EUR/USD: ECB officials dampen talk of aggressive rate cuts - Scotiabank

EUR/USD dropped back to the upper 1.07s in early Asian trade before crawling back to the low 1.08s, Scotiabank's Chief FX Strategist Shaun Osborne notes.

EUR edges higher

"Comments from ECB Governor Wunsch, adding to the raft of voices who have spoken out against upping the pace of rates cuts recently, helped nudge the EUR higher. Moody's put French debt on negative outlook Friday."

"OATs are, however, outperforming marginally in the day, with the outlook revision no great surprise and markets perhaps relieved that - for now, at least - a rating cut was avoided."

"Spot is consolidating in a developing range around 1.08. The pattern of trade so far suggests a minor pause in the EUR's decline before losses resume (potential bear flag pattern). The EUR remains heavily oversold on the intraday and daily oscillator studies which does raise the risk of a short squeeze at some point, however. Support is 1.0780. Resistance is 1.0870."