EUR/USD plummeted from its high
The EUR/USD exchange rate has sharply declined following robust U.S. employment data, marking the strongest single-day performance for the dollar since the September FOMC meeting. The addition of 165K jobs and a drop in the unemployment rate to 4.1% have bolstered expectations of a prolonged period of elevated interest rates from the Federal Reserve. This has created downward pressure on the euro, suggesting a growing divergence in monetary policy between the Fed and the European Central Bank, which still lags in its tightening cycle. Market participants are now recalibrating their forecasts to reflect this shift, which could lead to additional volatility in the euro as the market adjusts to the higher-for-longer narrative for U.S. rates.
Where it sits in our coverage
Our consensus target for EUR/USD currently stands at 1.1425 for December 2026 (median across firms), with RBC at the high end (1.2000) and HSBC at the lower end (1.1000). This broad range highlights the divided outlook in the market, especially as European economic indicators remain under scrutiny.
How firms align
Firms such as RBC and CIBC reflect more bullish views on the euro, projecting 1.2000 and 1.2200 respectively for December 2026, contrasting sharply with the current bearish sentiment fueled by strong U.S. data. On the other hand, HSBC has adopted a more cautious stance, pegging its December target at 1.1000, which aligns with the evolving narrative following the latest jobs report.
What the data shows
Recent forecast revisions indicate a mix of bullish and bearish sentiments, with Scotiabank raising its March target to 1.1734 and Rabobank to 1.1759. In contrast, UBS has maintained a higher target of 1.2000 for March 2026, suggesting some firms are still betting on a stronger euro despite present headwinds. This divergence is further documented in our latest insights, such as /research/eurusd-ecb-rate-path-2026-11-08.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01EUR/USD declines to 1.1373 following strong U.S. job data and rising rate expectations.
- 02Expect continued pressure on the euro as funds position for higher U.S. rates.
- 03Surge in U.S. jobs raises the prospect of a more aggressive Fed, targeting 1.10–1.20 range for EUR/USD.
- 04Divergence in forecasts signals potential market volatility ahead.
Market implications
As market sentiment shifts, traders should watch for a test of key support levels around 1.1300. Upcoming U.S. economic releases and potential ECB comments could also shape EUR/USD movements going into December. Our consensus number at 1.1425 will be crucial for gauging market sentiment going forward.
Risks to this view
A reversal in this bearish sentiment could occur if upcoming inflation data from the U.S. shows signs of moderation, prompting traders to reassess Fed rate hike expectations. Additionally, any significant positive surprises from Eurozone economic indicators could bolster the euro, invalidating the current bearish outlook.
Sentiment by currency
USD+EUR JPY~GBP~Composite USD score: +0.75
Sources & References
How we cover this story
Other coverage on this pair
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