Euro: Can the rebound against the US Dollar extend towards 1.1275? - Scotiabank

The Euro is trading slightly weaker against the Dollar as hawkish ECB commentary keeps December tightening priced in, according to Scotiabank’s FX team. Lower Oil prices have not dispelled concerns over European energy supplies. On the technical front, firm support around 1.11 has helped the pair recover, with the bank expecting EUR/USD to move towards the upper end of its range at 1.1275 over the coming week.

Can support near 1.11 sustain the rebound?

"The EUR is modestly lower on the session in quiet trade. ECB GC member Radev commented that the October rate pause does not mean that tightening is over, keeping the door open for a December hike. Dec OIS are pricing in 22bps of tightening risk."

"Despite the drop in crude oil prices this week, the European energy focus remains on natgas/power where prices have eased but remain significantly above even the most pessimistic ECB forecasts. "

"Meanwhile, France reported its September YTD budget balance of EUR159.2bn, in line with expectations."

"Neutral – Resilient EUR support in the low 1.11 zone in recent weeks provided the springboard for a solid, short-term EUR rebound. With the range base holding, we still think that spot could/should gravitate back towards the range ceiling around 1.1275 in the next week or so."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)