UBS kept its EUR/USD forecasts at 1.23 for end-2025 and 1.18 for 2026, citing Fed cuts - investingLive
At a Glance
UBS maintains its EUR/USD forecast, projecting levels of 1.23 for the end of 2025 and 1.18 for 2026, attributing these figures to anticipated Federal Reserve interest rate cuts. This positioning seems grounded in a belief that easing US monetary policy will bolster the euro against the dollar over the medium term, despite the current spot rate being significantly lower.
Key Takeaways
Full Analysis
What the desk is arguing
Our analysis supports UBS's forward-looking view that the EUR/USD pair has the potential to rise in conjunction with Fed easing. Although near-term expectations reflect a consensus closer to 1.18 for March 2026, there is room for upside, especially if macroeconomic indicators favor the eurozone or if US monetary policy becomes more accommodative than currently anticipated.
However, it remains critical to weigh the market dynamics that could thwart this outlook. Current consensus incorporates a median forecast of 1.22 for December 2026, implying traders are largely optimistic about the euro's medium-term strength relative to the dollar. This contrasts UBS's more conservative 2026 forecast of 1.18, suggesting a divergence in sentiment among market participants regarding the Fed's trajectory and its impact on the dollar's value against the euro.
Market Implications
If UBS's predictions materialize, we could witness a slow adjustment in EUR/USD as the market reacts to unfolding economic data and Fed policy moves. This could intensify volatility in currency pairs as traders recalibrate expectations based on incoming macroeconomic indicators, particularly regarding US economic health and growth prospects.
EUR/USD — All Desk Targets
| Firm | Stance | YE 2026 |
|---|---|---|
UOB | Bearish | 1.1140 |
ABN AMRO | Bullish | 1.1500 |
Bank of America | Bullish | 1.1500 |
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4 itemsUBS kept its EUR/USD forecasts at 1.23 for end-2025 and 1.18 for 2026, citing Fed cuts - investingLive
UBS's decision to maintain its EUR/USD forecasts at 1.23 for end-2025 and 1.18 for 2026 places them in a bullish stance on the euro, largely driven by anticipated Federal Reserve rate cuts. This perspective aligns with a broader sentiment among certain firms, many of which project gradual appreciation of the euro against the dollar in the coming years. However, UBS's projections are notably higher than what the consensus suggests, indicating a potential divergence in views on the euro's strength.
UBS maintains EUR/USD forecast at 1.23 for end-2025 amid Fed rate cut expectations - Investing.com Canada
The desk maintains a bullish outlook on the EUR/USD, aligning with UBS's forecast of 1.23 by the end of 2025, driven by anticipated Federal Reserve rate cuts. Per the full note [source], the expectation of a dovish pivot from the Fed is a key factor supporting this view. The desk highlights that a weaker dollar, stemming from these rate cuts, could bolster the euro's value against the USD. With no high-impact events on the calendar in the coming month, the focus remains on macroeconomic indicators and central bank communications that could influence market sentiment.
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