Euro: Hawkish ECB hike expected to support EUR against US Dollar – Scotiabank
The expectation of a hawkish move from the European Central Bank (ECB) is set to bolster the euro against the US dollar, as reiterated by Scotiabank. This bullish sentiment on the euro reflects a growing anticipation of widening rate differentials, which could prompt a shift in positioning among traders. The EUR/USD currently hovers near 1.1446, with potential resistance levels up ahead as long positions gain traction ahead of the ECB's decision.
Where it sits in our coverage
Our consensus EUR/USD target stands at 1.1700 for March 2026, with the forecast range spanning from 1.1200 to 1.2000. The most bullish position comes from Morgan Stanley at 1.2000, while Danske Bank takes a more conservative stance with a target of 1.1200. Scotiabank's recent revisions align closely with the upper spectrum of our consensus, indicating a strong bullish outlook.
How firms align
Morgan Stanley and RBC are poised to benefit from a hawkish ECB, projecting targets of 1.2000 and 1.1600 for March 2026, respectively, which support the notion of euro strength highlighted in the Scotiabank report. Conversely, firms like Danske Bank remain cautious with their projections.
What the data shows
Recent revisions from Scotiabank show an upward adjustment for the EUR/USD target to 1.1734 for March 2026, reflecting a bullish outlook in line with the ECB's anticipated policy direction. For further insights, see our publication /research/eurusd-ecb-rate-path-2026-09-08, which examines the current positioning of the euro against its peers.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01Expect increased bullish sentiment for EUR/USD as ECB's hawkish stance looms.
- 02Traders should consider entering long positions as market anticipates rate differentials widening.
- 03Watch for resistance at current levels around 1.1450-1.1500 in the near term.
- 04Firm targets exhibit divergence, reinforcing a spectrum of bullish outlooks among key players.
Market implications
As the ECB's decision approaches on September 10, traders should monitor positioning signals particularly around 1.1450. A strong signal above this level could encourage further euro appreciation towards our consensus target of 1.1700.
Risks to this view
Any dovish pivot from the ECB could invalidate the current bullish view, causing a sell-off in EUR/USD. Additionally, unexpected economic data from the Eurozone that surprises to the downside could alter sentiment significantly.
Sentiment by currency
USD EUR+JPY~GBP~Composite USD score: -0.65
Firms mentioned
Sources & References
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