EUR/USD Stable Amid Hawkish ECB Hike Expectations

According to Scotiabank strategists Shaun Osborne and Eric Theoret, the EUR/USD is flat in North American trade after reaching a one-week high. This surge can be attributed to the European Central Bank's (ECB) rate expectations firming up due to rising oil prices.

The market fully prices a 25-basis-point hike this Thursday, and another 25-bps increase is expected for December. Osborne and Theoret anticipate a hawkish hike and see limited resistance until the 1.1680/1.1700 area. Support levels are below 1.1580.

The ECB's pricing underpins the Euro's tentative recovery. Oil prices have increased, reflecting the ECB's greater sensitivity to energy price risks in the current environment. The strategists expect a hawkish hike from President Lagarde, who will unveil the latest forecast and signal ongoing concern about upside risk.