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- EUR/USD set to suffer a fresh dive towards the 1.10 level – Scotiabank
EUR/USD set to suffer a fresh dive towards the 1.10 level – Scotiabank
After trading at a one-week high on Wednesday of 1.1355, the EUR/USD has just slipped below the 1.13 level as yield differentials edge wider. Economists at Scotiabank think the world's most popular currency pair is set to decline towards the 1.10 level.
Upside scope remains limited
“Today, the spread of US over European debt yields has moved again in favour of the USD. Yesterday’s narrowing may have reflected the reaction to news on the vaccines/virus front, but we would generally advise to look past EUR upside on moves in rates ahead of tomorrow’s US CPI release and especially prior to next week’s Fed decision.”
“In a quarter where the Fed may begin hiking rates, that the ECB is still working through net purchases of government bonds is a solid trigger for continued EUR losses.”
“In the near-term, we see EUR downside to 1.10 on the policy outlook and the possibility of further virus limits with cases surging even before the full arrival of the Omicron strain.”
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