Euro: Policy divergence supports gains against US Dollar - DBS
The Euro continues to gain ground against the US Dollar, driven by a notable policy divergence between the European Central Bank and the Federal Reserve. As monetary policy expectations shift, particularly with the ECB's more hawkish stance, the underlying support for the Euro remains robust. This dynamic is increasingly salient as investors position for upcoming economic data and central bank decisions.
Where it sits in our coverage
Our consensus EUR/USD target sits at 1.1700 (median across firms), with Commerzbank at the upper bound (1.1900) and Citi at the lower (1.1300). The headline's sentiment aligns with the upper third of the target spread, particularly reflected in Goldman and MUFG's forecasts.
How firms align
Goldman Sachs expects the EUR/USD to reach 1.1800 by March 2026, closely following the positive market sentiment indicated in the reported gains. In contrast, BofA stands at a more conservative target of 1.1700 for March 2026, as seen in our reports.
What the data shows
Recent forecast revisions indicate a consensus strengthening, highlighted by BofA's upward revision to 1.1700 for March 2026 from previous levels. This aligns with our published research on the pair, particularly /research/eurusd-ecb-rate-path-2026-07-19, underscoring the market's bullish outlook on Euro strength.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01EUR/USD currently trading at 1.1434 with upside potential ahead.
- 02Watch for ECB policy signals to maintain Euro momentum.
- 03Critical resistance seen near 1.1700 as consensus builds.
- 04Expect further upward adjustments in forecasts post-ECB meeting.
Market implications
Watching the EUR/USD for a potential breakout above 1.1700 will be crucial, especially with significant ECB announcements approaching. The consensus target at 1.1700 suggests that market positioning is ready to capitalize on positive news regarding Euro monetary policy.
Risks to this view
A sudden shift in sentiment from the Fed, particularly if U.S. data indicates stronger-than-expected growth leading to a more aggressive rate hike path, could reverse the Euro's gains against the Dollar. Additionally, geopolitical tensions in Europe could introduce volatility.
Sentiment by currency
USD EUR+JPY~GBP~Composite USD score: -0.65
Sources & References
How we cover this story
Other coverage on this pair
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Bank desks on this topic
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Cross-firm research
EUR/USD Consensus Check: Spot at 1.1412, Median Target 1.16 — Week of July 20, 2026
EUR/USD trades 1.62% below the 29-firm median Dec-26 target of 1.16, with a 0.20-wide dispersion band exposing deep disagreement on the Fed-ECB terminal gap.
EUR/USD Consensus Check: Spot at 1.1438, Median Target 1.17 — Week of July 19, 2026
EUR/USD trades 2.24% below the 29-firm median Dec-26 target of 1.17, with a 0.20 dispersion range signalling deep disagreement on the dollar's path.
EUR/USD Consensus vs Spot: Week of July 18, 2026
EUR/USD spot sits 2.24% below the 29-firm Dec-26 consensus of 1.17, with a 0.20 dispersion range signalling deep disagreement on the dollar's path.