FXStreet (Córdoba) - Camilla Sutton, strategist at Scotiabank, commented that there is a lot priced in for next week’s ECB meeting as markets look to geopolitical developments as well. The analyst also notes the EUR/USD technical outlook remains bearish.
“There is a lot priced in for next week’s ECB meeting; however with the June ECB program not yet fully in effect, European 10‐year yields already low (France at 1.23%; German at 0.89%; Italy at 2.4% and Spain at 2.2%) and the problems facing Europe mainly structural, the ECB position is a difficult one”.
“Full fledged QE in Europe is likely not the core solution. Fundamental data was disappointing with both consumer and economic confidence falling and in Germany, employment was weaker than expected but the unemployment rate was stable at 6.7%; while regional CPI has been disappointing warning that regional CPI is likely to be flat m/m. Tomorrow’s flash CPI release in Europe (consensus is calling for it to come in at 0.3%y/y on headline and 0.8% y/y on core) will serve as a core input for ECB expectations”.
“EUR/USD short‐term technicals: bearish - two days of stabilization has done little to shift the
bearish technical outlook. All signals still warn of downside risk and momentum is strong. Support lies at the recent low of 1.3153; while resistance is at 1.3242—the August 22nd close”.