EUR/USD could weaken to 1.1875 in the near term – Scotiabank

In view of FX Strategists at Scotiabank, the pair’s downside could extend towards the 1.1875 level in the near term.

Key Quotes

“EURUSD losses continue to accumulate and the push under 1.22 leaves spot trading at its lowest level in six weeks. Eurozone data releases today were, however, somewhat positive. Final Spanish GDP was reported at a solid 3.1% Y/Y for Q4 and the country reported manufacturing PMI at 56, a new cycle high. Broader Eurozone manufacturing PMI data confirmed a moderation in the pace of growth at 58.6. Concerns that Eurozone growth may be moderating perhaps supports the narrative surrounding the softer EUR at the moment but growth is peaking at relatively high levels and we expect a solid performance for the Eurozone overall in 2018 still”.

“Spot’s loss of support at 1.2207 tips the near-to-medium term balance of risks lower still for the EUR. After repeated failures above 1.25, the break under the intervening low at 1.2207 triggers a double top signal on the daily chart and suggests the technical risk of a weakening towards 1.1875 in the next 2-4 weeks. We see support at 1.2085 (11-month trend) and feel that 1.2205/10 now serves as resistance. “Safe ground” for the EUR is above 1.2350 at the moment – too far to be relevant for today. Fade rallies”.