FX Daily: Looking for stabilisation
At a Glance
The desk interprets current market dynamics as a moment of stabilization for the euro, anticipating a potential rebound against a strong dollar. Per the full note, this calm in risk sentiment could allow EUR/USD to maintain levels above 1.130. In light of expected US data, particularly the core PCE, the path forward suggests a bearish USD potential, with the market pricing in a quasi-dovish Fed stance for December. Recent consensus reflects a broad range for EUR/USD targets, indicating a divided outlook among leading firms.
Key Takeaways
Full Analysis
What the desk is arguing
The desk believes the euro is positioned for stabilization against the dollar due to recent reductions in risk sentiment. Per the full note, if sentiment continues to improve, we can expect fundamental data and Fedspeak to drive currency movements.
Today's releases, particularly personal income and core PCE figures, are critical. The desk anticipates core PCE could print at 0.2% MoM, slightly below expectations, reinforcing the notion that aggressive Fed hawkishness might already be priced into the market.
Our baseline view circumscribes the EUR/USD from breaching below 1.130, suggesting that a sustained decline in the dollar may be forthcoming if these data points align favorably for the euro.
Where it sits in our coverage
Currently, the consensus target for EUR/USD is 1.1700, with a range from 1.1200 to 1.2000. Specific targets from notable firms include: - citi: Dec-26 target at 1.1200 - deutschebank: Dec-26 target at 1.2500 - ubs: Dec-26 target at 1.2000 With our view aligning closely with the upper end of market expectations, the desk is optimistic but remains cautious.
How other firms see it
A significant number of firms, including goldman and mufg, express bullish views on the euro, anticipating targets around 1.1800 to 1.2600. Conversely, citi holds a more conservative outlook, eyeing an upper target of only 1.1300 for the same period.
For related currency movements, keep an eye on risk sentiment indicators and the dollar index as both will impact EUR/USD volatility directly, particularly in response to upcoming economic data releases.
Market Implications
Watch for EUR/USD to hold above 1.130, especially if today's core PCE comes in at 0.2% or lower. A breakthrough in the euro's momentum could shift targeting higher towards consensus levels around 1.1700.
EUR/USD — All Desk Targets
| Firm | Stance | YE 2026 |
|---|---|---|
UOB | Bullish | 1.1800 |
ING | Neutral | 1.1700 |
Rabobank | Bullish | 1.1800 |
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Articles FX Daily: Looking for stabilisation 07:32 FX Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Calmer markets are allowing several currencies to take a breather against the strong dollar. If sentiment keeps stabilising from here, data and Fedsp
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The desk’s outlook suggests dampened enthusiasm for the dollar amid expectations that the Federal Reserve may adopt a more lenient approach to temporary inflation pressures, limiting the currency's upward trajectory. As communicated in the recent commentary by ing, this perspective lays the groundwork for a strengthening EUR/USD later in the year, particularly as the Fed appraises its policy stance. Current indications point to a stable EUR/USD at 1.1434, which is significantly below the consensus target of 1.1750 for December 2026, underscoring potential upside for the euro.
FX Daily: EUR/USD starting to look cheap
The desk sees EUR/USD as entering a buying opportunity as recent models suggest it is starting to appear undervalued. Per the full note from the bank's FX Daily, the prevailing summer trading conditions post-CPI have subdued FX volatility, keeping EUR/USD largely stable. While expectations for further Federal Reserve tightening seem overstated, the desk remains moderately bullish, anticipating a weaker dollar amid shifting Fedspeak dynamics. Traders should keep an eye on upcoming data releases as potential catalysts to validate this stance.