EUR/USD has failed to regain 1.13 and is set to retain a soft undertone into the European Central Bank (ECB) meeting. Economists at Scotiabank expect the euro to dip under 1.12 and forecast the world’s most popular currency pair at 1.08 by end-2022.

EUR/USD to retest the 1.12 level

“Next week’s ECB meeting is expected to deliver details on the bank’s plans after the expiry of the PEPP in March, but the bank has already prepared markets for an expansion of the APP. Overall, it will maintain a highly accommodative stance that will weigh on the EUR in the quarters ahead as the Fed begins its hiking cycle and we now see the currency closing 2022 at 1.08.”

“The balance of today’s US CPI release and next week’s Fed and ECB meetings could easily see the EUR drop under 1.12 in the days ahead.”