Scotiabank Sees EUR/USD Bullish Run Toward 1.20 as Key Target
Scotiabank’s FX research team identifies a developing bullish trend in EUR/USD with the 1.20 psychological barrier as the next major target. Using a multi-timeframe technical framework—combining moving averages, MACD, volume profile, institutional flow data and market-structure analysis—the bank notes the pair has broken above the 200-day moving average and formed higher highs and higher lows. Key technical levels: resistance at 1.1950 and 1.2000, support at 1.1850 and 1.1780 (200-day MA confluence). Volume and institutional buying support the breakout thesis. Fundamentals cited include a relatively hawkish ECB versus a moderating US economy, narrowing rate-differential expectations, improved Eurozone GDP revisions, energy cost stabilization, and a persistent current-account surplus. Scotiabank warns of risks: sudden central bank policy shifts, geopolitical shocks, liquidity thinness and option-driven volatility around the 1.20 pivot. Traders are advised to watch price action, volume, institutional flows and use disciplined sizing and stops. This analysis provides actionable levels and a structured framework for institutions and active traders positioning for a potential sustained euro appreciation against the dollar.
Neutral
Scotiabank’s analysis is technically bullish for EUR/USD, highlighting breakout signals (200-day MA breach, higher highs/lows), institutional buying, and a cluster of technical targets around 1.20. Fundamentals cited—ECB relative hawkishness and moderating US growth—support euro strength and validate the technical case. However, the designation of the 1.20 level as a psychological pivot introduces elevated risk: it historically triggers heavy volume, option hedging, false breakouts and rapid reversals. Short-term impact: increased volatility and buy-side interest as traders test resistance at 1.1950–1.2000; viable short-term strategies include breakout entries with tight confirmations or fade-on-false-break setups using stops near the listed supports. Long-term impact: if ECB-Fed divergence persists and institutional flows continue, a sustained uptrend toward and above 1.20 is plausible, supporting carry and momentum trades. Conversely, a Fed repricing, sudden macro shock, or liquidity squeeze could quickly reverse gains. Given the balanced mix of technical conviction and clear risk catalysts, the overall market implication is neutral—bullish evidence exists but is offset by high-probability disruption points around the 1.20 pivot.