Scotiabank’s Shaun Osborne and Eric Theoret report EUR/USD trading slightly lower in quiet conditions as markets look ahead to next week’s ECB meeting, with policymakers in a blackout period and implied volatility subdued. They and consensus expect no policy change. Short-term, the Euro retains a mild uptrend, but a break of mid-1.14 support has dulled bullish momentum and could see a test of 1.1395/1.1405 support.

Pre-ECB consolidation and key supports

"EUR/USD is modestly lower in quiet trade. Market attention is perhaps turning to next week’s ECB policy decision (policymakers are now in their “quiet period” ahead of the meeting) but low implied vol reflects little concern that the outcome will produce any significant surprises."

"We—and the market—expect a hold."

"Eurozone CPI was finalized at –0.1% m/m in June and up 2.8% in the year. The Eurozone reported a EUR25.1bn Current Account surplus for May. "

"Neutral/bullish—The EUR maintains a mild, short-term uptrend against the USD, but gains stalled this week in the upper 1.14s. Losses through minor support in the mid 1.14 area in late week trading have blunted near-term bullishness and may see spot edge back to test support at 1.1395/05 in the next day or so."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)