Euro: Further downside favoured against US Dollar - ING
ING's analysis points to further downside potential for the Euro against the US Dollar, aligning with a broader market sentiment that currently favors the USD. This bearish outlook is reinforced by the lack of hawkish signals from the European Central Bank (ECB), which may lead to sustained institutional flows favoring the dollar. As the Euro trades at approximately 1.1446, the recent bearish sentiment raises questions about the sustainability of any short-term recoveries for EUR/USD if the ECB's positioning does not shift significantly.
Where it sits in our coverage
Our consensus EUR/USD target sits at 1.1700 (median across firms), with Morgan Stanley at the high end (1.2000) and Standard Chartered at the low (1.1400). ING's bearish call resonates with the lower range of forecasts, indicating a cautious approach towards the Euro's potential strength moving forward.
How firms align
While ING's stance suggests further EUR/USD weakness, firms like Standard Chartered and Danske Bank present targets of 1.1400 and 1.1866 respectively, showing varying levels of pessimism towards the Euro. Contrarily, Morgan Stanley sets a higher target of 1.2000 for March 2026, which contradicts the bearish sentiment noted in the headline. See /research/eurusd-ecb-rate-path-2026-09-14 for more details on the differing perspectives.
What the data shows
Recent revisions from Scotiabank and Credit Agricole have reflected a shift towards more bearish views, with targets set at 1.1734 and 1.1584 respectively. This revision aligns closely with the recent pricing action observed in our market analysis, underscoring a cautious outlook on the Euro's performance against the dollar.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01EUR/USD currently trades at 1.1446, indicating bearish pressure.
- 02Market sentiment strongly favors the USD amid ECB's mixed signals.
- 03Watch for ECB communications, as they could influence EUR valuation.
- 04Bearish adjustments from several firms signal potential persistent weakness.
Market implications
Going forward, traders should monitor ECB communications closely, particularly any indications of a shift in monetary policy. The consensus target of 1.1700 raises a potential resistance level that could be tested if bullish sentiment returns. Positioning around upcoming Fed and ECB meetings may also signal shifts in EUR/USD dynamics.
Risks to this view
A reversal in this bearish view could occur if the ECB adopts a more hawkish stance, signaling a possible tightening of monetary policy or unexpected rate hikes. Additionally, stronger-than-expected Eurozone economic data might counteract current weaknesses and push EUR/USD higher.
Sentiment by currency
USD+EUR JPY~GBP~Composite USD score: +0.65
Sources & References
How we cover this story
Other coverage on this pair
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