EUR/USD Weekly Forecast: US Dollar in trouble as Warsh chickens out
The recent dynamics in the EUR/USD pair underscore a shift in sentiment towards the US dollar following dovish signals from Fed officials. The reference to Warsh's reluctance to adopt a hawkish stance emphasizes the growing doubts surrounding the dollar's robustness, particularly as the Eurozone positions itself for potential rate hikes. This backdrop allows for a favorable outlook on the euro, particularly as it approaches critical resistance levels stemming from the previous week.
Where it sits in our coverage
Our consensus target for EUR/USD is 1.1700 for March 2026, with predictions ranging from 1.1200 to as high as 1.2500 across various firms. This places our view solidly in the bullish camp, consistent with the more optimistic outlook expressed by all major players like Commerzbank and Deutsche Bank, who expect levels approaching 1.2000 and beyond.
How firms align
Commerzbank and Deutsche Bank are among the firms with the most optimistic targets at 1.1900 and 1.1800 for March, respectively. In contrast, BofA is more reserved, predicting 1.1700, aligning more closely with our consensus. This perspective suggests a divided view among analysts, with some anticipating further euro strength amid mounting USD weakness.
What the data shows
Recent target revisions reflect heightened optimism for the euro; particularly, ING's recent adjustment for March raised its forecast to 1.1700. The consensus movement shows an increasing belief that EUR/USD could push higher in the coming weeks, backed by our published insights highlighting diverging paths for monetary policies (/research/eurusd-ecb-rate-path-2026-07-31).
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01USD faces downward pressure as Fed's stance becomes more dovish.
- 02Expect EUR/USD to test resistance levels above 1.1500 in the near term.
- 03Key data releases next week may further influence the market's outlook.
- 04Continued bullish sentiment could drive prices toward 1.1800.
Market implications
Traders should watch for EUR/USD to maintain strength around the 1.1500 level, with eyes on upcoming economic data releases from both regions. The consensus target of 1.1700 underscores broader expectations for continued euro appreciation against the dollar next week.
Risks to this view
A potential shift in Fed policy towards a more hawkish tone could undermine the current bullish case for the euro, particularly if accompanied by stronger-than-expected economic indicators from the US. Any shifts in rate expectations would quickly invalidate the current outlook.
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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