EUR/USD Weekly Forecast: Hawkish Fed likely to push the US Dollar even higher
The EUR/USD pair is trading under significant pressure, having touched 1.1043 last week, a level not seen since April 2025. This decline underscores the strength of the US Dollar, bolstered by hawkish rhetoric from the Federal Reserve amid ongoing inflationary concerns. With the EUR struggling for momentum, expectations from market participants lean towards further USD appreciation unless the ECB introduces fresh stimulus measures to counteract this dynamic. The backdrop suggests a heightened risk for EUR/USD to test the lower boundaries observed in previous years.
Where it sits in our coverage
Our consensus EUR/USD target currently stands at 1.1400 (median across 12 firms), suggesting a moderate outlook relative to recent price action. The range spans from 1.1000 by Investec at the lower end to 1.2200 by CIBC at the upper end, indicating considerable divergence among firms about the future trajectory of the pair.
How firms align
Aligned with the bearish sentiment expressed by the headlined forecasts, firms such as RBC (targeting 1.1600 for Mar26) and Nordea (1.1884) are positioned more optimistically, albeit within a context of cautious vigilance. This contrasts with BoFA's lower stance of 1.1700 for the same tenor, which suggests skepticism towards EUR appreciation in the near term. Their perspectives can be explored further in our /research/eurusd-ecb-rate-path reports.
What the data shows
Recent forecast revisions from firms like Mizuho (Mar26 at 1.1300) and Rabobank (Mar26 at 1.1759) reinforce the notion that while there are pockets of optimism, a cautious stance remains. Insights from our previous analyses highlight that the median target has consistently hovered at 1.1400, indicating potential market recalibrations as economic indicators evolve.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01EUR/USD at 1.1043 signals renewed bearish momentum.
- 02Expect pressure on EUR unless ECB acts decisively.
- 03Recent Fed comments bolster USD; watch for developments at 1.10.
- 04Market divided: with some anticipating recovery, consensus remains cautious.
Market implications
Going forward, the 1.10 handle will be crucial to monitor; a sustained breach could signal further downside potential for EUR. Upcoming Fed announcements and ECB meetings will be pivotal in shaping market sentiment, with our consensus reflecting a cautious outlook at 1.1400.
Risks to this view
Any signs of easing inflation or dovish shifts from the Fed could trigger a USD reversal, challenging the current bearish stance on the EUR. Additionally, unexpected stimulus from the ECB would likely alter the market's perception and lead to a rapid recalibration of EUR/USD targets.
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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