Euro Slides as ECB Expectations Reprice

The Euro has been experiencing downward pressure due to softer expectations from the European Central Bank (ECB), according to Scotiabank strategists Shaun Osborne and Eric Theoret. As a result, the EUR/USD pair is drifting towards the mid-1.13s, levels last seen in May 2025.

The broader US Dollar tone dominates the market, while yield spreads show weakening support as markets fade post-September ECB hikes. This has led to a softening of fundamental support on the back of revised rate expectations since last Thursday's policy decision.

The messaging from the ECB remains hawkish, with policymakers guiding for a hike in September. However, the market seems to be starting to fade some of the tightening priced in beyond the next meeting.