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."