EUR/USD: Lagarde's dovish tilt weighs on Euro – ING
Lagarde's dovish stance has shifted market expectations regarding future ECB policy, suggesting that a rate-cut cycle may commence sooner than previously anticipated. This development is proving detrimental to the euro, pushing EUR/USD lower as the market reassesses the carry trade's attractiveness in the current environment. With spot currently at 1.1446, traders are likely reevaluating their positions ahead of upcoming economic indicators and monetary policy decisions.
Where it sits in our coverage
Our consensus EUR/USD target stands at 1.1700 (median across 13 firms), with Morgan Stanley at the upper bound (1.2000) and Stanchart at the lower end (1.1400). ING’s perspective aligns more closely with the bearish sentiment we see in the current market dynamics.
How firms align
Several firms are echoing the dovish outlook for the euro, including UBS with a target of 1.1600 for March 2026. Conversely, firms like RBC and CIBC are projecting higher targets for the same period, indicating a divergence in expectations. For further details, see our internal coverage for each firm's position at /research/eurusd-ecb-rate-path.
What the data shows
Recent forecast revisions indicate a downward tug on euro expectations, with BofA revising its March 2026 target to 1.1700 and more bearish outlooks from firms like Danske Bank. Refer to /research/eurusd-ecb-rate-path-2026-09-28 for deeper analysis on these shifts.
How firms align with this view
Key takeaways
- 01EUR/USD sees pressure with Lagarde's dovish tilt; spot currently at 1.1446.
- 02Traders may adjust positions as ECB policy outlook becomes increasingly bearish.
- 03Key upcoming data points could further influence market sentiment.
- 04Watch for March consensus targets aligning closer to current spot levels.
Market implications
Next, watch for economic data releases that may impact ECB’s rate outlook, particularly any signs of inflation or growth. Our consensus target of 1.1700 could come into play if the sentiment shifts positively for the euro.
Risks to this view
A reversal could materialize if economic data outperforms expectations, prompting a reassessment of the ECB's dovish stance. Markets will be closely monitoring any signals from Lagarde or other ECB officials that suggest a more hawkish pivot.
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: EUR/USD bearish bias converging on support – Societe Generale
EUR/USD approaching technical support levels with established bearish momentum; traders should monitor break-below scenarios for acceleration targets.
Euro approaches yearly lows at 1.1324 against an unstoppable US Dollar
EUR/USD breaking toward yearly lows signals sustained USD strength; monitor if 1.13 becomes technical support or capitulation trigger.
EUR/USD continues to decline: Too many risks
EUR/USD weakness attributed to elevated risk concerns supports USD safe-haven positioning; monitor whether risk-off intensifies or macro divergence between Fed/ECB tightening cycles sustains the move.