Euro holds gains as US Dollar weakens following midterm elections
The euro has effectively solidified its gains amid a backdrop of weakening dollar sentiment following the US midterm election results. As EUR/USD trades at 1.1253, it has encountered some resistance near 1.1273, partly due to resilient US economic data that has bolstered the dollar's position. This dynamic is particularly essential as it reflects ongoing tensions in the market concerning Fed policy decisions in response to electoral shifts and economic developments.
Where it sits in our coverage
Our consensus EUR/USD target sits at 1.1500 (median across 12 firms), with CIBC at the upper bound (1.2200) and Investec at the lower end (1.1455). The current price action aligns with the bullish sentiment stemming from recent dollar weakness, although firms like Investec maintain a more conservative outlook.
How firms align
Rabobank and Nomura share a more optimistic stance with targets of 1.1759 and 1.1800, respectively, positioning themselves in alignment with the euro's recent performance. In contrast, Investec's more cautious targets suggest a continued skepticism about sustaining those gains over the next quarters, as highlighted in our internal reports.
What the data shows
Recent revisions show stronger forecasts from firms like UBS, pushing their March 2026 target up to 1.2000, suggesting growing confidence in the euro's trajectory. This optimism is reflected in our research, particularly in the piece `/research/eurusd-ecb-rate-path-2026-11-04` which discusses tactical positioning in the current market environment.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01EUR/USD trading at 1.1253; midterm elections weigh on the dollar.
- 02Positioning favors tactical longs in the euro amid broad USD weakness.
- 03Recent US data resilience poses risks to euro gains, favoring USD recovery.
- 04Market participants should watch Fed signals ahead of important data releases.
Market implications
Investors should focus on the 1.1270 level as a potential resistance point, with any breaks suggesting further upside in EUR/USD. Next week, the focus on US inflation data could prompt a reevaluation of dollar strength and consequently impact our 1.1500 consensus target.
Risks to this view
A stronger-than-expected US inflation reading could quickly reverse the recent USD weakness, undermining bullish positions in EUR/USD. Additionally, any significant shift in Fed policy outlook post-midterms could also serve as a catalyst for a shift in market sentiment.
Sentiment by currency
USD EUR+JPY~GBP~Composite USD score: -0.45
Sources & References
How we cover this story
Other coverage on this pair
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