Euro: EUR/USD bearish bias converging on support – Societe Generale
Societe Generale's latest analysis indicates a bearish outlook for the Euro against the US Dollar, particularly as EUR/USD approaches key technical support levels. The desk noted bearish momentum, suggesting that a break below these levels could trigger further declines. This viewpoint resonates with the current market sentiment, which favors a stronger USD amid ongoing forecasts reflecting the need for increased vigilance around Euro vulnerabilities. As market participants consider their strategies, tracking support breakdowns will be crucial.
Where it sits in our coverage
Our consensus EUR/USD target is 1.1700 (median across 11 firms), with Morgan Stanley projecting the highest (1.2000) and Stanchart at the lower bound (1.1400). Societe Generale's target aligns with the upper range, forecasting 1.1700 for March 2026.
How firms align
Several firms are closely aligned with Societe Generale's bearish stance, including RBC, which also projects 1.1600, and Investec, forecasting 1.1455 for March 2026. In contrast, Danish Bank's outlook diverges with a projection of 1.1866 for the same period, suggesting a more bullish bias. See detailed targets in our internal reports on these firms.
What the data shows
Recent revisions show that Bank of America has revised its March target to 1.1700 while adjusting the December forecast to 1.1500. Additionally, our research '/research/eurusd-ecb-rate-path' highlights the ongoing divergence between current trading levels and market consensus, exemplifying the fragility of the Euro's outlook at current rates.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01EUR/USD shows bearish momentum as it nears key support at 1.1400.
- 02Watch for potential break-below scenarios; look for quick adjustments.
- 03Monitor market responses to ECB decisions around Eurozone inflation data.
- 04SocGen's bearish bias indicates heightened risks for EUR in the near term.
Market implications
As EUR/USD approaches critical support levels near 1.1400, traders should prepare for potential volatility, particularly ahead of ECB announcements. Our consensus sits at 1.1700, below which could accelerate declines and draw attention from participants across the spectrum.
Risks to this view
A reversal of this bearish outlook could occur if the Euro shows surprisingly strong economic data or if ECB signals a shift toward a more hawkish stance. Significant improvement in Eurozone economic indicators could reinvigorate bullish sentiment, challenging current forecasts.
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
Euro approaches yearly lows at 1.1324 against an unstoppable US Dollar
EUR/USD breaking toward yearly lows signals sustained USD strength; monitor if 1.13 becomes technical support or capitulation trigger.
EUR/USD continues to decline: Too many risks
EUR/USD weakness attributed to elevated risk concerns supports USD safe-haven positioning; monitor whether risk-off intensifies or macro divergence between Fed/ECB tightening cycles sustains the move.
EUR/USD: Lagarde's dovish tilt weighs on Euro – ING
Lagarde's dovish pivot signals ECB rate-cut cycle may begin sooner than priced, pressuring EUR/USD lower and reducing carry attractiveness.