Euro: Growth and policy doubts point lower against US Dollar – HSBC
HSBC's bearish outlook on the Euro against the US Dollar reflects concerns about economic growth and policy divergence within the Eurozone. As the current spot at 1.1419 shows, the market sentiment aligns with skepticism regarding the ECB's ability to maintain a supportive monetary policy amid adverse growth signals. This is particularly significant as it highlights a potential weakening of the Euro against a robust Dollar, which could exacerbate the ongoing pressures in global currency markets.
Where it sits in our coverage
Our consensus target for EUR/USD is currently 1.1700 by March 2026, with targets ranging from a low of 1.1200 (Goldman) to a high of 1.2000 (Commerzbank). HSBC’s outlook appears pessimistic in comparison, suggesting that growth and policy uncertainties place downward pressure on the Euro, aligning more closely with the lower end of the spectrum than the median.
How firms align
Firms like RBC and JP Morgan, targeting 1.1600 and 1.1800 respectively for March 2026, align with HSBC's concerns. Conversely, UBS and Deutsche Bank remain bullish at 1.2000, positioning themselves against HSBC's bearish forecast. You can find these positions in our research on /research/eurusd-ecb-rate-path-2026-07-26 and /research/eurusd-ecb-rate-path-2026-07-25.
What the data shows
Recent revisions have seen firms like HSBC adjust their targets lower, reflecting a broader shift in sentiment. The shifting landscape for growth forecasts in the Eurozone is evident, as indicated by our recent published insights. For deeper analysis, refer to /research/eurusd-ecb-rate-path-2026-07-24.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01Current EUR/USD spot at 1.1419 points to potential weakness highlighted by HSBC.
- 02Watch for ECB signals on growth policy; the outlook remains fragile.
- 03Key risk lies in Eurozone growth data; any surprises could shift sentiment.
- 04HSBC's revision to 1.1050 for Dec26 underscores persistent undervaluation fears.
Market implications
Traders should closely monitor the upcoming ECB meeting for signals regarding policy directions on July 29. A break below the 1.1400 level could heighten bearish sentiment, potentially leading toward our consensus target of 1.1700.
Risks to this view
A stronger-than-expected economic performance in the Eurozone or a more aggressive ECB policy stance could invalidate this bearish view. A significant shift in US economic indicators affecting the Fed's outlook could also lead to a reversal in the current sentiment.
Sentiment by currency
USD+EUR JPY~GBP~Composite USD score: +0.65
Firms mentioned
Sources & References
How we cover this story
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