EUR/USD: French risk premium weighs on Euro – ING
The EUR/USD pair is currently pressured by increased French political uncertainty, which analysts believe is contributing to a wider risk premium on the Euro. ING highlights that this uncertainty is exacerbating tail risks in the eurozone, thereby limiting potential ECB rate cuts in the near term. This backdrop creates a supportive environment for USD, which has gained favor among investors amid these euro-related concerns. As such, our outlook remains cautious on EUR/USD given the prevailing bearish sentiment towards the Euro.
Where it sits in our coverage
Our consensus EUR/USD target sits at 1.1700 (median across firms), with firms like SocGen and Nomura aligning with the upper bound at 1.2000. In contrast, Lloyds remains more conservative with a lower estimate of 1.1200 for December 2026.
How firms align
ING's perspective on the heightened French risk premium aligns with our general bearish sentiment on the Euro. Firms such as Stanchart and HSBC also project targets around 1.1700 for March 2026, while Barclays is slightly more optimistic offering a target of 1.1900. You can see more on their positions on our internal reports for each firm.
What the data shows
Recent forecast revisions indicate that BofA has adjusted their EUR target to 1.1700 for March 2026, while others like RBC and CIBC remain bullish with targets between 1.1600 and 1.2200. For a deeper analysis, refer to our insights on the evolving ECB rate path and the divergence in expectations highlighted in /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 at 1.1446 reflects ongoing Euro weakness due to French political risk.
- 02Traders should watch for movements towards the March 2026 consensus target of 1.1700.
- 03A break below 1.1400 could signal further downside for the Euro against USD.
Market implications
Next week, market participants should focus on any developments from France that could influence the Euro further. If the Euro breaches the 1.1400 level, it could expedite the move toward our consensus target of 1.1700. Additionally, any remarks from the ECB regarding policy adjustments will also be pivotal.
Risks to this view
An improvement in the political landscape in France or unexpected dovish signals from the ECB could shift sentiment, potentially supporting the Euro and invalidating our bearish outlook. Any news indicating stability or positive economic indicators from the Eurozone would also pose a risk to current projections.
Sentiment by currency
USD+EUR JPY~GBP~Composite USD score: +0.35
Sources & References
How we cover this story
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