Euro: Downside risks persist against US Dollar - Societe Generale
Following the Federal Reserve's recent decision to maintain interest rates between 3.75%-4.00%, Societe Generale's analysis indicates lingering downside risks for the Euro against the Dollar. With EUR/USD trading near the lower end of its range, market sentiment leans towards a bearish outlook on the Euro, suggesting that the interest rate differential will remain a key driver for this pair. This reinforces our view that, in the current landscape, the Euro's vulnerability could lead it to lower levels.
Where it sits in our coverage
Our consensus EUR/USD target currently sits at 1.1500, which is notably lower than the median target of 1.1700 for March 2026 across 12 firms. The spread ranges from 1.1200 (Wells Fargo) to 1.2000 (Commerzbank). Societe Generale's recent view aligns closely with the consensus, both projecting a target of 1.1700 for March 2026, indicating a shared bearish sentiment towards the Euro's movement against the Dollar.
How firms align
Several firms, such as Investec and ABN AMRO, reflect more cautious positions with targets around 1.1455 and 1.1284 respectively, which emphasizes a more bearish outlook compared to the overall consensus. Conversely, RBC and Commerzbank maintain optimism with higher targets of 1.1600 and 1.1900, showcasing a divergence in expectations within the market. These positions can be further explored in our internal reports on each firm's latest target assessments.
What the data shows
Recent forecast revisions from firms like Standard Chartered and MUFG suggest a slight downward adjustment with targets now at 1.1400 for March 2026, further reinforcing the bearish trend for the Euro. For further insights on the current state of EUR/USD, refer to our article titled /research/eurusd-ecb-rate-path-2026-10-29.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01EUR/USD at 1.1253 facing bearish sentiment driven by Fed's hold on rates.
- 02Focus on rate differentials as primary driver for Euro's weakness.
- 03Upcoming ECB decision on October 29 could impact EUR sentiment significantly.
Market implications
Going forward, traders should monitor the EUR/USD level at 1.1200 as a potential support point, especially in the context of the upcoming ECB rate decision. The consensus target of 1.1500 could be tested if market sentiment continues to shift against the Euro.
Risks to this view
A reversal in this bearish view could occur if the ECB surprises the market with a more hawkish stance or an unexpected shift in economic data points supporting the Euro. Any indication of a more aggressive tightening path from the ECB could quickly alter perceptions and stabilize the Euro.
Sentiment by currency
USD+EUR JPY~GBP~Composite USD score: +0.65
Firms mentioned
Sources & References
How we cover this story
Other coverage on this pair
EUR/USD Price Forecast: Holds gains to near 1.1200, while staying below key technical resistance
ECB hawkish pause supports EUR near 1.1190; watch for breakout above key resistance for directional conviction.
Euro: ECB guidance could keep range intact against US Dollar – DBS
ECB's likely hold with December hike signal maintains current EUR/USD positioning; no material shift in rate differential or forward guidance expected.
EUR/USD remains under pressure as the Fed turns more active
Fed hawkishness sustains USD demand; euro weakness into fifth weekly decline signals conviction in USD outperformance despite moderating pace.