Euro advances as US Dollar declines ahead of Fed policy decision
The Euro has gained traction as the US Dollar weakens, with markets anticipating a dovish Federal Reserve decision. Current sentiment is bearish on the USD and bullish on the EUR, which appears to be reflected in the recent price movements. This dynamic could lead to significant volatility, particularly if the Fed surprises with a hawkish stance, thus creating potential intraday reversals.
Where it sits in our coverage
Our consensus EUR/USD target is currently at 1.1419, with a median forecast across firms suggesting a range from 1.1200 to 1.2000 by March 2026. Goldman stands at the higher end of the range with a target of 1.1800, while BofA represents a more conservative outlook at 1.1240 for December 2026.
How firms align
Several firms align with a bullish view on the EUR, notably Commerzbank, which has set a target of 1.1900 for March 2026, and Deutsche Bank with a target of 1.1800. This is consistent with the headline's perspective regarding the EUR's strength as it faces a backdrop of USD weakness.
What the data shows
Recent forecast revisions indicate an upward trend in targets for EUR/USD, particularly from BofA, which recently lifted its March target to 1.1700, and Deutsche Bank, which projects a higher trajectory of 1.2000 for mid-2026. For further insights, see our [research/eurusd-ecb-rate-path](research/eurusd-ecb-rate-path).
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01EUR/USD at 1.1419 shows bullish momentum; consensus suggests targets shifting higher.
- 02Watch for potential reversals if Fed guidance indicates hawkish shift.
- 03Key resistance ahead at 1.1500; sustained breaks may lead to further gains.
Market implications
Next, traders should focus on the Fed's upcoming policy decision, as a deviation from dovish expectations could trigger quick market reactions. The consensus EUR/USD target of 1.1700 reflects a more bullish outlook, suggesting further upside potential if the ECB maintains its current stance.
Risks to this view
Invalidation of this bullish outlook could occur if the Fed adopts a more aggressive tightening stance, prompting a stronger USD and potentially reversing the EUR's gains. A shift in sentiment from markets could materialize around key economic data releases or Fed communications.
Sentiment by currency
USD EUR+JPY~GBP~Composite USD score: -0.45
Sources & References
How we cover this story
Other coverage on this pair
Euro: Softer Fed signals may lift EUR against US Dollar – Commerzbank
Fed pivot signals reduce real rate differentials, creating technical support for EUR/USD above recent lows.
Euro edges higher against US Dollar, focus is on Fed's policy
Euro: Softer Fed signals may lift EUR against US Dollar - Commerzbank
Dovish Fed pivot narrows rate differential, reducing near-term carry advantage that has underpinned USD strength.