EUR/USD: Political risks tilt against Euro – Commerzbank
The EUR/USD outlook is becoming increasingly pressured as political uncertainties in the Eurozone, particularly surrounding the upcoming French elections and rising debt concerns, overshadow the receding political risks in the US. Commerzbank notes that the divided Senate is likely to constrain any aggressive monetary easing from the US, which is put into stark contrast against the mounting challenges facing the Euro. This divergence is significant for traders as it implies that the Dollar's strength may be reinforced in the near term, potentially pushing EUR/USD lower.
Where it sits in our coverage
Our consensus EUR/USD target sits at 1.1400 (median across 11 firms), with CIBC at the upper bound (1.2200) and ABN AMRO at the lower (1.1284). Commerzbank's forecast aligns with the higher end of our spectrum, projecting a target of 1.1900 for March 2026, which highlights their bearish outlook on the Euro amidst expanding political risks.
How firms align
Commerzbank's stance, which reflects concerns over Euro area risk factors, aligns with targets from RBC and Nordea, both proposing levels around 1.1700 for March 2026. In contrast, CIBC and HSBC reflect a more optimistic view of the Euro with targets around 1.2200 and 1.1000 respectively, highlighting a split in sentiment within our coverage.
What the data shows
Recent forecasts have also shown a range of adjustments, with Mizuho revising down to 1.1300 for March 2026 in light of current Eurozone instability. Our ongoing research, such as in /research/eurusd-ecb-rate-path-2026-11-13, underscores these trends, indicating a significant divergence between current spot rates and consensus expectations.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01Political risk dynamics shift, favoring the Dollar over the Euro.
- 02Watch for volatility around the French elections as major catalyst.
- 03Current spot at 1.1373 is below consensus, signaling potential upside for USD.
- 04Expect further revisions as geopolitical tensions evolve in the Eurozone.
Market implications
Moving forward, traders should be alert to the 1.1400 consensus level, which could serve as a pivotal point for potential movements in EUR/USD. Economic data releases from the Eurozone and developments in the French election could influence positioning ahead of March.
Risks to this view
Any signs of stability in Eurozone governance, or unexpectedly favorable election results in France, could shift the sentiment and invalid the current bearish stance on the Euro, prompting a reassessment of EUR/USD forecasts.
Sentiment by currency
USD+EUR JPY~GBP~Composite USD score: +0.65
Firms mentioned
Sources & References
How we cover this story
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