Euro: Gains capped against US Dollar by Fed story – ING
The euro's potential for upward movement against the U.S. dollar is currently subdued, primarily due to market expectations surrounding Federal Reserve policy changes. ING's recent commentary suggests that despite a slight rally, the euro faces significant resistance influenced by the Fed's narrative, which could deter further gains. This situation is particularly relevant as traders are closely monitoring upcoming economic indicators that could shift sentiment.
Where it sits in our coverage
Our consensus EUR/USD target currently stands at 1.1700 (median across 13 firms), with Citi at the lower end (1.1300) and Goldman at the higher limit (1.2000). This positions the consensus on the optimistic side compared to current spot levels, reflecting expectations of a rebound despite the constraints posed by the Fed's narrative.
How firms align
Goldman and JPMorgan are aligned with expectations of 1.1800 and 1.2000 for March 2026, respectively, indicating a bullish outlook that contrasts with the more cautious stance suggested by ING. Firms like BNP Paribas and Commerzbank recently revisited their targets upward, reinforcing a positive sentiment toward the euro. Their recent revisions suggest a belief that market conditions may improve, diverging from ING's more restrained perspective.
What the data shows
Recent forecast revisions show that several firms, including ING and Commerzbank, have updated their targets upward, with March 2026 targets now ranging from 1.1600 to 1.2000. This aligns with our published research indicating a divergence, as outlined in reports like /research/eurusd-divergence-consensus-vs-spot-may-2026, highlighting the euro currently trading below consensus expectations.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01Current EUR/USD spot at 1.1500 faces resistance from Fed-driven sentiment.
- 02Market players should watch for Fed commentary to gauge USD strength.
- 03A significant break above 1.1800 could instigate renewed bullish interest.
- 04Upcoming economic data releases could be pivotal for short-term positioning.
Market implications
Traders should monitor the 1.1700 level as a crucial pivot, with the next major calendar event being the Fed's upcoming policy announcement. Should the euro breach this level, it may open doors for additional gains per our consensus target of 1.1700.
Risks to this view
Validating a bearish outlook on the euro would require a stronger-than-expected Fed statement signaling prolonged monetary tightening. Additionally, a surprising uptick in U.S. economic data could further bolster the dollar's position.
Sentiment by currency
USD+EUR-JPY~GBP~Composite USD score: +0.65
Sources & References
How we cover this story
Other coverage on this pair
Euro: Limited downside against US Dollar with ECB hike message – MUFG
ECB's continued hike messaging supports EUR/USD floor around current levels; limited downside signals reduced momentum for USD longs.
EUR/USD Price Forecast: 20-day EMA remains key barrier as Iran uncertainty persists
Euro slips as Hormuz firefight revives US Dollar demand
Geopolitical risk in Persian Gulf elevates safe-haven demand, likely to support USD/JPY parity and cap EUR/USD downside until tensions clarify.
Euro: Rangebound against US Dollar despite ECB repricing – Societe Generale
Bank desks on this topic
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
EUR/USD was hit in March on expectations that the stagflationary shock from Iran would resonate more in Europe than the US. The inflationary effects have been plain for all to see, but this week's release of European PMIs warns that the stagnationary effect is just starting to la
Morgan Stanley: How Much Will FX Hedging Flows Boost EUR/USD? - eFXdata
Morgan Stanley: How Much Will FX Hedging Flows Boost EUR/USD? eFXdata
Cross-firm research
EUR/USD Trades 3.16% Below Dec-26 Consensus as 18 Firms Hold 1.20 Median
With spot at 1.1621 and the 18-firm median Dec-26 target at 1.20, EUR/USD sits 3.16% below consensus—a gap that demands explanation.
EUR/USD Trades 3.2% Below Dec-26 Consensus as Targets Cluster Near 1.20
Spot at 1.1612 sits 3.2% below the 18-firm median Dec-26 target of 1.20, exposing a consensus that remains structurally bullish EUR despite the pair's failure to close the gap.
EUR/USD Trades 4% Below Dec-26 Consensus: What the Gap Reveals
EUR/USD spot at 1.1711 sits 4.01% below the eight-firm median Dec-26 target of 1.22, exposing a structural tension between macro conviction and current tape.