A run to 1.1 is possible in the short term – Scotiabank

The Euro (EUR) shows a marginal loss on the day on the screens, but EUR/USD has essentially moved sideways in a tight range overnight as the market consolidates around EUR’s year-to-date high, Shaun, chief FX strategist of Scotiabank. notes Osborne.

A correction or consolidation in the bull run

“While much attention is being paid to the outlook for Fed policy as a driver of EUR/USD gains, the ECB cannot be overlooked. Markets remain very confident that a further 25bp easing will take place on September 12, 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 wage agreements rose by 4.2% in the spring, which the Bundesbank says will keep inflation high. The ECB reports Q2 negotiated wages data on Thursday and another strong wage gain could check ECB easing bets.

“The euro’s solid trend on the chart is driving gains above the 200-week MA (1.1064) and puts the EUR within reach of the late-2023 high at 1.1149. Oscillators are bullishly aligned on short, medium and long-term DMIs, which helps support EUR gains. The intraday and daily DMIs are starting to look very stretched though. A bullish correction or consolidation is a rising technical risk for the EUR. Support is 1.1000/05.”