EUR/USD Price Outlook: Euro Holds Near 1.12 After US PPI Jump

The Euro could stabilise against the US Dollar after finding support near 1.11, Scotiabank says, although its short-term assessment remains cautious.

Foreign exchange analysts at Scotiabank see a possible base forming beneath EUR/USD after Wednesday’s sell-off, but resistance at 1.1240-1.1250 still stands above the recovering Euro.

EUR/USD traded near 1.1203 on Thursday afternoon, little changed from Wednesday’s close, after briefly dipping below 1.12 following the latest US data.

Scotiabank described the earlier rebound: “The EUR rose close to a cent from yesterday’s intraday low through overnight trade, peaking near 1.1240 before easing back modestly.”

“Eurozone data were largely ignored (weaker than expected August Industrial Production) as markets adjusted to volatile yield and spread movement.”

In that assessment, the bank added: “Front-end EZ/US spreads have moved sharply back and forth over the past 24 hours but are now little changed from levels prevailing ahead of yesterday’s US CPI report.”

These short-dated yield gaps reflect relative interest-rate expectations, which influence the returns available on Euro and Dollar assets.

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Oversold Euro (EUR) meets another inflation test

Thursday’s US producer-price report added to inflation concerns, recording a 1.3% monthly increase.

The Bureau of Labor Statistics said: “The September increase is the largest advance since rising 1.7 percent in March 2022.”

That leaves the yield risk discussed in our coverage of MUFG’s conditional sub-1.10 scenario relevant even as the Euro attempts to stabilise.

Scotiabank retains a neutral-to-bearish short-term assessment: “Bearish pressure on the EUR extended yesterday but losses were short-lived. Losses based in the low 1.11- right on the 50% retracement of the EUR’s 2025/26 rally from the low 1.01 area.”

The retracement marks the loss of half that earlier advance, rather than a 50% fall in the exchange rate.

Scotiabank says: “This may be significant and provide a platform for a heavily oversold EUR to stabilize or recover.”

EUR/USD exchange rate FAQs

Is Scotiabank bullish on EUR/USD?

Its short-term assessment remains neutral-to-bearish, although it sees scope for stabilisation or recovery.

Where is the bank’s resistance level?

Scotiabank identifies resistance between 1.1240 and 1.1250.

Is 1.11 a forecast target?

No. It is the area where the bank identifies potential support following the recent decline.

Our currency coverage draws on live market data, official economic releases and published bank research.

– Written by


Frank Davies

STORY LINK Pound-to-Dollar Forecast: GBP/USD Bounces as US Treasury Yields Retreat

The Pound to Dollar exchange rate (GBP/USD) rebounded towards 1.3250 after falling to 16-week lows near 1.3160 following hotter-than-expected US inflation data.

Stronger UK GDP and a retreat in US Treasury yields helped Sterling recover, although persistent underlying US price pressures have reinforced expectations of further Federal Reserve tightening.

GBP/USD Forecasts: Rebound from 16-Week Lows

The Pound to Dollar (GBP/USD) exchange rate rebounded strongly on Thursday after sliding to 16-week lows following hotter-than-expected US inflation data.

GBP/USD had fallen close to 1.3160 after Wednesday’s CPI release, but recovered towards 1.3250 as US Treasury yields retreated and the Dollar surrendered part of its post-inflation gains.

The stronger Pound was also supported by unexpectedly resilient UK growth data.

According to UoB, the recent recovery remains fragile; “To sustain the momentum, GBP must hold above 1.3230.”

The 2026 low around 1.3140 remains an important downside level, with a sustained break potentially increasing the risk of a move towards 1.3000.

US consumer prices increased sharply in September, reinforcing expectations that the Federal Reserve will tighten policy again before the end of the year.

Headline CPI increased 0.6% on the month, while the annual inflation rate accelerated to 3.7% from 3.4%, above consensus forecasts of 3.6%.

The increase was driven partly by a 7.1% monthly jump in gasoline prices.

Core prices rose 0.3% on the month, compared with expectations of 0.2%, while the annual core rate increased to 2.6% from 2.4%.

The figures triggered an immediate surge in US Treasury yields and broad Dollar gains.

Markets raised the probability of an October Federal Reserve hike sharply following the release, although pricing subsequently moderated as bond yields retreated.

A December increase remains much more firmly priced.

Schroders senior economist George Brown commented; “While energy prices might be grabbing the headlines, today’s report suggests the inflation problem runs much deeper.”

He added; “A stronger-than-expected core inflation reading adds to mounting evidence that domestic price pressures are becoming more entrenched, rather than easing.”

ING currently expects the Federal Reserve to wait until December before increasing rates again, although it sees risks skewed towards additional tightening if inflation remains elevated.

MUFG is also cautious over extrapolating the latest rise in prices into a prolonged tightening cycle.

The bank commented; “We remain sceptical that inflation pressures will continue to build and while we expect the Fed to hike again in December, we do not expect the Fed to deliver the two further rate hikes currently priced by the markets.”

Pound Sterling received an additional boost on Thursday after the latest UK growth figures exceeded expectations.

UK GDP increased by 0.1% in August compared with forecasts for a 0.1% contraction.

Annual growth accelerated to 2.1%, while manufacturing output increased sharply during the month.

The data provided some reassurance that the UK economy is proving more resilient than feared despite elevated energy prices and borrowing costs.

The Pound also benefited from the retreat in US Treasury yields as investors moved into government bonds amid renewed weakness in global technology stocks.

The Dollar consequently gave back part of Wednesday’s CPI-driven advance.

For GBP/USD, the 1.3230-1.3250 region is now the immediate technical area to watch.

A sustained recovery above 1.3275 would improve the short-term outlook and could bring 1.3300-1.3350 back into focus.

Conversely, renewed Dollar buying would expose 1.3200 followed by the 2026 low around 1.3140.

The wider direction will remain highly sensitive to US rate expectations, with upcoming retail-sales and producer-price data likely to determine whether Wednesday’s inflation shock produces another sustained rise in Treasury yields.

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EUR/USD is trading near 1.1211 on the 4-hour chart after bouncing up from 1.1112. Price has since moved above 1.1153, but it remains below the descending trendline and the shorter- term moving average. The broader technical structure remains bearish.

The first area of resistance is at 1.1237. Should price break through that level, the next area of resistance is at 1.1278 and the final area of resistance is at 1.1316. The first area of support is at 1.1153. The second area of support is at 1.1112. The final area of support is at 1.1071. Support may be tested if the rebound fails.

RSI is in the bullish territory and has improved from the previous oversold territory. I am neutral to bearish with a slightly bearish bias while EUR/USD remains below 1.1237 and the descending trendline.

Should EUR/USD break above 1.1237, that would improve the chances of a further rebound. Should it break below 1.1153, that would put 1.1112 back in focus.

Despite the pair’s recent weak trading, its repeated stability below the additional barrier at 177.80 confirms that it remains influenced by the previously suggested bearish trajectory. We will continue to wait for the price to gather negative momentum before resuming its decline, initially targeting 175.75, followed by the main target near 174.95.

However, a surge above 177.80 followed by a positive close would signal the beginning of bullish corrective waves, potentially allowing the pair to recover some losses by advancing first toward 178.60 and then toward the resistance barrier near 179.45.

The expected trading range for today is between 175.75 and 177.70.

Trend forecast: Bearish

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