Euro steadies against US Dollar after volatile reaction to US CPI
The Euro has stabilized against the US Dollar following a turbulent response to the recently released US CPI data. This market behavior suggests traders are grappling with the implications of inflation on future Federal Reserve policy and its ripple effects on the Euro's valuation. It's noteworthy that despite initial volatility, the EUR/USD trading close to 1.1446 reflects a cautious sentiment as markets recalibrate expectations amidst broader economic data. The stability is crucial, as it indicates potential support levels for traders to monitor moving forward.
Where it sits in our coverage
Our consensus EUR/USD target currently sits at 1.1700 for March 2026, with a spread ranging from 1.1200 at Danske Bank to 1.2000 at Morgan Stanley. This indicates a positive outlook amongst most firms, a view aligned with previous forecasts that see the Euro appreciating against the Dollar over the medium to long term.
How firms align
Several firms have expressed bullish targets for the Euro. RBC maintains a target of 1.1600 for March 2026, while Scotiabank has recently revised its forecast to 1.1734, closely aligning with the consensus. Conversely, Danske Bank presents a more conservative view, expecting only 1.1866 by the same date, as detailed in /research/eurusd-ecb-rate-path-2026-09-09.
What the data shows
Recent forecast revisions have highlighted a general bullish sentiment towards the Euro, with notable upgrades from firms like Mizuho and UBS, suggesting confidence in the Eurozone's recovery. For further insights, refer to /research/eurusd-ecb-rate-path-2026-09-10, where we discuss the implications of the ECB's recent rate decision on Euro strength.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01Euro steady at 1.1446 against USD post-CPI reaction.
- 02Key support level to watch: 1.1400.
- 03Catalyst: Upcoming Fed rate decision on September 16 may influence EUR/USD.
- 04Data-driven approach essential as inflation impacts markets.
Market implications
Traders should watch for further developments surrounding the Fed's rate decision next week, as expectations are set for volatility. Given our consensus target of 1.1700 for March 2026, any directional moves closer to this target could shift trading positions significantly.
Risks to this view
A shift in Federal Reserve policy towards a more hawkish stance could invalidate the Euro's recent bullish sentiment, potentially leading to a significant downturn towards levels near 1.1200. Attention should be directed to inflation data releases leading up to the Fed meeting.
Sentiment by currency
USD~EUR~JPY~GBP~Composite USD score: +0.00
Sources & References
How we cover this story
Other coverage on this pair
EUR/USD Weekly Forecast: To hike or not to hike? Kevin Warsh between a rock and a hard place
EUR/USD Price Forecast: Likely find direction after US CPI data
Euro: Downside risks while 1.1585 holds against US Dollar – UOB
EUR/USD 1.1585 support breach would signal resumption of downtrend; monitor for break below key technical level.