Euro Dives 0.5% vs USD Amid Risk Aversion and ECB Hawkishness

The Euro has weakened against the US Dollar by about 0.5% as risk aversion supports broad USD strength. Scotiabank strategists Shaun Osborne and Eric Theoret report that yield spreads imply a fair value near 1.1633, while data have been light ahead of Tuesday's ZEW survey.

Osborne and Theoret highlight major support around 1.15 and limited near-term resistance before 1.1650, citing European Central Bank (ECB) rhetoric turning more hawkish on energy-driven inflation. ECB Executive Board member Schnabel has characterized the increase as 'quite concerning'. Sentiment is dominating, with yield spreads remaining relatively well-supported.