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EUR/USD drifts toward 1.15 after Fed-driven rally, Scotiabank says

Scotiabank places fair value for EUR/USD in the mid-1.15s, with a near-term 1.1450 to 1.1550 range and about 42 bps of tightening priced by December.

Reported · Written up by our desk · Major Pairs

Scotiabank’s FX team says EUR/USD is drifting toward 1.15 after a Fed-driven rally, with the euro remaining soft versus the US dollar.

The bank points to euro area inflation data as largely in line with expectations, noting July headline CPI at 2.9% year over year and core at 2.5% year over year, versus 2.4% expected. It also says French CPI briefly lifted the euro, but the effect faded.

Scotiabank adds that rate expectations are stabilizing after a pullback, with markets pricing about 22 bps of tightening for September and roughly 42 bps cumulatively by December. It also cites supported 2-year spreads, Germany versus the US, and sets a fair-value estimate in the mid-1.15s.

On positioning, the team highlights a range bound outlook, pointing to support at 1.1450 and resistance at 1.1550, and says the daily chart shows limited resistance ahead of 1.16.

Latest closeEUR/USD 1.153 ▲0.5%

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