Friday’s close close tilts tech risks more soft – Scotiabank

The euro (EUR) is falling in line with the broader recovery in the US dollar (USD), notes Shaun Osborne, chief FX strategist at Scotiabank.

There is the possibility of additional, corrective losses in the euro

“The Euro itself faces the risk of another interest rate cut from the ECB soon (25bp price is included for the September 12 meeting). But a Reuters report yesterday highlighted divisions among ECB policymakers over the outlook going forward, with some increasingly worried about recession amid slowing activity in Germany and others more worried about stubborn inflationary pressures.”

“A more cautious ECB at the end of the year suggests losses in the euro may not extend too far in the near term. EUR/USD has given back a little more than a third of its August rally and looks poised to give up a bit more ground at least in the short term.”

“A lower close in the week to last Friday saw a ‘dark cloud covering’ weekly candle signal suggesting the possibility of further, corrective losses in the euro. Support is at 1.0990 and (stronger) at 1.0920/40. Resistance is 1.1070/75.”