TD Research discusses EUR/USD outlook and adopts a neutral bias in the near-term.
"For EURUSD, there may be more tactical two-way risks ahead. The divergence between German and US 10yr real rates has widened further. And, with the ECB committing itself to policy purgatory while rolling up its PEPP into the APP, it could be some time before German real rates rise. The divergence is not just unique to the real rates space. Against this backdrop, EURUSD will likely need a fresh catalyst to drive it higher. The German elections later this month offers some potential, but meaningful fiscal change (if any) is more of a strategic/long-term consideration than anything tactical in nature," TD notes.
"We note that the rejection of the 1.1909 level in EURUSD could suggest some exhaustion near-term, meanwhile the 1.1750 level should be key support that could open a re-test of the sub 1.17 lows," TD adds.