Euro recovers against US Dollar, German CPI accelerates
The euro has shown resilience against the US dollar, driven by a stronger-than-expected German CPI figure, which is a vital indicator of inflation for the Eurozone. This upward movement provides a counterpoint to concerns about the EUR/USD trajectory, suggesting market participants may be pricing in a more hawkish European Central Bank stance in the near term. With EUR/USD now at 1.1446, this recovery underscores the ongoing tug-of-war between US monetary policy tightening and European economic recovery.
Where it sits in our coverage
Our consensus EUR/USD target currently rests at 1.1700 (median across firms), with Morgan Stanley positioning at the high end (1.2000), while Lloyds represents a more conservative take at 1.1331. This indicates a broad spectrum of expectations among analysts regarding the euro's potential upside against the dollar.
How firms align
Several firms have adjusted their targets in light of recent data, including Morgan Stanley with a March 2026 forecast at 1.2000, signaling a bullish outlook, while Stanchart takes a more cautious stance with a 1.1400 target for the same period. This aligns with the general sentiment reflected in the upward CPI revision, as detailed in /research/eurusd-ecb-rate-path-2026-08-30.
What the data shows
In recent forecast revisions, Morgan Stanley has notably increased its March target to 1.2000, reflecting bullish sentiment based on the latest economic data. For more insight, see our report /research/eurusd-ecb-rate-path.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01Euro shows strength at 1.1446 post-German CPI data.
- 02Higher German inflation may prompt ECB to adopt a hawkish tone.
- 03Watch for further CPI prints and ECB announcements influencing EUR/USD volatility.
Market implications
Looking ahead, traders should monitor the 1.1500 level for potential resistance, alongside upcoming Eurozone economic releases that could shape the ECB's narrative. Our consensus target at 1.1700 presents a critical resistance point that the euro will aim to breach.
Risks to this view
A more dovish shift from the ECB or a resurgence in US economic strength, particularly if inflation readings surprise to the upside, could reverse the current euro strength. Any shifts in US monetary policy expectations could also significantly impact EUR/USD dynamics.
Sentiment by currency
USD EUR+JPY~GBP~Composite USD score: -0.35
Sources & References
How we cover this story
Other coverage on this pair
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