EUR/USD set to dip towards 1.13 in the coming days – Scotiabank

EUR/USD records fresh 2021 lows and test 1.1330, weighed by spreads and relative fundamentals. Economists at Scotiabank expect the pair to continue its move downward to the 1.1300 level.

Near-term drivers for the euro remain negative

“Widening Bunds-UST differentials remain a firm downward force on the euro. The spread between US and German debt in the 10-yearr space has risen to its largest since April as markets adjust for the Fed’s tapering and eventual hikes.” 

“Near-term drivers for the euro remain negative as the continent battles a surge in COVID-19 cases, elevated energy prices, and supply shortages limiting industrial output.”

With a relatively bare domestic calendar and no change in tone expected from scheduled European Central Bank speakers to change the outlook on the EUR/USD, we expect further losses ahead, toward 1.13, in the coming days.”