Morning briefing: EUR/USD drops below 1.1500 after Fed rate hike
The Fed's recent rate hike has prompted a significant drop in EUR/USD, pushing it below the psychologically important threshold of 1.1500. This development reinforces the perception that further downside pressures are likely, with analysts eyeing 1.1400 as the next key support level. The market's current sentiment indicates a continued bullish outlook for the USD, while the EUR faces mounting bearish sentiment, highlighting the divergence in monetary policy direction between the Fed and the ECB.
Where it sits in our coverage
Our consensus EUR/USD target stands at 1.1684 for Dec 26, with a median across firms showing a wide range from 1.1200 to 1.2000. The current market price of 1.1446 sits distinctly below this median, suggesting a significant divergence in expectations among market participants.
How firms align
Specific firms such as SocGen and RBC are more optimistic about future EUR/USD levels, predicting 1.1700 and 1.1600 respectively for Mar 26, while others like Stanchart forecast a much lower target of 1.1400. Our internal coverage highlights this divergence, with /research/eurusd-ecb-rate-path-2026-09-16 documenting the current consensus and pricing discrepancies.
What the data shows
Recent forecast revisions from BNPP and Scotiabank indicate mixed sentiments, but overall lean towards higher targets, with Scotiabank at 1.1734 for Mar 26. This suggests that there may still be a consensus belief in a recovery towards the 1.17 target despite the current pullback.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01EUR/USD drops below 1.1500, signaling potential further declines.
- 02Traders should monitor support at 1.1400 as key selling pressure mounts.
- 03Watch for implications of future ECB policies against Fed tightening.
- 04Bulls may find justification for entry above 1.1500 with positive data.
Market implications
Next week’s data releases, especially from the Eurozone, will be crucial in determining if the EUR can reclaim lost ground above 1.1500. Additionally, any hints from the Fed regarding future rate decisions could solidify the current USD strength, pointing traders toward a consensus target of 1.1684 across firms.
Risks to this view
If the ECB signals a more aggressive tightening path or economic data from the Eurozone surprises positively, this could invalidate the current bearish outlook for EUR/USD and lead to a significant reversal of trends back above 1.1500.
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 starts new week under pressure as Fed hawkishness weighs on Euro
Fed hawkishness creating fresh EUR/USD selling pressure suggests market repricing higher-for-longer USD rates relative to ECB policy trajectory.
Euro: Holds below 1.15 against US Dollar as yields rise - Danske Bank
Rising yields supporting USD strength; EUR/USD trading below 1.15 suggests market repricing of relative rate differentials favors dollar appreciation.