EUR/USD short-term bullish - Scotiabank

Eric Theoret, Strategist at Scotiabank, notes that short-term bias for EUR/USD is bullish, with  limited resistance ahead of the June 24 open at 1.1385.

Key quotes

“EUR is up 0.8%, a mid-performer in an environment of impressive, broad-based USD weakness against all of the G10 currencies. Fundamental releases (mixed trade, improving ZEW) have largely been ignored in favor of broader developments.”.

“Yield spreads are shifting favorably for EUR, with both the 2Y and 10Y Germany-U.S. spreads narrowing impressively over the past few sessions. EUR risk reversals have also shifted dramatically with the one week now showing a premium for protection against EUR strength.”

“EURUSD short-term technicals: bullish—EUR has made a decisive break above 100 day MA resistance, retracing a portion of the June 24 drop with a rally toward 1.13. The RSI is relatively muted at 63, leaving ample room for further upside ahead of the overbought threshold at 70. Resistance is limited ahead of the June 24 open at 1.1385. We now look to the 100 day MA (1.1230) as a level of near -term support.”