Broader uptrend remains strong – Scotiabank

EUR/USD is strengthening, trading largely flat today as markets await Powell’s comments, notes Shaun Osborne, chief FX strategist at Scotiabank.

The market is consolidating this week’s gains through 1.11

ECB Governor Kazaks commented on Thursday that he was “very much” open to an interest rate cut in September, but there was debate over the size and pace of easing ahead. Governor Vujcic said earlier today that “gradual” rate cuts would be possible if the inflationary outlook holds. ECB inflation expectations came in a tenth higher than forecast at 2.8% and 2.4% for the 1-year and 3-year measures respectively.”

“There may be some tentative signs of softness in the EURUSD price action as the market consolidates this week’s gains through 11/1. The broader euro uptrend remains strong, but short-term oscillators appear very stretched, which may signal the potential for further consolidation.”

“Intraday price trends suggest that weakness back below 1.1095/00 could prompt more corrective short-term losses in the euro towards the 1.10 low.”