According to Scotiabank’s Chief FX Strategist Shaun Osborne, the EUR/USD pair is slightly firmer, reflecting the overall weakness of the USD in the market.
Limited Upside Potential Before ECB Meeting on Thursday
Osborne believes that the Euro (EUR) may not see significant gains leading up to the European Central Bank’s (ECB) policy decision on Thursday. While a 25bps rate cut is anticipated and already priced in, the overall rate outlook is more crucial for short-term rate direction. Market expectations include a total easing of 64bps by the end of the year, indicating a faster pace of cuts than the ECB’s quarterly approach.
Recent price movements suggest a potential reversal from this week’s low of 1.1015, forming a bullish “morning star” pattern on the 6-hour chart. However, the EUR’s momentum signals are still bearish, with gains stalling in the mid-1.10s. Breaking through the 1.1070/75 level could provide the EUR with additional intraday momentum, while the key short-term support rests at 1.1015.
Expert Analysis and Breakdown:
Overall, the EUR/USD pair is showing signs of strength ahead of the ECB meeting, but the upside potential remains limited. The market is closely watching for any hints about future rate cuts and the ECB’s overall monetary policy stance, which will likely impact the direction of the EUR in the short term. Traders should pay attention to key support and resistance levels to gauge potential intraday momentum shifts.