EUR/USD Weekly Forecast: US rate hike back on the table, US Dollar up
The recent headlines highlight a renewed market sentiment around potential US rate hikes, contributing to increased expectations for dollar strength against the euro. The current EUR/USD spot at 1.1446 reflects this outlook, as traders brace for key US economic data that could signal further Fed tightening. This environment suggests a narrowing of the EUR/USD trading range, primarily favoring dollar appreciation in the short term.
Where it sits in our coverage
Our consensus EUR/USD target stands at 1.1700 (median across firms), with UBS at the upper end (1.2000) and Lloyds at the lower bound (1.1331). The perspective from fxstreet aligns more closely with the lower targets among the firms, suggesting a cautious outlook amid the potential Fed tightening narrative.
How firms align
Morgan Stanley notably holds a bullish view on EUR/USD with targets of 1.2000 for March 26, contrasting with firms like Danske Bank, which anticipates a more bearish scenario with a target of 1.1100 for December 26. Both perspectives can be further explored in our internal reports such as /reports/morganstanley and /reports/danskebank.
What the data shows
Recent revisions have shown Morgan Stanley and ING adjusting their March 26 targets upward, reinforcing a more optimistic stance at 1.2000 and 1.1700, respectively. Our analysis in /research/eurusd-ecb-rate-path-2026-08-28 indicates a consensus check with a median target still hovering around 1.17, indicating a slight divergence with spot prices.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01Current EUR/USD spot at 1.1446 amidst renewed rate hike speculation.
- 02A constrained trading range favors dollar strength over euro in the near term.
- 03Watch for US data releases which could further impact rate expectations and pricing.
- 04Market sentiment rapidly shifts with data releases; position accordingly.
Market implications
Moving forward, investors should closely monitor key US economic data releases, notably employment and inflation reports, as they could decisively sway the EUR/USD direction from the current spot level. Our consensus target of 1.1700 remains a critical level to watch in relation to rate hike probabilities.
Risks to this view
A shift in ECB policy or unexpectedly strong eurozone economic data could invalidate the prevailing dollar bullish outlook, potentially pushing EUR/USD above current spot levels significantly. Key data on eurozone growth could serve as a catalyst for this shift.
Sentiment by currency
USD+EUR JPY~GBP~Composite USD score: +0.65
Sources & References
How we cover this story
Other coverage on this pair
Euro: Range phase caps recent advance against US Dollar – UOB
Gold rejected at 4,700, EUR/USD corrects, GBP/USD stays bullish [Video]
EUR/USD correction signals renewed USD strength; GBP resilience suggests differential positioning between pairs despite common risk-off backdrop.
Euro: ECB hike view supports range against US Dollar - Danske Bank
ECB rate hike expectations provide structural support for EUR/USD range, reducing downside vulnerability to USD strength.