Eurusd Will Test 10660 And 105 Levels Scotiabank

 Eurusd Will Test 10660 And 105 Levels Scotiabank

EUR/USD Will Test 1.0660 And 1.05 Levels

EUR/USD pair tried to extend the recovery beyond 1.08 but failed due to the concentration of bears around that level. And now, the Scotiabank economists are here with a forecast about the next possible direction of EUR/USD.

According to Scotiabank, EUR/USD will now test the support at 1.0660, which is also Monday's low. And if that level fails to hold, then the EUR/USD pair will turn even more lower to target the 1.05 support level.

This forecast from Scotiabank comes at a time when the USD is gaining ground against the EUR, GBP, and even the gold!

50 BPS Rate Hike By ECB Is Highly Likely

If we look at the fundamental side, the high rates set by the ECB are here to stay despite a slowdown in inflation. In fact, the comments from the ECB officials point towards more tightening in the coming months.

We also have a scheduled speech by Lagarde (President of ECB). According to analysts, Lagarde will reaffirm that another rate hike of 50 basis points is on the cards for the March meeting.

Similarly, the ECB president will also likely hint towards 25 bps rate hikes in the next meetings depending on the economic data.

So although the rate hikes are here to stay in 2023, the exact size of them will likely shrink as the inflation cools down.

If we look at the technical side, the EUR currency shows signs of rejection near the resistance at 1.08. Now, the next immediate target is the test of 1.0660, and after that, there's support at 1.05.

In short, more downside is ahead for the Euro as the US Dollar is on the front foot at strong retail sales and inflation data. Both of these economic releases are not good news for the US stocks, but they will strengthen the USD position in the FX market.

Similarly, the chances of rate cuts in the USA are also very slim, at least during 2023. However, the situation could be different as we enter 2024!

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