EUR/USD: Outperforming stocks may provide some backing – Scotiabank

The Euro (EUR) is moderately lower again as the USD firms broadly, Scotiabank's Chief FX Strategist Shaun Osborne notes.

EUR/USD drifts back to 1.04

"There are some positives around the fringes of the EUR’s outlook, however. Spain notched up another solid year of growth, rising 3.5% in the Q4 year—better than many. Meanwhile, this week’s volatility in global stocks may give investors a timely nudge that Eurozone stocks are outperforming US markets so far this year."

"The Stoxx 50 index is up 7% YTD. Relatively better returns in Europe may provide a little support for EUR sentiment if the trend extends."

"Soft price action yesterday—spot losses completed the third leg of an 'evening star' candle pattern on the daily chart—adds to the weaker technical tone of the EUR. Spot losses are losing a little momentum in the low 1.04 area at present, with the 40-day MA (1.0403) providing some anchoring for the market. Loss of support around the figure targets a drop to 1.0350. Resistance is 1.0535."