Euro: Gradual recovery from Warsh sell-off against US Dollar – ING
The Euro is staging a gradual recovery against the US Dollar following a significant sell-off triggered by hawkish comments from Warsh. Despite this recovery, market sentiment still leans towards the Dollar as the underlying support for USD remains intact. The recent movements highlight an evolving sentiment landscape in the FX market, particularly as traders recalibrate expectations amid fluctuating Eurozone economic indicators.
Where it sits in our coverage
Our consensus EUR/USD target stands at 1.1700 (median across multiple firms), with Morgan Stanley projecting an optimistic 1.2000 at the upper end and Lloyds reflecting a cautious stance at 1.1331. ING’s outlook of 1.1700 aligns closely with our consensus, underscoring a shared expectation of gradual recovery from the recent lows.
How firms align
Firms like RBC and Nomura are also supporting this optimistic view, with targets set at 1.1600 and 1.1700 respectively, suggesting a consensus on a bullish outlook for the Euro in the medium term. In contrast, firms like Danske Bank and HSBC show more bearish sentiment with targets of 1.1100 and 1.1000 due to ongoing concerns about Eurozone economic stability.
What the data shows
Recent revisions indicate a mix of sentiment, with UBS heightening its 2026 target to 1.2000, while Standard Chartered has slightly adjusted its Mar26 target down to 1.1400. More insight can be found in our published research on the ECB rate decision preview (/research/ecb-decision-preview-2026-09-10).
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01EUR/USD currently at 1.1446, showing signs of recovery after Warsh's hawkish comments.
- 02Market sentiment indicates a stronger USD but recent shifts suggest cautious optimism for the Euro.
- 03Watch for ECB rate decisions as a potential catalyst for Euro movement; consensus targets staying near 1.1700.
- 04Optimistic forecasts from firms like RBC and Nomura reinforce bullish expectations for the Euro.
Market implications
Traders should closely monitor the upcoming ECB meeting for signals that might sway the Euro's trajectory. If the consensus target of 1.1700 is breached firmly, it could indicate stronger bullish sentiment, driving prices higher in the near term.
Risks to this view
Any unexpected dovish shift from the ECB or further hawkish comments from Fed officials could reverse the current sentiment landscape, leading to renewed strength in the USD against the Euro. Additionally, geopolitical developments in the Eurozone could also weigh heavily on the Euro.
Sentiment by currency
USD+EUR JPY~GBP~Composite USD score: +0.55
Sources & References
How we cover this story
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