EUR/USD: Measured ECB tightening to support Euro – TD Securities
As the ECB signals a measured tightening cycle, TD Securities highlights the potential for this to underpin the euro against the dollar. The current spot at 1.1446 is seen as below market expectations, with the consensus target at 1.1700 suggesting a bullish outlook on the euro. This realignment indicates a shifting sentiment towards the euro as the market begins to price in the impact of upcoming ECB rate hikes, which could challenge the near-term strength of the USD.
Where it sits in our coverage
Our consensus EUR/USD target sits at 1.1700 (median across 10 firms), with CIBC at the upper bound (1.2200) and Lloyds at the lower (1.1200). TD Securities' view aligns closely with our consensus, suggesting that the measured tightening from the ECB supports a stronger euro going forward.
How firms align
Several firms are expressing bullish targets for the euro, notably SocGen at 1.1700 for March 26 and RBC at 1.1600 for the same tenor. This supports the headline's bullish sentiment on EUR, contrasting with more conservative stances from firms like Lloyds. For further details, see our reports on these individual firms such as /reports/socgen and /reports/rbc.
What the data shows
Recent forecast revisions reflect a generally optimistic outlook for the euro, with BofA adjusting its March target to 1.1700, albeit with some divergence in its December target now at 1.1500 compared to previous expectations. For a deeper analysis, refer to /research/eurusd-ecb-rate-path-2026-09-30 which discusses the current consensus vs. spot divergence.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01ECB tightening expected to firm up EUR/USD, pushing targets higher.
- 02Market sentiment gradually shifting in favor of the euro.
- 03Watch for decisive ECB communications as a potential catalyst at 1.1700.
Market implications
Investors should monitor ECB meeting dates and economic data releases that could influence interest rate expectations. The consensus target of 1.1700 remains a significant level that, if breached, could solidify bullish sentiment on the euro.
Risks to this view
An unexpected shift in the ECB's hawkish stance or weak Eurozone economic data could reverse this outlook. Significant resistance for EUR/USD is found below the 1.1400 threshold, which, if breached, could undermine the current bullish projections.
Sentiment by currency
USD EUR+JPY~GBP~Composite USD score: -0.55
Sources & References
How we cover this story
Other coverage on this pair
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