EUR/USD Weekly Forecast: EU inflation outpaces US price growth as ECB, Fed meetings loom
The EUR/USD is facing upward momentum as EU inflation metrics surpass those in the US, shifting expectations ahead of the impending ECB and Federal Reserve meetings. This divergence could prompt adjustments in positioning, particularly if market participants perceive a narrowing of the policy gap between the two central banks. With the EUR currently trading at 1.1446, the outlook appears bullish, supported by various firms revising their forecasts upward amid this inflationary backdrop.
Where it sits in our coverage
Our consensus EUR/USD target sits at 1.1700 (median across 12 firms), with CIBC at the upper bound (1.1866) and Lloyds at the lower (1.1331). The bullish sentiment highlighted in the article aligns with our expectations that higher EU inflation could bolster the euro's strength against the dollar.
How firms align
Specific firms such as SocGen and Nomura have set their EUR/USD targets at 1.1700 for March 2026, aligning with the bullish outlook presented in the forecast. On the other hand, Citi's more conservative target of 1.1300 suggests a contrary view that may limit exposure to further euro appreciation. See our reports for more insight: /research/eurusd-ecb-rate-path-2026-09-30 and /research/eurusd-ecb-rate-path.
What the data shows
Recent forecast revisions from UOB and ING, pricing EUR/USD at 1.1700, illustrate the sentiment shift among analysts. This is notwithstanding Citi's reduction to 1.1300, indicating some caution in the market as inflation dynamics evolve. For further context, review /research/eurusd-ecb-rate-path-2026-09-29.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01Market sentiment turns bullish for EUR/USD, currently at 1.1446.
- 02Traders should monitor ECB signals for inflation and interest trajectory.
- 03A break above 1.17 could extend EUR gains, aligned with inflation trends.
- 04Revisions indicate rising consensus among firms for a stronger euro.
Market implications
Next week's ECB meeting will be critical; any signals of policy tightening in response to EU inflation could propel the EUR/USD towards our consensus target of 1.1700. Additionally, watch out for US inflation numbers, as these will frame expectations for the Fed's policy.
Risks to this view
If US inflation rebounds sharply, it could sway the Fed's outlook towards a more hawkish stance, putting downward pressure on EUR/USD. Furthermore, any unexpected dovish signals from the ECB might also challenge the current bullish sentiment.
Sentiment by currency
USD EUR+JPY~GBP~Composite USD score: -0.35
Sources & References
How we cover this story
Other coverage on this pair
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