EUR/USD appears bearish near term – Scotiabank

In opinion of FX Strategists at Scotiabank, the pair’s near term outlook stays bearish while support is seen limited ahead of 1.18.

Key Quotes

“EUR is soft, down 0.3% from Friday’s close and threatening a push to fresh 2018 lows in the low 1.19 area. German factory orders were unexpectedly weak in March, falling 0.9% m/m (vs. +0.5% exp.) with a third consecutive month of contraction. The outlook for relative central bank policy is weighing on EUR as market participants consider the recent softening in measures of activity and inflation. This week’s calendar is relatively limited, with no major data releases and central bank risk limited to the ECB’s economic bulletin scheduled for Thursday. Yield spreads are bearish and extended, and risk reversals are showing a premium for protection against EUR weakness vs. both the USD and JPY”.

“Momentum indicators are bearish and trend strength is firm. The RSI is in oversold territory below 30 and the ADX is rising steadily. EUR is threatening 1.19 and support appears limited ahead of 1.18 and the mid-December low around 1.1720. Near-term resistance is now expected at the 200 day MA around 1.2020”.