EUR/USD: A run towards 1.1 near term is possible – Scotiabank
20.08.2024, 11:59

EUR/USD: A run towards 1.1 near term is possible – Scotiabank

The Euro (EUR) is showing a marginal loss on the day on the screens but EUR/USD has essentially moved sideways in a narrow range overnight as the market consolidates around the EUR’s highest point since the start of the year, Scotiabank’s Chief FX Strategist Shaun Osborne notes.

A correction or consolidation in the bull run

“While much attention falls on the Fed policy outlook as a driver of EUR/USD gains, the ECB cannot be overlooked. Markets remain very confident that another 25bps ease is coming on September 12th but there are some clear, potential impediments to a ‘data dependent’ ECB cutting rates again.”

“Policy hawks were concerned about the level of wage gains in Q1. Germany’s Bundesbank reported today that collective earnings agreements rose 4.2% in the spring which, according to the Bundesbank, will keep inflation high. The ECB reports Q2 negotiated wage data Thursday and another strong gain in wages could check ECB easing bets.”

“The EUR’s solid bull trend on the chart is driving gains above the 200-week MA (1.1064) and putting the EUR within reach of the late 2023 high at 1.1149. Oscillators are bullishly aligned across the short, medium and long-term DMIs which is helping underpin EUR gains. The intraday and daily DMIs are, however, starting to look very stretched. A correction or consolidation in the bull run is a growing technical risk for the EUR. Support is 1.1000/05.”

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