EUR/USD Price Forecast: Slides to four-week low as hawkish Fed bets accelerate
The EUR/USD has dipped to a four-week low as markets increasingly price in hawkish sentiments from the Federal Reserve, indicating robust demand for the USD. This downturn highlights a pivotal moment as investor sentiment shifts, particularly in anticipation of heightened Fed communications ahead. A focus on rate differentials suggests sustained pressures on the Euro, especially as European economic signals remain mixed.
Where it sits in our coverage
Our current consensus EUR/USD target stands at 1.1700 (median across firms), while individual forecasts display a range from 1.1200 (Danske Bank) to 1.2000 (Morgan Stanley). The headline's hawkish interpretation aligns closely with sentiments expressed by RBC and Scotiabank, who anticipate rates around 1.1700 for March 2026.
How firms align
Firms such as RBC and Scotiabank are positioned around the 1.1700 target, aligning with the current sentiment of increased USD demand. Conversely, Danske Bank's bearish outlook at 1.1200 presents a stark contrast to the prevailing hawkish sentiment seen from other firms. More details can be found in our reports on RBC and Scotiabank's positions.
What the data shows
Recent forecast revisions from Scotiabank and Mizuho project target levels of 1.1734 and 1.1800, respectively, demonstrating an upward tilt in expectations despite current lows. Our research from September 10 furthers this dialogue, suggesting that the ECB's signals will significantly influence the Euro's path against the USD.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01EUR/USD at 1.1446 reflects hawkish Fed pricing, diverging from previous Euro strength.
- 02Watch for Fed tone in upcoming communications; critical for directional clarity.
- 03Bearish pressure on EUR may persist with March 26 targets around 1.1700.
Market implications
Traders should monitor the EUR/USD as it approaches critical support around 1.1400, which if broken, could prompt further USD strength. The consensus target of 1.1700 remains significant as we look ahead to the next FOMC communications.
Risks to this view
A softer-than-expected signal from the Fed could reverse the current sentiment, revitalizing the Euro and pushing EUR/USD back towards its recent highs. Additionally, any positive economic data from the Eurozone might renew bullish momentum for the Euro.
Sentiment by currency
USD+EUR JPY~GBP~Composite USD score: +0.70
Sources & References
How we cover this story
Other coverage on this pair
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