EUR/USD tests two-month low: What's driving the decline?
EUR/USD is currently testing a two-month low, reflecting ongoing dollar strength amid economic data suggesting resilience in the U.S. labor market. This decline below recent support levels highlights increasing pressures on the euro, as market participants reassess the outlook for European monetary policy. The current market sentiment is predominantly bearish for the euro and bullish for the dollar, emphasizing the diverging paths of the two economies at this juncture.
Where it sits in our coverage
Our consensus EUR/USD target sits at 1.1684 (median across 11 firms), with Morgan Stanley at the high end (1.2000) and Danske Bank at the low end (1.1100). fxstreet.com's view reflects increasing bearish sentiment for the euro, aligning with expectations of lower targets as it approaches the key support level.
How firms align
Morgan Stanley and RBC maintain bullish targets for EUR/USD at 1.2000 and 1.1700 respectively, while analysts like SocGen are more cautious with a target of 1.1700 as well. Meanwhile, Danske Bank's more conservative outlook at 1.1200 is indicative of a broader skepticism toward the euro, as seen in their target revisions in recent reports (/research/eurusd-ecb-rate-path-2026-09-23).
What the data shows
Recent revisions indicate a notable divergence as BNPP's forecasts for EUR have shifted lower, with targets now reflecting a bearish bias at 1.1600 for March 2026. Our earlier insights underscore the gap between current spot prices and consensus targets, suggesting a growing misalignment that may drive positioning strategies in the upcoming sessions.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01EUR/USD tests critical support near 1.1446 amid dollar strength.
- 02Bearish sentiment for the euro reflects shifting economic expectations.
- 03Watch for a potential breakdown below 1.14 to signal further dollar allocation.
Market implications
Next, traders should monitor the 1.08 level for EUR/USD, as a break below could trigger additional selling pressure. With the consensus target at 1.1684, maintaining attention on U.S. economic releases will be crucial for assessing further dollar strength.
Risks to this view
A swift change in Eurozone monetary policy or an unexpected improvement in euro economic indicators could challenge the current bearish sentiment. Key catalysts include upcoming ECB statements or favorable GDP data from the euro area.
Sentiment by currency
USD+EUR JPY~GBP~Composite USD score: +0.65
Sources & References
How we cover this story
Other coverage on this pair
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