EUR/USD seen at 1.20 by end 2017 – Scotiabank

FX Strategists at Scotiabank noted the pair is likely to have found a base around the 1.1800 handle.

Key Quotes

“For all the focus on the stronger USD this morning, the EUR remains in touch with a 1.18 handle and hardly looks soft. We published a note yesterday highlighting 1) weak correlations between the EUR and sovereign risk currently and 2) a recovery in Eurozone inbound investment inflows as grounds for expecting the EUR to remain well-supported despite the Catalan issue and negative yield spreads. Eurozone current account data today revealed a larger than forecast surplus (EUR33.3bn) but some weakening in portfolio and direct investment inflows in Aug. We think broader financial flow trends remain bullish EURUSD, however, and look for spot to reach 1.20 through year-end”.

“EURUSD tested the 1.1860 area a number of times over the past 24 hours but the level held, prompting some liquidation of long positions ahead of the weekend. Intraday price action looks a little soft for the EUR but there are tentative signs of a base developing around the 1.1800/05 area. Broader range looks to be 1.1675/1.1875 for now”.