EUR/USD stays bearish near term – Scotiabank

FX Strategists at Scotiabank keep their bearish outlook on the pair unchanged in the near term.

Key Quotes

“Investors continue to shed EUR long positions as the cost of carrying USD shorts versus lower yielding currencies becomes even more punishing in the absence of gains in the underlying position. For USD-based investors, the cost of holding a short position versus the EUR amounts to 290 pips (3m hedged annualized). Most mainland European markets are closed today, robbing the spot market of liquidity but the EUR is looking soft and prone to more losses as the market nears psychological support around the 1.20 mark”.

“Volumes are light but the damage to the short-term chart is hard to ignore as EURUSD slides to new cycle lows, pushing below the low seen through Friday’s (bullish) session and pressures longer run consolidation support in the 1.2030 zone. Trend momentum is bearish, but looking somewhat over extended on the short-term charts. There is little, obvious support below the 1.20 until 1.1918, the Jan low”.