EUR/USD Holds Steady as ECB Rate Hike Expectations Rise

The EUR/USD exchange rate is holding steady in North American trade after touching a one-week high. According to Scotiabank strategists Shaun Osborne and Eric Theoret, fundamentals remain supportive due to firmer European Central Bank (ECB) rate expectations on higher oil prices.

Markets fully price a 25 bp hike this Thursday and another in December, which the analysts expect will be hawkish. They anticipate limited resistance until the 1.1680/1.1700 area, with support below 1.1580.

The ECB's pricing underpins the tentative Euro recovery. The EUR is entering Wednesday's NA session unchanged vs. the USD following an overnight push to a fresh one-week high. Fundamentals remain supportive as ECB rate expectations firm in response to the latest rally in oil prices, reflecting the ECB's greater sensitivity to energy price risks in the current environment.