The Euro (EUR) has nudged higher to near 1.10 this morning despite signs that even relative hawks on the ECB governing council may not oppose a rate cut late this month, Scotiabank’s Chief FX Strategist Shaun Osborne notes.

EUR to retest 1.10 breakdown point

“While ECB Governor Holzmann commented yesterday that the fight against inflation was not over, Nagel said earlier today that he is open to discussing a cut this month. Swaps are pricing in 24bps of easing risk for the 17th. A dovish-leaning ECB should help curb the EUR rebound around the 1.10 zone.”

“Spot has rebounded to retest last week’s technical breakdown point at 1.10—the low between the August and September tests of 1.12 and the effective double top trigger point. This should be firm resistance if the pattern is to deliver on its technical—measured move—promise of driving EUR/USD back to the low 1.08s in the next few weeks.”