Euro: Range-bound risks with upside caps against US Dollar – Rabobank
The euro remains under pressure against the US dollar, as highlighted by Rabobank's assessment of range-bound risks with potential upside limitations. Currently trading at 1.1500, the EUR/USD pair is trading significantly below the consensus forecast of 1.2000 by December 2026. Market uncertainty, particularly regarding upcoming Federal Reserve decisions, could play a pivotal role in shaping this currency dynamic in the near term.
Where it sits in our coverage
Our consensus EUR/USD target sits at 1.2000 (median across firms), with Goldman at the upper bound (1.2500) and Citi at the lower (1.1300). Rabobank's latest analysis aligns with the cautious sentiment observed among firms as the euro grapples with broader market challenges.
How firms align
Several firms reflect a cautious outlook towards the euro, with JPMorgan and MUFG estimating targets of 1.2000 for March 2026, which align more closely with Rabobank's view. Meanwhile, Goldman Sachs holds a more bullish stance, projecting a higher target of 1.2500 in the same timeframe, suggesting divergence in sentiment across the market.
What the data shows
The current figures indicate that the EUR/USD is trading approximately 4% below the December 2026 consensus of 1.2000, as highlighted in our recent reports. This divergence may indicate broader market skepticism towards the euro's strength in the face of evolving economic data and Fed policy shifts, as discussed in /research/eurusd-divergence-consensus-vs-spot-may-2026.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01EUR/USD sits at 1.1500, below the December 2026 consensus of 1.2000.
- 02Cautious sentiment prevails among firms regarding euro's prospects.
- 03Look for Fed policy signals as a catalyst for potential EUR/USD moves.
- 04Strong support seen around 1.1300; resistance may appear near 1.1700.
Market implications
Investors should monitor the 1.1700 resistance level closely, as it may dictate near-term euro movements if breached. Additionally, upcoming Fed meetings represent critical calendar events that could influence the pair's direction and widen the existing range.
Risks to this view
A hawkish shift in Federal Reserve policy, signaling a more aggressive rate hike path, could markedly strengthen the USD and invalidate current projections for the euro. In particular, if job data or inflation metrics exceed expectations, a stronger dollar could put downward pressure on the euro.
Sentiment by currency
USD+EUR-JPY~GBP~Composite USD score: +0.35
Sources & References
How we cover this story
Other coverage on this pair
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FX Daily: Iran fall-out coming home to roost in EUR/USD
https://think.ing.com/articles/fx-daily-iran-fall-out-coming-home-to-roost-in-eur-usd/
FX Daily: Iran fall-out coming home to roost in EUR/USD
https://think.ing.com/articles/fx-daily-iran-fall-out-coming-home-to-roost-in-eur-usd/
FX Daily: Iran fall-out coming home to roost in EUR/USD
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