The EUR/USD pair has steadied around the 1.16 level through late week trade. Though the world’s most popular currency pair is set to snap a five-week losing streak, economists at Scotiabank see EUR/USD diving as low as 1.11.

Limited euro upside potential

“Economic data have reflected softness in the industrial sector, the energy crunch persists and key ECB policy makers have suggested that policy accommodation will remain in place for some time. We continue to favour fading modest EUR gains.”

“Gains have alleviated short-term bearish pressure on spot but longer-term (daily, weekly) trend studies remain firmly negative for the EUR; we expect limited EUR upside potential as a result.” 

“Minor, short-term gains are a selling opportunity; we continue to target the low 1.14s in the short run for EUR/USD and feel the 1.11 is reachable in the next few months.”