EUR/USD: Wider spreads pressure the Euro – Scotiabank

EUR/USD slides below 1.07. Economists at Scotiabank expect the pair to remain under downside pressure.

Limited scope for EUR rebounds from here

“Market expectations for ECB hikes have been pared marginally but 2Y EZ-US spreads are widening again, providing the drive for a lower EUR (yield gap wider at – 172 bps, the widest since late Mar) and rather suggesting little opportunity for the EUR to rebound at this point.” 

“A clearer loss of support in the low 1.07 range will leave little in the way of a deeper EUR slide towards 1.05 in the next few weeks.”

“Bearish, short-term trend momentum signals suggest limited scope for EUR rebounds from here (look for resistance in the low/mid 1.07s).”