Morning briefing: EUR/USD can decline below 1.1100
The recent uptick in US CPI has intensified expectations for a December Fed rate hike, with markets pricing in an 87.1% probability for a 25bps increase. This bullish sentiment towards the dollar has facilitated a decline in EUR/USD below the 1.11 mark, indicating a potential shift in currency momentum. The evolving rate differentials will likely continue to drive the euro lower, making it a critical moment for traders as this trend unfolds.
Where it sits in our coverage
Our current consensus target for EUR/USD is set at 1.1400 for December 2026, with a median forecast ranging amongst firms from 1.1000 to 1.2000. The most optimistic view is held by CIBC at 1.2200, while HSBC stands at the lower bound with a target of 1.1000. The headline from fxstreet.com aligns with these views, emphasizing a bearish outlook for the euro.
How firms align
Investec has a Mar26 target of 1.1455, while Nomura aligns with a more aggressive 1.1700, reflecting a slightly bullish stance compared to the headline's bearish tone. On the contrary, HSBC's outlook at 1.1000 dampens sentiment further. For more detailed positions, check our reports on individual firms: /research/investec, /research/nomura, and /research/hsbc.
What the data shows
Recent forecast revisions from Mizuho and Scotiabank indicate a shift, with targets at 1.1300 and 1.1734 respectively, suggesting some firms are hesitant to fully commit to the bearish sentiment. Comprehensive insights can be found in our related research /research/eurusd-ecb-rate-path-2026-11-11.
Key takeaways
- 01Dollar strength puts pressure on EUR/USD as rates diverge.
- 02Trading below 1.1100 indicates significant bearish momentum for the euro.
- 03Monitor forthcoming economic data releases from the US for further direction.
- 04Continued rate hike expectations could deepen euro's decline.
Market implications
Traders should keep a close eye on the 1.1100 level for EUR/USD as a significant break could indicate further downside potential. Upcoming CPI data releases and Fed communications are critical calendar events to watch for indications of continuing dollar strength.
Risks to this view
Should the ECB offer a surprise dovish stance or the Fed signal a pause in rate hikes, this could immediately reverse the current bearish outlook on EUR/USD. Additionally, shifts in geopolitical factors may also impact market perceptions significantly.
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: Downside risks toward 1.10 – ING
Fed-ECB rate differential widening pressures EUR/USD toward 1.10 as two-year swap spreads favour USD carry.
Euro finds temporary support near 1.1066 against US Dollar, outlook remains uncertain
EUR/USD Price Forecast: Declines below 1.1100, negative outlook remains intact under 100-day SMA
ECB caution pressures EUR below 100-day SMA; consolidation risk extends if sub-1.1080 holds through European close.