Spot has nudged a little higher through quiet Asian and European trade, Scotiabank’s Chief FX Strategist Shaun Osborne notes.

ECB stresses slow and measured cuts

“A number of ECB officials have been speaking and messaging is pretty clear— policymakers are in no rush to ease and December is the next likely point at which rates will be cut. The outlook for slow and cautious cuts contrasts with market expectations for bolds, more aggressive easing from the Fed. EZ/US 2Y spreads have narrowed to – 135bps, the narrowest since May last year.”

”EUR/USD is on the cusp of a bullish technical break out. Spot has been consolidating in a downward sloping range since the end of August—a potential bull flag pattern. Gains through the channel ceiling at 1.1125— which is under pressure at writing—should trigger a retest of 1.12 (at least) and should signal scope for a broader move up.”

“Trend momentum is leaning bullish and strengthening again, supporting the outlook for more EUR gains. Major resistance sits at 1.1275. Support is 1.1075.”