EUR/USD to struggle to surpass the 1.1650 area – Scotiabank

EUR/USD is marginally stronger despite mixed PMIs. But economists at Scotiabank see limited momentum toward a firm breach past the mid-1.16s area.

ECB rate hikes are too far to provide support for the euro in the short run

“France’s services PMI beat estimates but the manufacturing index missed expectations. German services missed and manufacturing beat (though mainly due to supply bottlenecks pushing up prices). The eurozone services data followed Germany’s with the index decelerating to 54.7 from 56.4 in September and 55.4 expected while manufacturing ticked marginally lower to 58.5 (57.1 expected from 58.6).”

“We think that, in any case, ECB rate hikes are too far in the future to provide support for the EUR in the short run even if the ECB signals that it may go sooner than expected by economists.”

“The Tuesday and Thursday highs of ~1.1665/70 are key resistance before 1.17 where the 50-day MA at 1.1707 also awaits.”

“The EUR has found intermediate support at ~1.1620 ahead of firmer in the 1.1590/600 zone.”