May extend losses to mid-1.10s – Scotiabank

The euro (EUR) has lost 0.5% in the session so far as the EUR’s consolidation since the start of the week is turning a bit softer, notes Shaun Osborne, chief FX strategist at Scotiabank.

EUR slips despite narrowing of short-term EZ/US spreads

“In the absence of any fundamental data or developments, short-term flows appear to be driving the session’s move. Note that EZ/US 2Y spreads narrowed further today (-147bps, the narrowest since mid-2023), suggesting that losses in the euro could widen again after month-end flows they will run out.

“The EUR/USD drift has undercut the near-term trend dynamics and spot risks have eased slightly further to test the key near-term support at 1.1100/10. Price action suggests that a minor top may have been reached around 1.12 earlier in the week. A push below 1.1100 could see losses extended into the mid-1.10s.”