Price action over the past 48 hours or so has looked more constructive for the EUR on hopes for progress in conflict resolution. Although EUR/USD has climbed above 1.10, economists at Scotiabank expect the pair to trade below the 1.12 level over the coming months.

Measures against high energy prices to give a minor boost to the euro

“The EU’s announcement of its plan to reduce its energy dependence on imports from Russia was received with little fanfare in markets yesterday. More details on EU joint issuance and plans for additional defense spending and measures against high energy prices may surface over the coming days and give the EUR a minor lift.” 

“Continued steps towards détente should see the EUR climb above 1.10 but we think even a resolution to the immediate conflict will still see high energy prices and a dovish ECB that keep the EUR to below 1.12 over the coming months.”