Euro: Fed split supports EUR against US Dollar – Commerzbank
The recent Fed split regarding interest rate decisions has added a layer of complexity for the dollar, diminishing its yield support and providing a favorable short-term outlook for the euro. As sentiment shifts, the technical bias for EUR/USD seems increasingly bullish, with market positioning likely to reflect this momentum. Commerzbank highlights this divergence, underscoring the strength of the euro against a weakening dollar amidst uncertainty in Fed policy.
Where it sits in our coverage
Our current consensus for EUR/USD sits at 1.1525 (median across multiple firms), with a notable spread highlighting differing outlooks: Goldman at the upper end (1.2100) and TMG at the lower end (1.1448). This consensus is reflective of the cautious bullishness companies are showing towards the euro, particularly in light of the changing dynamics in US monetary policy.
How firms align
Commerzbank's targets (Mar26 1.1900, Jun26 1.2000) align well with the current sentiment, emphasizing an optimistic view on the euro against the dollar. Conversely, BofA, with a lower target of 1.1700 for March 2026, appears more conservative compared to peers such as Deutsche Bank and Morgan Stanley, who also express bullish sentiment for the euro.
What the data shows
Recent revisions from firms like HSBC and Rabobank have adjusted their targets, demonstrating an overall more positive outlook for the euro in March 2026, with HSBC recently revising their target to 1.1700. Our own reports, such as /research/eurusd-ecb-rate-path-2026-07-30, further emphasize the divergence between current spot levels and firm expectations, suggesting continued upward potential for the euro against the dollar.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01Fed dissent weakens dollar support, boosting EUR/USD outlook.
- 02Traders are eyeing levels above 1.1500 for potential moves.
- 03Risk catalysts include upcoming Fed meetings and ECB statements.
Market implications
Next, watch for any significant resistance at 1.1500 as the market digests Fed and ECB communications. Our consensus number at 1.1525 suggests that if the euro breaks above this level, further advances are likely to follow.
Risks to this view
If the Fed signals a more hawkish stance or the ECB conveys a wait-and-see approach, it could rapidly reverse the bullish outlook for the euro, pushing sentiment back towards the dollar.
Sentiment by currency
USD EUR+JPY~GBP~Composite USD score: -0.65
Firms mentioned
Sources & References
How we cover this story
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