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- EUR: Post-Fed drop holds near November low – Scotiabank
EUR: Post-Fed drop holds near November low – Scotiabank
The Euro (EUR) has has recovered on Thursday about half of the sell-off against the US Dollar (USD) seen after the Federal Reserve’s (Fed) policy decision, Scotiabank’s Chief FX Strategist Shaun Osborne notes.
Gains to remain limited to the low-mid 1.0400 area
“A less accommodative Fed drove short-term EZ/US spreads back to near recent extremes yesterday. Spreads have narrowed modestly today but the wide, 225bps yield gap for 2Y bonds is a major block on any significant improvement in the EUR In the near-term and suggests spot will remain better offered on minor rebounds for the foreseeable future.”
“Minor gains in the EUR seen overnight appear corrective as the market’s consolidate yesterday’s heavy losses. Spot losses did hold near the November low (1.0335 – major support now) yesterday but there is little in the intraday price charts to suggest a turn around in the EUR’s technical fortunes at this point.”
“Gains are likely to remain limited to the low/mid-1.04 area. A clear move back above 1.0450 is needed to drive a deeper rebound towards 1.05/1.06.”
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