An overnight note (Global FX Strategy: Daily FX Update) via Scotiabank
EURUSD failed to reach the 1.21 level by just a handful of ticks yesterday and the drift lower in spot suggests the market may be awaiting fresh impulses from data later this week (Eurozone CPI, US jobs).
- German and Spanish data showed stronger than expected declines in unemployment today; the German unemployment rate fell to 5.5%, a record low.
- Little, or nothing, has changed from the past few days when the EUR was plowing steadily higher so we rather put the EUR's stumble down to positioning and consolidation pressures after an extended run higher rather than anything fundamental.
EURUSD short-term technicals:
- Bullish/neutral - The EUR has slipped back from September's peak levels and perhaps risks consolidating a little more in the near term; the market range so far today is inside yesterday's which supports the notion of consolidation.
- While spot perhaps risks dipping a little more than we expected Tuesday, we think the "internals" of the EUR rally remain strong from a technical point of view.
- However, that may mean support nearer 1.1940/50 near-term than the 1.20 area we suggested yesterday. Resistance remains 1.2090/1.21.
(bolding mine)
