Euro gathers strength above 1.1500 as cooling inflation data weighs on US Dollar
The euro is experiencing positive momentum, surging past the 1.1500 mark, as recent US inflation data indicates a potential easing of the Federal Reserve's tightening cycle. This shift has created downward pressure on the US dollar, coinciding with broader adjustments in market expectations regarding future rate holds. It's a pivotal moment for EUR/USD, reflecting both macroeconomic fundamentals and market sentiment that could signal further strength if the euro maintains its position above critical resistance levels.
Where it sits in our coverage
Our consensus EUR/USD target stands at 1.1700 (median across 12 firms), with UBS at the upper bound (1.2000) and MUFG at the lower (1.1800). FXStreet’s recent analysis highlights the euro’s firm base as it defies initial downward pressures, reinforcing our near-term projections.
How firms align
Goldman Sachs and Morgan Stanley are particularly bullish, both setting March targets of 1.1800 and 1.2000 respectively, aligning closely with the recent bullish sentiment surrounding the euro. In contrast, TMGM provides a more cautious outlook with a target of 1.1447 for the same period, which contrasts with the prevailing trend noted in FXStreet's analysis.
What the data shows
Recent adjustments reflect increased optimism for the euro; Deutsche Bank raised its March target to 1.1800, while MUFG expects it to reach 1.1800 by March with a more optimistic view for mid-2026. This supports the conclusions drawn in our prior research found in /research/eurusd-ecb-rate-path-2026-08-13.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01EUR/USD trading above 1.1500 signals bullish market sentiment.
- 02Expect further movement if inflation trends continue to ease in the U.S.
- 03Focus on upcoming Fed announcements—key levels lie at 1.1500 support.
- 04Mid-year targets are signaling extended euro strength through 1.2000.
Market implications
Market participants should watch the 1.1500 support level closely; a sustained hold above this threshold could unlock further upside toward our consensus target of 1.1700. Additionally, upcoming FOMC meetings will be pivotal in shaping Fed rate expectations and, consequently, the dollar's strength.
Risks to this view
A reversal in this bullish outlook could occur if upcoming inflation data surprises to the upside, leading the Fed to signal a stronger tightening stance than anticipated. Additionally, any unforeseen geopolitical events or economic downturns in the eurozone could also jeopardize the euro's upward trajectory.
Sentiment by currency
USD EUR+JPY~GBP~Composite USD score: -0.55
Sources & References
How we cover this story
Other coverage on this pair
Euro edges higher against US Dollar after soft US PPI data
Softer-than-expected PPI reduces near-term Fed rate-hike probability and pressures USD carry positions.
Euro: Choppy range trading outlook against US Dollar – Rabobank
Euro: Range tests with upside bias against US Dollar – ING
ING sees EUR/USD testing range highs with upside bias, suggesting near-term support for euro strength against dollar.