EUR/USD has been trading below the 1.0800 level. Economists at Scotiabank analyze the pair’s outlook.
EUR/USD’s early year losses risk extending a little more before stabilizing.
Macro-economic drivers should improve somewhat for the EUR in the coming year, with the worst of the Eurozone’s economic slump now behind it. But near-term trends are likely to reflect the EUR’s still significant interest rate disadvantage relative to the USD.
A drop back in the EUR to 1.0500/1.0600 may develop before renewed EUR buying interest emerges.
A more constructive EUR trend should develop into Q2/Q3.