Euro: Lower against US Dollar after PCE surprise – Danske Bank
The Euro is experiencing downward pressure against the US Dollar following a surprising PCE report which reinforces the Fed's inflation narrative and supports a stronger dollar outlook. This shift indicates market sentiment leaning towards continued USD strength in the near term. As the ECB maintains a more dovish stance, the outlook for EUR/USD appears bearish, especially in the absence of any significant hawkish cues from the ECB to counterbalance the USD's momentum.
Where it sits in our coverage
Our consensus EUR/USD target is currently at 1.1700, with a range from 1.1200 to 1.2000 across various firms. Notably, firms like RBC and Morgan Stanley set their March 2026 targets at 1.1600 and 1.2000, respectively, while Danske Bank offers a notably bearish target of 1.1866.
How firms align
Danske Bank’s bearish projection for the Euro is echoed by firms like Lloyds, which hold a lower target of 1.1331 for March 2026. Conversely, firms such as HSBC and UOB maintain a more optimistic view with targets around 1.1700 and 1.1536, respectively, indicating a divergence in expectations. [See our recent insights for further detail on this divergence in /research/eurusd-ecb-rate-path-2026-08-26.]
What the data shows
Recent forecast revisions reflect a relatively stable outlook for many firms, with ING and UOB reaffirming their targets at 1.1700 for March 2026. Our research on historical consensus also indicates that discrepancies remain significant given the current spot at 1.1446 compared to targets from numerous firms, particularly those arguing for a rebound above 1.1700, as seen in /research/eurusd-ecb-rate-path.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01EUR/USD currently trading at 1.1446 amidst PCE-driven USD strength.
- 02Expect continued pressure on the Euro without strong ECB signals.
- 03Watch for any surprises in upcoming ECB meetings or US economic data.
Market implications
Traders should monitor the 1.1400 level as a potential support point for EUR/USD, with further movement likely dictated by upcoming US economic data releases. Our consensus target at 1.1700 suggests significant upside potential if the Euro can regain traction against the dollar.
Risks to this view
A shift in ECB policy towards a more hawkish stance or unexpected positive economic data from the Eurozone could invalidate the current bearish view on EUR/USD, potentially pushing the currency pair above 1.1700.
Sentiment by currency
USD+EUR JPY~GBP~Composite USD score: +0.65
Sources & References
How we cover this story
Other coverage on this pair
EUR/USD Price Forecast: Correcting lower with the near-term bullish trend intact
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Morning briefing: EUR/USD remains capped below 1.1700
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Euro: Rally stalls against US Dollar as spreads drive trade – Scotiabank
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