Euro: Downside risks start to shrink against US Dollar – ING
Recent commentary from ING highlights a shift in sentiment regarding the euro's downside risks against the US dollar, suggesting a potential technical floor is forming for EUR/USD. This view is substantiated by current market dynamics, which show signs of mean-reversion bids emerging in the 1.08–1.09 support zone. With the euro currently at 1.1446 and sentiment turning bullish, observers should pay close attention to whether this sentiment can translate into further upside momentum.
Where it sits in our coverage
Our consensus EUR/USD target currently sits at 1.1684 (median across 12 firms), with Morgan Stanley at the upper bound (1.2300) and Danske Bank at the lower (1.1100). ING's observations align with the prevailing bullish sentiment, indicating a trend that requires close monitoring in the near term.
How firms align
Aligned with ING's view, SocGen targets EUR/USD at 1.1700 for March 2026 while RBC sets their target at 1.1600. Conversely, Danske Bank takes a more cautious stance with a target of 1.1866, suggesting a broader divergence in outlooks among forecasting firms. More details can be found in our reports on this forecast.
What the data shows
In the past two weeks, BNP Paribas updated its EUR/USD target for March 2026 to 1.1600 and December 2026 to 1.2100, indicating a slight upward shift. This reinforces the notion of increasing bullish sentiment, as detailed in our research on the ECB rate path.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01EUR/USD faces shrinking downside risks, testing support near 1.08–1.09.
- 02Technical floor in EUR/USD could attract mean-reversion bids.
- 03Key bullish levels to watch include firm targets around 1.1700 and above.
Market implications
Traders should watch for momentum building off the 1.08–1.09 support zone, as this may provide a launchpad for pushing towards the consensus target of 1.1684. Additionally, market reactions to upcoming economic data releases will be crucial in determining the euro's trajectory.
Risks to this view
A significant catalyst for reversal would be a stronger-than-expected labor report from the U.S. or hawkish signals from the Federal Reserve that could reinforce USD strength. Moreover, any adverse developments in the eurozone economic outlook could compound this risk.
Sentiment by currency
USD~EUR+JPY~GBP~Composite USD score: -0.35
Sources & References
How we cover this story
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