Euro revisits monthly low against US Dollar in countdown to Fed's policy
The euro has slid to a monthly low against the dollar in the lead-up to the Fed's policy decision, reflecting prevailing market sentiment that favors a hawkish stance from the Federal Reserve. With EUR/USD trading at 1.1419, traders are eyeing key support levels that could test investor confidence ahead of potential shifts in monetary policy. The upcoming Fed meeting is paramount for shaping the euro's trajectory, as traders brace for implications on rate trajectories amid slowing growth prospects.
Where it sits in our coverage
Our consensus EUR/USD target sits at 1.1700 (median across 11 firms), with UBS at the upper bound (1.2000) and Commerzbank at the lower end (1.1900). Notably, the consensus reflects a bearish outlook for the euro against the dollar coinciding with current market sentiment.
How firms align
Goldman Sachs and Deutsche Bank are among the firms that remain optimistic for the euro, both targeting 1.1800 for March 2026. Conversely, BofA's 1.1700 target indicates a more cautious view, but still aligns with the overall bearish sentiment highlighted by the recent euro weakness ahead of the Fed meeting.
What the data shows
Recent forecast revisions have not significantly shifted expectations, with firms like BofA and Nomura maintaining their March target at 1.1700. This stability suggests a consensus that the euro may struggle under current pressures, as highlighted in our recent research on the ECB’s rate path (/research/eurusd-ecb-rate-path-2026-07-25).
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01EUR/USD weakness is evident as it tests support levels around recent monthly lows.
- 02Traders should watch for volatility around the Fed’s policy decision.
- 03Fed's hawkish hold could push EUR/USD below key psychological levels.
- 04Alignments in forecasts indicate mixed outlooks for the euro against the dollar.
Market implications
Moving forward, watch the level around 1.1400 as a potential break point for further downside. The Fed’s meeting on July 29 will be a crucial event that could change the current dynamics and influence our consensus target of 1.1700.
Risks to this view
A shift in the Fed's narrative towards a dovish stance could invalidate bearish projections for the euro. Any indications of economic resilience from the US could also reinforce the dollar's strength, forcing a reassessment of current EUR/USD projections.
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: Under pressure with YTD lows at 1.1324 coming closer
EUR/USD approaching YTD lows suggests downside momentum may continue if technical support at 1.1324 breaks.
Euro: Recovery signals offer limited upside against US Dollar – BBH
Despite euro recovery signals, structural USD strength limits near-term EUR/USD upside, suggesting dip-buy trades face resistance above 1.10 levels.
Euro trims gains as geopolitical risks, Fed outlook support US Dollar
Geopolitical risk premium and Fed policy expectations combine to support USD; EUR facing headwinds from both external shocks and hawkish Fed repricing.