EUR/USD: bearish into Jackson Hole - Scotiabank

Analysts at Scotiabank explained that the EUR was outperforming all of the G10 currencies and climbing in response to the release of stronger final GDP data from Spain and relief following better-than-feared IFO survey data from Germany. 

Key Quotes:

"However, EUR gains have been relatively limited. Short-term yield spreads remain a drag for EUR, and we note the broad turn in sentiment with a notable rise in measures of implied volatility.

Risk reversals have responded accordingly, pricing in a greater premium for protection against EUR weakness across a range of time horizons. We are bearish EUR into Friday’s risk event."