EUR/USD is trading below the 1.0800 level. Economists at Scotiabank analyze the pair's outlook.
Until the 2nd/3rd quarter, a more constructive EUR trend should develop
EUR/USD's losses at the start of the year risk extending a little further before stabilizing.
Macroeconomic drivers should improve somewhat for the EUR in the coming year, the worst economic downturn in the Eurozone is already behind it. However, short-term trends are likely to reflect the continued significant downside of EUR interest rates against the USD.
EUR may fall back to 1.0500/1.0600 before there is renewed buying interest in EUR.
Until the 2nd/3rd quarter, a more constructive EUR trend should develop.