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EUR/USD: room for squeeze higher near term – Scotiabank

FXStreet (Edinburgh) - According to Shaun Osborne, Chief FX Strategist at Scotiabank, the pair could still test higher levels.

Key Quotes

“While investors have developed some obvious concerns about the Fed policy outlook, slow growth (and the impact of still evolving issues such as Chinese growth and VW) and weaker inflationary impulses suggest that the risk of renewed ECB easing remains high”.

“We still believe in the merits of a bearish view on the outlook for EURUSD but the short trade is popular and well-populated. That perhaps makes EURUSD prone to a slow squeeze higher, forcing out the weaker hands, before a renewed turn lower develops as central bank policy divergence risks become clearer”.

“After the overnight run up to 1.1410, overnight price action looks soft. In fact, we would venture that the intraday peak for the EUR is now “in” for the day and that the market is liable to pressure supports in the low/mid 1.13 range over the next few hours. Look to fade EUR rallies intraday”.

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