EUR/USD at highest level since may: What comes next?
The EUR/USD has surged to its highest levels since May, reaching 1.1446 amid a bullish sentiment around the euro. This upward movement raises questions about its sustainability, particularly given the potential for divergence in monetary policy from the ECB and the Fed. Traders will closely monitor upcoming economic data and central bank signals to confirm if this trend can hold, especially as the market continues to weigh the implications of interest rate differentials.
Where it sits in our coverage
Our consensus EUR/USD target sits at 1.1700 (median across firms), with firms like RBC and Morgan Stanley targeting as high as 1.2000 by March 2026, compounding potential for upside. In contrast, other firms such as TMG and Lloyds maintain more conservative projections around 1.1450 and 1.1331, respectively. This spread suggests varying degrees of confidence in the euro's strength moving forward.
How firms align
Aligned with the bullish outlook, Investec and Nomura forecast targets of 1.1700 and 1.1700 respectively for March 2026, reflecting a positive consensus around the euro's strengthening. On the contrary, firms like Danske Bank predict a decline to 1.1100 by December 2026, suggesting potential pushback against the current bullish narrative. Their insights can be found in our /research/eurusd-ecb-rate-path-2026-08-23 report.
What the data shows
Recent revisions indicate a general trend towards higher expectations for the euro, with firms like Rabobank adjusting their March target to 1.1759, signaling optimism. Our earlier research has also highlighted a growing divergence in ECB and Fed monetary policy approaches as a significant factor affecting EUR/USD movements, as seen in our /research/eurusd-ecb-rate-path-2026-08-21 publication.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01EUR/USD rises to 1.1446, highest since May.
- 02Watch for ECB/Fed policy divergence; key in sustaining strength.
- 03Upcoming ECB meeting could be a catalyst for further movement.
Market implications
Traders should remain vigilant for significant resistance levels near 1.1500, with a focus on U.S. economic data releases and the ECB's next policy meeting for potential catalysts. Our consensus target of 1.1700 may be tested if bullish momentum sustains.
Risks to this view
A reversal could occur if Fed signals a more aggressive tightening stance or if Eurozone economic data disappoints, weakening the euro. Any surprises in upcoming inflation reports could also prompt a reassessment of risk positioning.
Sentiment by currency
USD EUR+JPY~GBP~Composite USD score: -0.45
Sources & References
How we cover this story
Other coverage on this pair
Euro: Recovery against US Dollar supported by data – BBH
Recent Eurozone data momentum is underpinning EUR/USD recovery from lows, reducing near-term USD safe-haven bid.
Euro: Further gains eyed toward 1.1800 against US Dollar – UOB
EUR/USD technical target of 1.1800 suggests directional bias toward euro strength; traders should monitor resistance levels and macro catalysts driving momentum.
EUR/USD Price Forecast: Corrects further as US Dollar extends recovery
USD strength momentum extends EUR/USD correction, likely testing technical support levels watched by systematic traders and hedge funds.