EUR/USD: Upside potential is limited - Scotiabank

The Euro (EUR) has recovered a little from new cycle lows near 1.0240 made yesterday against the US Dollar (USD) but the rebound has stalled below 1.03 so far on the session, Scotiabank's Chief FX Strategist Shaun Osborne notes.

EUR scratches out a minor rebound

"The EUR is quite undervalued, from my point of view, but there is little reason to expect a significant pick up at this point. German unemployment rose 10k in December, holding the unemployment rate at 6.1%. The data was better than expectations of a 15k gain."

"Short-term price signals suggest a minor reversal may have developed around yesterday's intraday low. A bullish 'hammer' signal on the 6-hour candle chart has provided some positive momentum for the EUR into the weekend but the broader trend remains strongly bearish and the rebound is unlikely to flourish at this point."

"Resistance is developing around 1.03 but a minor squeeze could develop above the figure to reach 1.0360/90 where better selling interest is likely to emerge. Support is 1.0240/50."