EUR/USD looks in a good position to retest recent peaks near 1.05 – Scotiabank

EUR/USD holds yesterday’s gains and looks poised to test levels above 1.05, economists at Scotiabank report.

“Peak Fed” pricing will exert more pressure on the USD

“We think solid returns in European stocks relative to US markets will help keep the EUR underpinned in the short run while ‘peak Fed’ pricing will exert more pressure on the USD in the longer term, paving the way for additional, if modest, EUR gains into 2023.”

“EUR/USD is holding this week’s consolidation range below 1.05 and just under retracement resistance at 1.0517 (50% Fibonacci retracement of the 2022 decline).”

“Solid (technically bullish) gains overall yesterday will offset the bearish price action in the EUR we saw at the start of the week to some extent but new highs are needed to give the EUR a more obvious and sustained lift.”

“Support is 1.0390/00 and 1.0300/20.”