Trades lower on wider spreads, weak technicals – Scotiabank

Losses in the euro (EUR) extended — slightly — after last week’s sharp drop as investors eye the ECB’s policy decision next week and anticipate some pick-up in the central bank’s easing pace, notes Shaun Osborne, chief strategist Scotiabank FX.

EUR traders fell slightly

“A 1/4 point cut is almost fully priced in for the 17th, and another 25bps cut is more or less priced in for December. Wider short-term spreads against the USD are a drag on the EUR outlook and technical momentum is bearish.”

“The spot breakout from the minor consolidation that developed around the week’s tower above 1.0950 has widened a bit, but the lower intraday EUR drift maintains the negative technical tone after last week’s sharp move lower and the break below key support at 1.10 (now resistance). ).”

“The 100-day MA (1.0934) may provide short-term support for the EUR, but short-term risks point to a push to 1.0875/80 and losses may extend to the low 1 area, 08.”