Euro: Fair value drop points to downside against US Dollar – ING
ING's recent reassessment of the euro's fair value signals a bearish outlook against the US dollar, which is particularly relevant given the current spot at 1.1446. The recalibration suggests that investors should anticipate potential downside movements, especially if the EUR/USD breaks below key support levels around 1.05–1.08. The context of fading growth differentials and diverging monetary policies could further exacerbate this weakness, making it a crucial watch-point for traders.
Where it sits in our coverage
Our consensus EUR/USD target currently stands at 1.1684, with forecasts widely ranging from a low of 1.1100 to a high of 1.2300 across various firms. This suggests differing outlooks on the pair, particularly with Morgan Stanley's bullish stance at 1.2000 contrasting with Danske Bank's more cautious view targeting 1.1100.
How firms align
ING's downward revision is echoed by notable firms like SocGen, which align closely with the bearish sentiment, forecasting 1.1700 for March 2026. Conversely, RBC maintains a more optimistic view, projecting the pair to reach 1.2000 by the same date, as seen in our reports on their respective targets.
What the data shows
Recent forecast revisions have indicated a tightening in the range of target numbers, with firms like BNP Paribas adjusting to 1.1600 for March 2026. Insights from our earlier research echo these shifts, particularly in our report titled /research/eurusd-ecb-rate-path-2026-09-19, which highlights the consistent underperformance of the euro relative to market expectations.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01ING signals bearish EUR/USD outlook following fair value reassessment.
- 02Monitor critical pivot zones at 1.05–1.08 for potential downside break.
- 031.1684 consensus target may be challenged if current trends persist.
- 04Key shifts in forecasts indicate a cautious sentiment among European currency analysts.
Market implications
Next, traders should focus on the potential breakdown of the 1.05 level, which could trigger further selling pressure on the euro. Additionally, upcoming ECB meetings and economic indicators will be critical in shaping market sentiment, especially as they relate to the existing consensus of 1.1684.
Risks to this view
This bearish view could be invalidated if the euro stages a significant recovery above recent highs, particularly if economic data points to stronger-than-expected growth or if political stability returns to bolster confidence in the eurozone. A shift in the ECB's monetary policy stance could also alter the current narrative.
Sentiment by currency
USD+EUR JPY~GBP~Composite USD score: +0.65
Sources & References
How we cover this story
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