EUR/USD: watching 1.1000 in next few weeks - Scotiabank

Analysts at Scotiabank suggested that two failed attempts to push under 1.12 this week suggest some modest upside risk for EUR/USD in the short run.

Key Quotes:

"Medium-term signals remain negative for the EUR and we continue to think that technical signals point to a test of the 1.1100 area (trend channel support) in the next few weeks. Above 1.1300/05 relieves pressure on the EUR."

"Overnight data showed upward revisions for French CPI data (+0.5% from +0.3% m/m in May) and the EU trade balance posted a record trade surplus of EUR28bn in April (well above forecasts of EUR21.5bn).

The data may have underpinned the EUR at the margin but, with modest gains in US short-term rates and EZ-US short-term spreads nudging wider again (US 2Y spread at 130bps again), upside scope for the EUR is limited. The EUR’s role as a proxy hedge for GBP nerves is underlined by the 1M EURUSD risk reversal reaching the biggest premium for puts since 2011 earlier (3.3%) since 2011."