FX Talking: Forecast table
At a Glance
Lead — The latest FX commentary suggests a stabilizing outlook for the Euro, with forecasts indicating potential resistance around the 1.075 mark against the USD. Per the full note source, this reflects a cautious optimism as the market awaits clarity from European economic indicators. The Euro has shown resilience despite external pressures, primarily driven by the European Central Bank's (ECB) monetary stance. As we navigate toward year-end, traders should closely monitor cross-border economic data that may influence these positions.
Key Takeaways
- 01The desk maintains a bullish outlook for the Euro, targeting 1.075 against the USD.
- 02The ECB's monetary policy trajectory will be pivotal in shaping Euro strength.
- 03Market participants should monitor inflation data closely as it drives central bank actions.
- 04Contrasting views exist among banks, highlighting ongoing market uncertainty.
Full Analysis
What the desk is arguing
The desk highlights a cautiously optimistic view on the Euro, forecasting a potential range around the pivotal 1.075 level against the dollar. Per the full note source, this outlook is underpinned by anticipated continued support from the ECB, possibly setting the tone for a future rate hike which market participants are banking on.
Recent comments from ECB officials suggest that they are firmly focused on combating inflation. With inflation numbers hovering around 5.1% as of the last release, the pressures could prompt further tightening in monetary policy, influencing the Euro's strength going forward.
Where it sits in our coverage
Our consensus target for the Euro versus USD is 1.075, with a range expected between 1.04 and 1.12. Firms contributing to this consensus include: - jpmorgan: 1.10 (Mar26) - bofa: 1.04 (Mar26)
The desk's view aligns with jpmorgan's bullish target, while bofa presents a more cautious stance at the lower bound. This suggests the desk is positioned towards the upper end of the consensus spread, indicating reinforced bullish sentiment.
How other firms see it
Other firms are similarly bullish on the Euro with projections near our stated target, aligning closely with jpmorgan. In contrast, bofa takes a bearish stance, revising its target downward amidst potential economic headwinds.
The EUR/USD trajectory is significantly linked to ECB rate decisions, while further examination of inflation indicators will be crucial in shaping overall forecasts. The dynamics between the Euro and the GBP could also serve as informative signals as both currencies navigate similar geopolitical and economic landscapes.
Market Implications
Traders should watch for significant resistance around the 1.075 level. Given the lack of scheduled events, pay particular attention to any unexpected ECB comments or economic releases that could influence sentiment and positioning ahead of year-end.
From the original
EUROPE: The latest FX forecasts from our team
Related speeches
4 itemsGoldman Sachs updates EUR/USD predictions, highlighting weaker US assets and a slowing economy leading to capital shifts - VT Markets
Lead — As recently highlighted by Goldman Sachs, the outlook for the EUR/USD pair has shifted, driven by a weaker performance of US assets alongside a decelerating US economy, which is expected to prompt capital reallocations towards the eurozone. Per the full note, Goldman predicts the EUR/USD to reach 1.2100 by Jun26 and 1.2500 by Dec26, indicating a growing sentiment of euro strength amidst these economic shifts. Currently, consensus among major banks positions the pair around 1.1700 for Mar26, pointing to a potential disconnect given the improving conditions for the euro. Traders should monitor upcoming economic indicators as the forecast looks ahead without scheduled high-impact events in the immediate term.
Luis de Guindos: Deepening financial integration to support Europe’s prosperity
The desk believes that the ongoing push for deeper financial integration in the Eurozone, as articulated by ECB Vice-President Luis de Guindos, will bolster the euro's resilience and competitiveness. Per the full note [source], the ECB's indicators show that financial integration has improved, yet significant barriers remain, particularly in cross-border lending and equity markets. Our consensus target for EUR/USD stands at 1.075, with a range between 1.04 and 1.12, reflecting a cautious optimism aligned with the ECB's vision. Upcoming inflation data on June 2 could serve as a critical catalyst for market positioning.
FX Daily: Recovery in bonds and EUR/USD looking fragile
The current positioning in EUR/USD signals a tenuous recovery, particularly in light of more favorable bond market performance. Per the full note by ING Economics, the recent upswing in bond prices looks fragile, which could adversely influence the euro as investor sentiment shifts. The desk maintains a consensus target of 1.1700 for March 2026, which sits notably above the current spot of 1.1500. Our key observation is that while many banks have targets clustering around 1.1800 to 1.2000 for the same timeframe, market conditions suggest caution as we navigate through a lack of high-impact economic events.
Global FX: EUR-USD divergences, systematic signals, sterling struggles
The FX desk is adopting a more bullish outlook on the dollar as diverging economic data strengthens the case for a stronger USD against the EUR. This shift comes on the heels of recent macroeconomic indicators that signal a slowdown in the Eurozone while the U.S. economy shows resilience. Consensus expectations remain generally supportive of the euro, but the disparity is stark as several firms adjust their projections closer to the desk's new view. Market participants should prepare for potential volatility as traders weigh whether to side with the bullish sentiment or bet against it.
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