Morning briefing: EUR/USD heads lower ahead of the ECB policy meeting
The EUR/USD is facing downward pressure as we approach the pivotal ECB policy meeting, with the Dollar Index climbing above 102. This uptick in the dollar reflects growing market expectations ahead of significant rate decisions from both the Fed and ECB. The current spot at 1.1253 highlights a divergence between market sentiment and forecasts, with a consensus target significantly higher. The focus on ECB policy will be crucial, as traders assess the central bank's stance in light of the euro's recent weakness.
Where it sits in our coverage
Our consensus EUR/USD target stands at 1.1700 (median across firms), with CIBC at the high end of the range (1.2200) and ABN AMRO at the lower (1.1284). The headline's perspective aligns more closely with bullish views, particularly from firms like Rabobank and Nomura, which have targets at 1.1759 and 1.1700 respectively.
How firms align
Rabobank and RBC share a more optimistic outlook for EUR/USD with targets of 1.1759 and 1.1600 respectively. Conversely, BofA's stance, with a target of 1.1700, reflects a more cautious view, consistent with the overall sentiment expressed in the headline. This positions BofA as somewhat contrary to the general bullish expectations ahead of the ECB meeting.
What the data shows
Recent revisions highlight a positive shift, with firms like MUFG now targeting 1.1800 for March 2026, indicating that the market remains bullish despite current spot levels. Insights from our publication, such as /research/eurusd-ecb-rate-path-2026-10-26, reinforce the discrepancy between current trading levels and longer-term targets.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01EUR/USD currently at 1.1253, facing bearish sentiment ahead of ECB meeting.
- 02Short-term traders should watch for shifts in ECB guidance.
- 03Key resistance for EUR/USD seen around 1.1700 as forecasts suggest recovery potential.
Market implications
Next week’s ECB meeting could be a turning point for EUR/USD; a failure to signal a hawkish shift may push the pair closer to 1.1200. The consensus of 1.1700 suggests that traders are hoping for a more dovish stance from the ECB that could strengthen the euro.
Risks to this view
A significant change in market expectations could emerge if the ECB surprises with a hawkish tilt, potentially invalidating the bullish outlook. Additionally, strong data from the U.S. could bolster the dollar further, challenging the consensus targets.
Sentiment by currency
USD+EUR JPY+GBP~Composite USD score: +0.65
Sources & References
How we cover this story
Other coverage on this pair
Euro: Fed focus keeps pressure against US Dollar – Commerzbank
Market focus on imminent Fed decision is anchoring USD strength despite mixed Eurozone fundamentals; ECB data risks being sidelined by Fed action.
Euro: Lending slowdown threatens key support against US Dollar - ING
Eurozone lending tightening compounds macro headwinds for EUR/USD; technical support at YTD lows at risk if credit impulse deteriorates further.
Euro: Downtrend targets 1.1095 support against US Dollar – UOB
EUR/USD breakdown below 1.1135 accelerates downside momentum toward 1.1095, signaling technical conviction in USD strength.