Euro: Rebound toward 1.1275 in focus against US Dollar - Scotiabank

Scotiabank’s FX team reports the Euro slightly lower versus the Dollar, as ECB officials keep a hawkish stance with December tightening still priced. Despite softer Oil, European energy concerns persist. Technically, resilient support near 1.11 has underpinned a rebound, and the bank expects EUR/USD to gravitate toward the 1.1275 range ceiling over the coming week.

Support near 1.11 underpins 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.)