EUR/USD: technically bearish, bounces to attract sellers to the 1.1100/30 area - Scotiabank

EUR/USD has broken below key short-term support in the in the low 1.11 area. According to Scotiabank analysts, a short-term squeeze higher intraday would not surprise from here but they expect modest rallies to attract sellers to the 1.1100/30 area.

Key Quotes

“Germany reported better than expected ZEW confidence data for October earlier—59.5 versus 55.1 last and 55.5 expected for the current conditions and 6.2 versus 4.0 forecast for the expectations component. The numbers had no impact on the EUR, however. We continue to focus on wider 2Y Eurozone-US yield spreads at 10-year highs (-152bps currently) as a major driver of EURUSD weakness.”

“EURUSD short-term technicals: bearish—EURUSD’s technical condition looks weak; the market is breaking under key short-term support in the in the low 1.11 area and is pressuring key medium-term (weekly) support at 1.1087. A short-term squeeze higher intraday would not surprise from here but we expect modest rallies to attract sellers to the 1.1100/30 area.”