Euro: Support holds near 1.15 against US Dollar – Scotiabank

Market impact: mixed, with a near-term neutral-to-bearish bias for EUR/USD.

Scotiabank’s assessment suggests that EUR/USD has found temporary demand around the mid-to-lower 1.15s, but the broader technical structure remains vulnerable. The 1.15 area is the key downside pivot: a sustained break would undermine the recovery from July and could trigger momentum selling, particularly if the Federal Reserve strengthens the US dollar through a hawkish policy signal or higher US yields.

The medium-term backdrop is more supportive for the euro. Stable Germany–US yield spreads, hawkish ECB communication, and Scotiabank’s estimated fair value near 1.1625 imply that the pair is not clearly overvalued on fundamental measures. However, this support is conditional: if US rate expectations rise faster than European expectations, the yield-spread argument could deteriorate quickly.

Trading interpretation:

• Above 1.15: The pair may remain range-bound or attempt a recovery toward the 1.16 area and the cited 200-day moving average near 1.1633. This would represent stabilization rather than confirmation of a new bullish trend.
• Below 1.15: The technical damage would be more significant, likely increasing downside momentum and supporting broader dollar strength.
• Macro sensitivity: The immediate catalyst is the September 16, 2026 Fed decision and its effect on US yields, dollar positioning, and overall risk sentiment. The options market’s neutral positioning suggests limited pre-existing directional conviction, so a policy surprise could produce a sharper repricing.

The main risk to the bearish interpretation is that the Fed fails to reinforce dollar strength while ECB rhetoric and relative European yields remain firm. Conversely, a hawkish Fed outcome, widening US–German yield differentials, or a deterioration in risk appetite would increase the probability that 1.15 fails. Traders should monitor the Fed communication, US and German two-year yields, EUR/USD’s ability to hold 1.15, and whether rallies are rejected near 1.16–1.1633.