Dovish comments from ECB Governors Simkus and Kazaks support market expectations for a further reduction in ECB rates in December, Scotiabank’s Chief FX Strategist Shaun Osborne notes.
EUR capped by 200-day MA in upper 1.08s
“But there is little appetite for large reductions in rates, comments suggest, which perhaps means markets expectations are a little stretched (32bps priced in for December at this point). EUR/USD is likely to remain under pressure in the short run but bargain hunters may become a bit more active around 1.08.”
“A decent rebound in the EUR late last week does not appear to signal a reversal in the EUR’s recent slide. The sell-off is looking over-extended on the intraday and daily oscillators but a firm cap appears to have been set on spot rebounds at 1.0872, where the 200-day MA sits currently.”
“Minor gains from Thursday’s low appear corrective ahead of renewed losses. Support is firm at 1.0780/00. Weakness below there targets 1.0650/00.”
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