Euro gains against US Dollar as Waller tempers Fed rate-hike bets
The euro strengthened against the US dollar following Federal Reserve Governor Waller's dovish remarks, which reduced expectations for imminent rate hikes. This shift in sentiment boosts the near-term profitability of holding euros versus dollars, as traders recalibrate their positions in response to evolving monetary policy signals. The current EUR/USD spike reflects the market's interpretation of Waller's comments as a sign of a prolonged period of low rates, enhancing the euro's attractiveness.
Where it sits in our coverage
Our consensus EUR/USD target currently sits at 1.1700 (median across 12 firms), with UBS and RBC at the upper bound (1.2000) and Lloyds at the lower (1.1200). The latest market movement aligns well with the general bullish sentiment surrounding the euro, building on a strong 1.1446 spot.
How firms align
Several firms are positioned favorably in line with the euro's rally, notably Morgan Stanley with a target of 1.2000 for March 2026 as detailed in /research/morganstanley-eur-2026-09-01. Conversely, Investec's March target of 1.1455 indicates a more cautious outlook relative to the recent momentum.
What the data shows
Recent forecast revisions have leaned bullish, with UBS and Morgan Stanley each projecting targets of 1.2000 for March 2026. For a deeper dive into the current consensus, refer to /research/eurusd-ecb-rate-path-2026-09-02.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01Euro rallies with current spot at 1.1446 after dovish Fed comments.
- 02Traders should monitor Fed communications closely for future guidance.
- 03Waller's comments potentially shift market expectations regarding rate hikes.
Market implications
Investors should watch the 1.1500 level closely as a potential support zone. Upcoming Fed meetings will play a crucial role in shaping future EUR/USD performance; our consensus points to a stable outlook around 1.1700.
Risks to this view
A shift towards more hawkish rhetoric from the Fed would invalidate the current bullish stance on the euro. Key indicators of tightened monetary policy could include stronger employment data or inflation reports exceeding forecasts.
Sentiment by currency
USD EUR+JPY~GBP~Composite USD score: -0.65
Sources & References
How we cover this story
Other coverage on this pair
EUR/USD Price Forecast: 20-day EMA acts as key support level
Euro: Trading near 1.16 against US Dollar as yields rise – Danske Bank
Rising yields typically reflect stronger growth or hawkish policy expectations; EUR/USD pressure at 1.16 suggests USD strength from higher US rate premia.
Euro: Downside risk persists toward 1.1550 against US Dollar – UOB
EUR/USD downside bias toward 1.1550 signals technical weakness that may reinforce USD strength positioning in short-term trades.
EUR/USD Price Forecast: Turns sticky to 20-day EMA
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Cross-firm research
EUR/USD Consensus Check: Spot at 1.1623, Median Target 1.17 — Week of September 3, 2026
EUR/USD spot sits 0.65% below the 30-firm median Dec-26 target of 1.17, with a 0.14 dispersion range signalling meaningful disagreement on the path ahead.
EUR/USD Consensus Check: Spot at 1.1588, Median Target 1.17 — Week of September 2, 2026
EUR/USD spot sits 0.96% below the 30-firm median Dec-26 target of 1.17, with a 0.14 dispersion range signalling meaningful disagreement on the path ahead.
EUR/USD Consensus Check: Spot at 1.1592, Median Target 1.17 — Week of September 1, 2026
EUR/USD spot sits 0.92% below the 30-firm median Dec-26 target of 1.17, with a 0.14-wide dispersion range signalling meaningful disagreement on the path ahead.