France’s manufacturing bounce may prove short-lived
ING Economics argues that France's manufacturing PMI bounce is temporary, citing weak new orders and persistent supply constraints. The data likely won't alter the ECB's dovish stance, keeping EUR/USD under pressure. Consensus sees euro downside, with a 1.04-1.12 range into 2026.
What the desk is arguing
Per the full note from ING Economics, the recent uptick in France's manufacturing PMI is a rebound from a low base rather than a sustainable recovery. The headline improvement masks deteriorating demand, with new orders contracting at a faster pace in the latest print.
ING flags that the composite PMI remains in contraction territory, and output growth is not translating into broader economic momentum. The desk expects the ECB to maintain its accommodative bias, which should keep the euro under pressure against the dollar.
Where it sits in our coverage
Our internal consensus targets EUR/USD at 1.075 by December 2026, with a range of 1.04 to 1.12. JPMorgan forecasts 1.10 (Mar26), while Bank of America sees 1.04 (Mar26). Goldman Sachs is at 1.09 (Jun26).
ING's view aligns with the bearish end of the consensus, sitting near the lower bound of the spread. The desk's focus on short-lived manufacturing support reinforces the cautious tone prevailing among most firms.
How other firms see it
JPMorgan and Goldman Sachs share a similar cautiously bearish view on the euro, though with higher targets. Bank of America is more outright bearish, expecting deeper EUR/USD downside.
Related pairs: EUR/USD trajectory remains tied to ECB policy divergence with the Fed; watch EUR/GBP for spillover as UK data provides a competing narrative.
What the calendar says
No high-impact events in the next 30 days for the eurozone or France, so the data-dependent ECB is unlikely to shift guidance before the September meeting. Market focus will remain on US economic releases and Fed rhetoric.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01France's manufacturing PMI bounce is expected to be short-lived, per ING.
- 02Weak new orders and supply constraints underpin the temporary nature.
- 03The ECB's dovish stance will likely continue, pressuring EUR/USD.
- 04Consensus targets EUR/USD in a 1.04-1.12 range through 2026.
Market implications
Watch EUR/USD for a break below the 1.07 support as manufacturing data disappoints. The next catalyst is the ECB meeting in September; until then, rate differentials favor dollar longs.
Risks to this view
A sustained improvement in global trade or a hawkish ECB surprise could invalidate the bearish euro call. The risk is that the manufacturing bounce gains traction, pushing EUR/USD back toward the 1.10 level.
Sources & References
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