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EUR/USD: technicals point to a neutral bias – Westpac

FXStreet (Edinburgh) - Strategists at Westpac have reiterated the neutral outlook on the pair in the near term.

Key Quotes

EUR understandably running into some short term demand into the 1.1085-1.1100 technical support level”.

“A tough call here, the risk averse backdrop on the one hand likely to underpin EUR but relative growth and policy vs the US still decidedly tilted in the USD’s favour”.

“For the time being we stick with a positive one week EUR view - higher energy prices in the month tip the risks in favour of a firmer Sep advance EZ CPI while regional US PMIs flag sub-50 ISM risks this week”.

“Beyond that a Dec Fed hike still looks like a good bet and we stick with a negative 3mth EUR outlook”.

“The optics look much more favourable for a Dec Fed hike amid what is likely another year of “seasonally” stronger US activity data - as has been custom into in recent years - while the base effects from the fall in energy prices drop out of the US CPI calculations through Q4”.

“Reversal from 1.1460/80 has been aggressive, keeping pressure on the downside in the short term. Strong support expected at 1.1120/50. Neutral bias”.

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