EUR/USD seen bullish near term – Scotiabank

FX Strategists at Scotiabank believe the pair could extend the upside beyond 1.2000 the figure in the near term.

Key Quotes

“ECB’s Villeroy suggested that the ECB would not sit on its hands after winding back asset purchases, saying that rate hikes would come quarters, rather than years, after QE ends. Wider Germany/Italy bond spreads suggest markets are taking a negative approach to news of a possible government formation in Italy, given a platform that calls for a 15% flat tax, higher benefits and lower retirement. EURUSD remains better supported overall and may continue to grind higher after its recent softness”.

“EURUSD has seen steady demand since breaking minor trend resistance in the upper 1.18s late last week. Short-term trend momentum is positive and longer run price signals are bullish. A high close on Friday completed the third leg of a bullish “morning Star” signal on the daily chart and helped form a bullish “hammer” on the weekly chart. We see support now in the 1.1940/50 area and look for EURUSD gains to extend above 1.2010/20 intraday”.