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FX BANK FORECAST · COVERAGE
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Aggregated year-end forecasts, scenario shifts, and curated analyst notes from 39 institutional desks. No promotion.
FX BANK FORECAST · COVERAGE
Aggregated year-end forecasts, scenario shifts, and curated analyst notes from 39 institutional desks. No promotion.
The Federal Reserve is poised to resume rate hikes in December, with future adjustments hinging on incoming economic data. This cautious approach raises concerns about the Fed potentially falling behind in controlling inflation, as robust economic indicators could force more aggressive action later. With inflation a persistent challenge, the market is keenly focused on the Fed's next moves and their implications for the USD. Given the insistence on data dependence, any unexpected economic developments could alter the anticipated monetary policy trajectory.
Our consensus EUR/USD target sits at 1.075 (median across 8 firms), with Goldman at the upper bound (1.12) and BofA at the lower (1.04). The New York Times' view suggests that the tapering of rate increases may align more closely with the upper targets, echoing sentiments from firms like JPMorgan and ING.
JPMorgan is aligned with the Fed's cautious stance, maintaining a target of 1.10, while BofA's more conservative target of 1.04 contradicts this view. Our internal findings suggest a divergence in timing and expectations regarding Forex movements in response to Fed policy signals, notably reflected in our /reports/jpmorgan and /reports/bofa pages.
Recent data indicates volatility in inflation readings, prompting discussions on adjusting forecasts. As a reference, our latest insights suggest an uptick in inflation expectations which could necessitate a review of previous targets — see /research/inflationoutlook for more details.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
Market implications
Traders should closely monitor upcoming inflation data releases, particularly the CPI report scheduled for next week. This data will significantly impact our consensus target of 1.075 and could push the USD to test key resistance levels if inflation continues to surprise to the upside.
Risks to this view
Should inflation readings unexpectedly decline or show signs of stabilizing, the Fed may reconsider its rate hike timeline, leading to a potential weakening of the USD. A poorly received CPI report could trigger significant shifts in market sentiment towards dovish expectations.
Sentiment by currency
USD+EUR JPY GBPComposite USD score: +0.65
How we cover this story