Buy the dips in EUR/USD – Scotiabank

Chief FX Strategist at Scotiabank Shaun Osborne recommended buying the pair on occasional drops.

Key Quotes

“ECB President Draghi sounded confident at the central bank’s forum in Portugal, noting that that factors dampening inflation were temporary and that deflationary forces had been replaced by inflationary ones. He noted that inflation was not yet durable and self-sustaining and that a considerable degree of monetary policy stimulus was still required to support the ECB’s objectives, however”.

“There is nothing new in these remarks but investors chose to focus on the more positive aspects of the speech, lifting EURUSD. Gains have, however, stalled (so far) near recent range highs and may hold ahead of the Yellen comments. We favour buying EURUSD dips”.

“Broader trends are positive, however, and we think modest EURUSD dips are a buy. We expect good support in the low/mid 1.12s from here. We think a weekly close above 1.13 (Nov 2016 and recent high) would be more EUR positive”.