Euro comes under pressure against US Dollar after mixed US PCE data
The Euro is currently facing downward pressure against the US Dollar following the release of mixed Personal Consumption Expenditures (PCE) data, which complicates the Federal Reserve's outlook on future rate cuts. This development contributes to a wider rate differential, favoring the USD and bolstering carry trades. The market's response indicates uncertainty about EU economic stability, particularly given the mixed signals emanating from the US economy. The prevailing sentiment suggests a bearish bias towards the Euro, in line with market expectations.
Where it sits in our coverage
Our consensus EUR/USD target stands at 1.1700 (median across 11 firms), with firms such as Morgan Stanley and UBS projecting at the higher end (1.2000), while Lloyds remains more bearish at 1.1331. This reflects a significant spread in expectations for the euro's performance against the dollar.
How firms align
Morgan Stanley and UBS support a bullish outlook for the Euro, anticipating it to reach 1.2000 by March 2026. In contrast, Lloyds' more pessimistic forecast at 1.1331 indicates a divergence within the market, underscoring varying perspectives on Eurozone resilience amid US rate expectations, as indicated in our internal reports.
What the data shows
Recent forecasts suggest revisions have been mostly upward, with firms like ING increasing their March 2026 EUR target to 1.1700. Additionally, thorough analysis published recently underscores the widening divergence between current spot levels at 1.1446 and the consensus, as seen in our research archives such as /research/eurusd-ecb-rate-path-2026-08-24.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01EUR/USD now at 1.1446 faces pressure after mixed US PCE data, undermining Euro bullishness.
- 02Focus on rate differentials; a widening gap favors USD positioning over EUR.
- 03Watch for movement around 1.1500 for potential trading signals; stay alert for shifts in Fed policy.
- 04Market sentiment suggests continued EUR weakness unless supported by stronger EU data.
Market implications
Traders should monitor EUR/USD levels closely, particularly the 1.1500 mark, as it may signal a reversal point. The next FOMC meeting on monetary policy could further clarify trends, with our consensus target at 1.1700 becoming pivotal in shaping trading strategies.
Risks to this view
A reversal in sentiment could occur if upcoming Eurozone data surpasses expectations, or if the Fed indicates a more dovish stance than currently anticipated. Such developments could trigger a shift in the rate differential favoring the Euro.
Sentiment by currency
USD~EUR JPY~GBP~Composite USD score: +0.30
Sources & References
How we cover this story
Other coverage on this pair
Euro: ECB tightening outlook offers support against US Dollar - BNY
ECB tightening cycle expectations support EUR/USD mean reversion from recent lows; rate differential narrows USD carry advantage.
EUR/USD outlook: Consolidates above key supports ahead of US inflation data
Euro: Schnabel's upbeat tone supports against US Dollar – ING
ECB Schnabel's hawkish messaging reinforces market expectations of elevated rates, supporting EUR/USD near-term bid.
Euro: Holds near 1.1670 against US Dollar as rate moves offset - Danske Bank
Bank desks on this topic
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Cross-firm research
EUR/USD Consensus at 1.17 vs Spot 1.1675: How Wide Is the Gap?
EUR/USD spot sits just 0.22% below the 30-firm Dec-26 consensus of 1.17, yet a 0.14 dispersion range signals deep disagreement on the path.
EUR/USD Consensus Check: Spot at 1.1663, Median Target 1.17 — Week of August 24, 2026
EUR/USD spot sits at 1.1663, just 0.32% below the 30-firm median Dec-26 target of 1.17, masking a 0.14 range of dispersion across the panel.
EUR/USD Consensus Check: Spot at 1.1677, Week of August 23, 2026
EUR/USD spot sits within 0.06% of the 30-firm Dec-26 consensus median of 1.1684, masking a 0.14 range between Citi's 1.10 floor and Nordea's 1.24 ceiling.