Euro: Fed focus keeps pressure against US Dollar – Commerzbank
The recent slip of EUR/USD to its lowest level since May 2025 is notable, as Fed expectations shape the market dynamics. Commerzbank's viewpoint reflects the prevailing sentiment, with emphasis on how the upcoming Fed decision may overshadow recent Eurozone metrics and the ECB Bank Lending Survey. As the market awaits clarity on the Fed's stance, the pressure on the Euro persists, suggesting a complicated landscape ahead for traders.
Where it sits in our coverage
Our consensus EUR/USD target is 1.1700 (median across 12 firms), with CIBC at the upper bound (1.2200) and BofA at the lower (1.1200). Commerzbank's forecast aligns with the upper range, projecting 1.1900 by March 2026, marking a bullish outlook that contrasts with the broader sentiment reflected in our consensus.
How firms align
Commerzbank's suggested target of 1.1900 for March 2026 reflects an optimistic stance compared to the pain evident in the market dynamics, aligning closely with CIBC at 1.1866 and RBC at 1.1600. Meanwhile, BofA's position of 1.1200 suggests a cautious approach, indicating a divergence in expectations among the firms.
What the data shows
Forecast revisions over the last two weeks have shown a mix of adjustments, with Standard Chartered lowering its target to 1.1400 and Nordea raising it to 1.1884. This ebb and flow in expectations signals uncertainty in market sentiment ahead of the Fed's impending decision, as highlighted in our recent research /research/eurusd-ecb-rate-path.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01EUR/USD trades at 1.1253, signaling ongoing downward pressure.
- 02Caution prevails as traders await key Fed signals.
- 03March consensus forecast sits at 1.1700, indicating a complex outlook ahead.
Market implications
Investors should closely monitor the Fed's upcoming decision, scheduled for October 28, as it could propel EUR/USD toward the consensus target of 1.1700. Additionally, any movements toward the 1.1200 or 1.1400 levels may signal shifts in trader positioning.
Risks to this view
Potential shifts in this view could arise from stronger-than-expected U.S. economic data or an unexpected dovish tilt from the Fed. An aggressive Fed tightening path could further depress the Euro against the dollar.
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
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