EUR/USD: bearish bias on funamentals - Scotiabank

Analysts at Scotiabank noted the recent developments in European trade for EUR/USD.

Key Quotes:

"French Q1 GDP rose 0.4% (against expectations of a 0.3% gain) while German state CPI data reflected weak price pressures; the NRW state data showed inflation easing 0.2% in the May month, and annual inflation dropping to 1.6%, from 2.1% in April."

"Comments from ECB President Draghi yesterday stressed that, despite reduced downside risks facing the Eurozone economy, extra-ordinary accommodation was still required. We see no early shift away from the ECB’s easing bias. More generally, Greece (German press speculation – denied by the Greek government – that it may forego its next debt repayment) and Italy (movement toward agreement on a new electoral law that may pave the way for a snap election) are back on the radar."

"European blue chip stocks have also lost about 2% relative to US markets over the past week which we think will add to EUR pressure nearterm. "