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FX BANK FORECAST · COVERAGE
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Aggregated year-end forecasts, scenario shifts, and curated analyst notes from 36 institutional desks. No promotion.
FX BANK FORECAST · COVERAGE
Aggregated year-end forecasts, scenario shifts, and curated analyst notes from 36 institutional desks. No promotion.
At a Glance
The desk posits that recent cooler US economic data has diminished the likelihood of a Federal Reserve rate hike in September, leading to a weaker dollar and bolstered risk assets. Per the full note, this environment supports continued carry trades and long commodity positions, especially as expectations for Fed tightening have been scaled back significantly. Our consensus forecasts for the EUR/USD pair indicate a target of 1.1700 for March 2026, aligning with several firms' outlooks that reflect similar optimism. Notably, the upcoming release of the FOMC minutes from the July meeting could provide further insight but is unlikely to shift the current sentiment barring unexpected geopolitical developments.
Key Takeaways
Full Analysis
The desk frames the current narrative around the USD as one of weakness driven by a run of softer economic indicators that complicate the Fed's rate-hiking trajectory. Per the source commentary, the recent retail sales data has significantly lowered the probability of a September hike, with only 7 basis points priced in for that meeting. Additionally, expectations for tightening into next year have been reduced from 50 basis points to just 35 basis points, indicating a notable shift in market sentiment.
This dovish pivot is evidenced by the DXY exploring the lower end of its trading range (99.40-100.00), suggesting that the dollar could trade softer throughout the week. This positions risk assets favorably as traders focus on higher-yielding currencies and commodities, moving away from traditionally safe currencies like the JPY and CHF.
For the EUR/USD pair, our consensus target currently sits at 1.1700, with forecast ranges reflecting variability among firms: - Deutsche Bank: Mar26 1.1800, Jun26 1.2500 - Morgan Stanley: Mar26 1.2000, Jun26 1.2300 - Commerzbank: Mar26 1.1900, Jun26 1.2000
This outlook is generally in harmony with market sentiments reflected by other firms but leans toward the upper bounds of the consensus range, specifically with Rabobank and ING also aligning closely to expectations around 1.1700.
Firms like JPMorgan and Goldman Sachs are similarly predicting upward movement for the EUR/USD, whereas others, including UBS and Rabobank, suggest caution with lower targets around 1.1400. The contrasting views indicate a division about the dollar's immediate strength versus the potential of Eurozone recovery.
The expected trajectories of the GBP/USD and USD/JPY pairs should also be monitored closely, particularly as sentiment shifts focus towards US labor data and the implications for Fed policy. These pairs may exhibit spillover effects based on upcoming central bank commentary and economic prints.
Market Implications
Traders should watch for a potential move in the EUR/USD towards the consensus target of 1.1700 as the dollar remains under pressure. The release of the FOMC minutes on Wednesday could act as a catalyst for volatility, particularly if the language suggests a more hawkish stance than currently anticipated.
| Firm | Stance | YE 2026 |
|---|---|---|
Société Générale | Bearish | 1.1400 |
Scotiabank | Bearish | 1.1200 |
Commerzbank | Bullish | 1.2200 |
All 30 desk targets for EUR/USD
From the original
Articles FX Daily: Porridge cools for goldilocks Published 08:01 FX Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download A slightly cooler run of US data recently has cut the chances of a Fed hike in September. Lower short-dated US rates and a mildly weake
30 investment banks see EUR/USD at 1.1628 by Dec 2026
View the live EUR/USD forecastUOB |
ANZ |
TMGM |
Rabo |