Euro: Downside risks for EUR against US Dollar – Rabobank
Rabobank's recent assessment underscores significant structural downside risks for the euro against the U.S. dollar. With the current spot at 1.1384, it suggests that EUR/USD long positions may require reevaluation, particularly given the prevailing bullish sentiment surrounding the USD. This has major implications for investors, as continued dollar strength could pressure EUR downwards from current levels, which are already lower than several firm median targets.
Where it sits in our coverage
Our consensus EUR/USD target is currently at 1.1700 (median across 11 firms), with Morgan Stanley on the higher end at 1.2000 and Lloyds at the lower end, targeting 1.1200 by December 2026. Rabobank's perspective resonates with those targeting the downside, positioning itself amidst a context of cautious sentiment on the euro's strength.
How firms align
Several firms reflect a bullish stance on EUR/USD, including SocGen and RBC, both targeting 1.1700 for March 2026. Meanwhile, firms like Danske Bank and TMGM are significantly lower in outlook, with targets of 1.1200 and 1.1447 respectively, highlighting diverging strategies that contrast with Rabobank's bearish narrative on the EUR. For a detailed analysis, see /research/eurusd-ecb-rate-path-2026-09-23.
What the data shows
Recent revisions show BofA lowering its EUR target to 1.1200, signaling growing caution, while ANZ also adjusted its forecast down. This shift in sentiment points to a hesitance among analysts and aligns with Rabobank's concerns over persistent USD strength. For further insights, refer to /research/eurusd-ecb-rate-path.
How firms align with this view
Contrary positioning
Key takeaways
- 01Rabobank identifies structural risks to EUR/USD amid USD strength.
- 02FX traders might consider reassessing long EUR positions based on this dynamic.
- 03Key risk includes further USD bullish trends pushing EUR down toward 1.1200.
Market implications
Watch for upcoming economic data from the U.S. which could further strengthen the dollar. The consensus target of 1.1700 may come under pressure if recent bearish sentiments materialize into market action. Traders should keep an eye on levels around 1.1300 for potential shifts.
Risks to this view
A shift in the monetary policy focus from the ECB towards a more aggressive tightening could invalidate the bearish outlook on the euro. Additionally, unforeseen strength in eurozone economic indicators could counter USD dominance, shifting sentiment in favor of the EUR.
Sentiment by currency
USD+EUR JPY~GBP~Composite USD score: +0.65
Firms mentioned
Sources & References
How we cover this story
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