EUR/USD: Rebounds are limited in scope and scale - Scotiabank

EUR/USD is not moving a great deal at the moment and so the overall technical picture remains little changed, said  Shaun Osborne, Chief FX Strategist at Scotiabank, as he notes that rebounds are limited in scope and scale and the market remains in consolidation mode after the June/July softness.

Key quotes

“Germany reported stronger than expected industrial production for June (+0.8%) but the rebound in output simply reversed the weakness seen in May (-0.9%) and broader trends remain quite soft. The Banque de France reported a small increase in business sentiment for July (98, from 97), suggesting sentiment was unaffected by the shocking domestic events of last month. Data do little to change the outlook for sluggish growth (Q2 data due at the end of the week) in the Eurozone overall, however. We continue to feel that ECB policy makers will ease again in September.”

“EURUSD short-term technicals: neutral/bearish—Spot is not moving a great deal at the moment and so the overall technical picture remains little changed. Rebounds are limited in scope and scale and the market remains in consolidation mode after the June/July softness. We continue to see upside prospects as very limited and think the mid 1.11 area (55-day MA) is likely to hold gains and provide an entry zone for sellers. Intraday losses will pick up below 1.1080. Key support is at 1.0980 now, the base of the current consolidation.”