Euro Range-Bound Against USD: Scotiabank Sees Limited Downside

The euro's downside is likely limited in the near term, according to Scotiabank analysts. The currency is expected to trade within a defined range against the US dollar.

The bank highlights that while the euro faces headwinds from divergent central bank policies, the scope for further depreciation appears constrained. Much of the negative news is already priced in, reducing the likelihood of a sustained breakdown below current levels.

The EUR/USD pair has been trading in a relatively narrow band around 1.05 and 1.08, reflecting a market waiting for fresh catalysts. Scotiabank notes that the euro's resilience is partly due to improved risk sentiment in Europe and stabilization in energy prices, which previously weighed on the single currency.