EUR/USD Elliott Wave: New yearly low opens the door for further downside [Video]
The EUR/USD has breached its yearly low, triggering a potentially bearish Elliott Wave pattern that suggests further downside is on the horizon. This development is significant as it reflects a broader weakness in the euro against a strong dollar, particularly against the backdrop of diverging monetary policy expectations. Investors will likely focus on how this technical setup unfolds in the coming days, resulting in heightened volatility.
Where it sits in our coverage
Our consensus EUR/USD target sits at 1.1700 (median across several firms), with CIBC at the upper bound (1.2200) and Lloyds at the lower end (1.1200). The current spot at 1.1446 indicates a substantial divergence from consensus, which has prompted amendments among participant forecasts.
How firms align
Several firms remain cautious in light of the recent price action, with Barclays projecting 1.1700 for March 2026, aligning with the bearish sentiment indicated in the headline. Meanwhile, RBC stands slightly more optimistic at 1.1600 for the same horizon, suggesting varying degrees of confidence among market participants regarding euro strength going forward.
What the data shows
Recent revisions include BofA adjusting its March 2026 target to 1.1700 but with a note of caution at 1.1500 for December 2026, indicating hesitancy about the euro's recovery potential. This shift highlights broader market concerns over euro weakness, as detailed in our research on the ECB's rate path (/research/eurusd-ecb-rate-path-2026-09-30).
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01EUR/USD has hit a new yearly low of 1.1446.
- 02Bearish outlook strengthens following Elliott Wave analysis.
- 03Watch for potential support levels around 1.1400.
- 04Market reactions to upcoming ECB policy will be critical.
Market implications
Traders should monitor the EUR/USD closely, specifically looking for confirmation below the 1.1400 level, which could trigger further selling pressure. Upcoming ECB decisions could also serve as a catalyst for euro volatility, impacting our consensus target of 1.1700.
Risks to this view
Any shift in sentiment from the ECB toward a more hawkish stance could reverse the current bearish outlook for the euro. Additionally, significant economic data releases from the Eurozone that surprise to the upside may also undermine the prevailing bearish narrative.
Sentiment by currency
USD+EUR JPY~GBP~Composite USD score: +0.65
Sources & References
How we cover this story
Other coverage on this pair
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