Euro falls on wages – Scotiabank

EUR/USD is slightly lower in quiet trading earlier in the week, notes Shaun Osborne, chief FX strategist at Scotiabank.

The ECB interest rate was cut completely for Thursday

“There were no major data reports in the Eurozone this morning and the Euro slippage likely reflects a continuation of the USD correction seen as the dust settled around Friday’s US data.”

“So far, short-term EZ/US spreads (the 2-year spread is little changed around -142bps this morning) suggest the EUR should remain supported on minor downside. A 25bp discount on Thursday’s ECB policy decision is fully priced in. Cautious guidance on the outlook could modestly support the EUR.”

“A weak close on Friday for the EUR leaves the daily chart clearly skewing negative through a bearish session outside the range. The underlying trend signals remain bullish on the daily and weekly charts, however, which should help limit losses in the euro at least in the short term. Weakness through last week’s low at 1.1025 could see a further drift towards the mid/upper 1.09s. Resistance is 1.1075/85.”