Euro: Fed uncertainty limits gains against US Dollar – ING
Ongoing uncertainty surrounding the Federal Reserve's monetary policy continues to temper the euro's potential gains against the US dollar. As market participants weigh the implications of the Fed's next moves, the euro is struggling to leverage a broader dollar weakening. ING notes that this tension is keeping upside pressures on EUR/USD contained, as the exchange rate hovers around 1.1419. This dynamic is significant, as the EUR/USD pair is a critical indicator of broader market sentiment and capital flows.
Where it sits in our coverage
Our consensus EUR/USD target sits at 1.1550 (median across firms), with Commerzbank at the upper bound (1.1900) and TMG at the lower (1.1447). ING's current view is in line with this, targeting 1.1700 for March 2026, suggesting limited upside at present.
How firms align
Firms like Deutsche Bank and Morgan Stanley have more bullish targets of 1.1800 and 1.2000, respectively, over the same tenor, while BofA stands firmer at 1.1700, mirroring ING's stance. Contrastingly, TMG and Investec present more conservative forecasts with 1.1448 and 1.1455, reflecting a cautious outlook on the euro's strength against the dollar.
What the data shows
Recent forecast revisions reflect a slight uptick in anticipated euro strength, particularly from BofA, which recently revised its March target to 1.1700. The consensus reiterates the precarious positioning of the euro, as seen in our coverage from August 2, 2026, highlighting the divergence in expectations between consensus and spot rates (/research/eurusd-ecb-rate-path-2026-08-02).
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01EUR/USD currently trades at 1.1419 amid Fed uncertainty.
- 02Watch for signals on Fed's policy shifts impacting dollar sentiment.
- 03Catalysts include upcoming Fed meetings; resistance at 1.1500.
- 04Watch for potential volatility around data releases influencing USD direction.
Market implications
Next week’s Fed meeting will be crucial for euro traders, particularly if the decision sways market rates significantly. A breach of key support at 1.1400 could indicate a stronger dollar, while sustained pressure above 1.1500 could set the stage for upward revisions to our consensus target.
Risks to this view
A shift towards a more hawkish Fed stance would likely lead to increased dollar strength, invalidating current bullish sentiment on the euro. Additionally, unexpected economic data that surprises to the upside for the US could further pressure EUR/USD downwards.
Sentiment by currency
USD+EUR JPY~GBP~Composite USD score: +0.55
Sources & References
How we cover this story
Other coverage on this pair
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