EUR: Single currency poised to test the $1.10 area - BBH

Research Team at BBH, notes that the euro was essentially flat last week and the poor close before the weekend leaves the single currency poised to test the $1.10 area that has held outside the immediate aftermath of the UK referendum.   

Key Quotes 

“With many participants expecting the ECB will move away from its capital key determinant of its bond purchase program in the week ahead, the euro may not be able to sustain upticks ahead of the meeting.  We suspect it is too early for the ECB to make such a decision, and if the market is disappointed, the euro could bounce.  

The Canadian dollar rose 0.5% against the US dollar last week.  The Bank of Canada did trim its growth forecast, but still seemed optimistic that activity would improve in H2. The Canadian dollar strengthened, but ran out of steam in front of the previous week's high and turned back down, with a poor close ahead of the weekend.   The risk is that the US dollar pushes beyond CAD1.30 to the upper end of the recent range found near CAD1.3140.   

The Australian dollar posted a key reversal before the weekend, even before the last leg down late in the North American session in response to the developments in Turkey.   It made a new high for the move and then sold off, through the previous days low.  The break of $0.7575 would suggest potential toward $0.7475-$0.7500, however, given that the coup attempt was defeated, the Aussie may first try to recover from knee-jerk losses.  A move above the $0.7650 area would be an early sign that the bearish scenario is not panning out.”