Euro declines as US Dollar recovers recent losses amid hawkish Fed tone
The Euro has seen a downward correction as the US Dollar recovers following a hawkish tone from the Federal Reserve. This bullish stance on the USD could extend the recent EUR/USD decline, currently trading at 1.1446, raising concerns about the divergence in monetary policy between the Fed and the European Central Bank. Without clear guidance on ECB policy direction, the euro is poised for further softness, particularly if the Fed maintains its aggressive stance on interest rates.
Where it sits in our coverage
Our consensus EUR/USD target currently stands at 1.1684 (median across 12 firms), with RBC projecting the highest target at 1.2000 and standard chartered at the lower bound of 1.1400. Given the ongoing market dynamics, our estimates indicate a continued bias towards a weaker euro against the USD, unless ECB signals suggest a policy shift.
How firms align
RBC is one of the firms projecting value for EUR/USD at 1.1700 through June 2026, aligning with the generally bearish sentiment reflected in the market today. Conversely, Danske Bank holds a contrary view, aiming for a weaker 1.1200 by June 2026. For further insights, you can reference our updates on EUR/USD forecasts at /research/eurusd-ecb-rate-path-2026-09-21.
What the data shows
Recent revisions from Scotiabank indicate a March target of 1.1734, slightly higher than the current spot, suggesting a potential for short-term retracement, although longer-term forecasts diverge significantly with expectations of 1.1200 by December from firms like Danske Bank. More on this can be found in our piece at /research/eurusd-ecb-rate-path-2026-09-19.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01EUR/USD trading at 1.1446, reflecting market corrections amid dollar strength.
- 02Bearish sentiment likely continues unless ECB provides dovish clarity.
- 03Watch for ECB announcements as catalysts for potential euro recovery.
- 04Liquidity shifts could amplify volatility in this range.
Market implications
Traders should eye 1.1400 as a critical support level for EUR/USD; a break below could reinforce bearish trends. Upcoming ECB meeting dates will be crucial for positioning ahead of any policy announcements, particularly as they may align or diverge from Fed actions.
Risks to this view
An unexpected shift in ECB stance towards tightening could invalidate the current bearish outlook for EUR/USD, leading to a potential reversal in cross dynamics. Additionally, stronger-than-expected Eurozone economic data could challenge the dollar's recent gains.
Sentiment by currency
USD+EUR JPY~GBP~Composite USD score: +0.65
Sources & References
How we cover this story
Other coverage on this pair
EUR/USD: Catching the 220 pip move lower and hitting the 2R target
Technical breakdown in EUR/USD confirms downside momentum; watch for support hold near 1.05 to assess whether move has legs.
Euro: Fair value drop points to downside against US Dollar – ING
ING's fair value reassessment signals structural EUR/USD weakness; re-anchor portfolio hedges and monitor 1.05–1.08 pivot zones.
Euro: Downtrend eyes 1.1400 support against US Dollar – UOB
EUR/USD downtrend targeting 1.1400 suggests technical breakdown risk that could extend if US data remains supportive or ECB signals additional easing.