The Euro (EUR) failed to sustain gains following the European Central Bank (ECB) decision, even as unchanged rates and upgraded growth projections reinforced the view that the easing cycle has ended, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

Markets see ECB easing cycle as complete

"The EUR failed to hold gains made around the ECB policy decision yesterday despite some bullish cues. No change in rates and some upgrades to the growth outlook helped reinforce the view that ECB’s easing cycle is complete."

"President Lagarde would not be drawn on the rate outlook when questioned but the usual post-meeting comments from unidentified officials indicated that they thought the easing cycle was over. Policy developments contrast with the Fed outlook and should extend the EUR support on minor dips."

"Early week losses for the EUR continue to hang over the short-term technical picture. A net loss for the EUR on the week, forming a likely 'shooting star' candle on the weekly chart, loads the technical dice against the EUR to some extent. Loss of support at 1.1695/00 would signal more softness in the near-term—but perhaps only to the low/mid 1.16 zone."