EUR/USD edges under 1.12 after the Federal Reserve hawkish message. Economists at Scotiabank note that the world’s most popular currency pair could slide below 1.11 towards the 1.10 level.

Escalating tensions with Russia will remain a headwind

“Wednesday’s decision by the Fed that probably tees up more rate hikes than markets are expecting reinforces our expectation that the EUR will aim for a test of 1.10 soon.”

“Escalating tensions with Russia will remain a headwind as will the near-term uncertainty in Italian politics.” 

“The EUR now faces very limited support markers until 1.11 (psychological) and then firmer support at 1.10.”