As the EUR/USD exchange rate hovers around the 1.10 mark, market experts like Scotiabank’s FX strategist Shaun Osborne are closely monitoring the situation. While recent volatility has played a role in the currency pair’s movements, there are underlying factors supporting the Euro’s strength.
According to Osborne, the EUR’s current position near 1.10 is justified by the improved short-term yield differentials in favor of the Euro. Despite lingering spreads at -160bps in the 2-year sector, the situation is an improvement from the -200bps levels seen in April. Scotiabank’s estimate places the fair value of EUR/USD just below 1.11 at 1.1094.
Looking ahead, Osborne suggests that while intraday price action may be soft, corrective losses could push the EUR below 1.09. However, strong support levels are expected to emerge around 1.0850/60, with resistance at 1.1075.
Overall, the EUR/USD exchange rate is influenced by a combination of market volatility and fundamental factors. Traders and investors should pay attention to key support and resistance levels to make informed decisions about their positions in the currency pair.