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.

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