The Euro (EUR) is steady around the 1.04 zone, Scotiabank’s Chief FX Strategist Shaun Osborne notes.
“ECB Governor Escriva remarked earlier that the central bank needed to move to a neutral stance in the coming months. However, Governor Holzmann remains cautious on near-term ECB easing, suggesting he needs ‘good arguments’ to support a rate cut next week. President Lagarde commented that the central bank will maintain its ‘measured’ easing steps yesterday.
“Swaps continue to price in a 1/4 point cut for next week’s meeting. The EUR is holding a tight range intraday after another test of —and failure at—retracement resistance at 1.0422 yesterday. The low 1.04 area has been a block on EUR rebounds since December but the level on the chart is a bit more meaningful now as 1.0422 represents the initial (23.6%) retracement of the EUR’s slide from 1.12.”
“A clear push through the low 1.04 zone should see spot gains extend towards 1.05/1.06. Support is 1.0350.”