FX Daily: Fed minutes shouldn’t rock the boat
Per the full note from ING, the desk argues that today's September FOMC minutes should not surprise on the dovish side given the hawkish dot plot, yet softish post-meeting data raises the bar for any positive dollar reaction — leaving the greenback stabilising near DXY 102.0 with risks skewed to the upside. The supporting evidence is two-sided: four dot-plot members still expect two further hikes this year versus only two expecting no tightening, while markets continue to firmly price a December move despite softer data since September. Against our internal consensus, the median EUR/USD Dec-26 target sits at 1.1634 with a range of 1.1200–1.2000, far above current spot at 1.1253, meaning ING's own 1.1700 Dec-26 forecast sits in the upper half of the firm spread. Oil remains the wildcard — Brent briefly dipped below $100/bbl before recovering on reports of stepped-up Iranian strikes on tankers in the Strait of Hormuz — and with no high-impact events on the near-term calendar, the minutes and energy flows are the dominant catalysts.
What the desk is arguing
The desk's thesis is blunt: today's FOMC minutes shouldn't rock the boat, and the dollar may stabilise around 102.0 in DXY with risks still skewed to the upside. Per the full note from ING, the hawkish September dot plot — more members expecting two further hikes this year than no further tightening — limits the scope for a dovish surprise.
The supporting evidence is a two-sided data-policy reaction function. On one side, the dot plot showed four members projecting two more hikes in 2026 versus only two projecting no further tightening, and markets continue to firmly price a December move. On the other side, post-meeting data has been softish, which raises the bar for a positive dollar reaction to the minutes themselves.
The alternative read the desk is implicitly rejecting is that the minutes reveal a dovish dissent strong enough to force a repricing of the December hike. ING's own framing suggests that with a 4-to-2 hawkish skew in the dots, the burden of proof sits with the doves, not the hawks.
Where it sits in our coverage
Our internal consensus median for EUR/USD Dec-26 is 1.1634, with a range of 1.1200–1.2000 across tracked firms. Current spot is 1.1253, meaning the market is trading roughly 3.4% below the median target. Selected Dec-26 targets:
- rabobank: 1.1800
- nomura: 1.2000
- hsbc: 1.1000
- lloyds: 1.1200
- rbc: 1.2000
The ING Dec-26 forecast of 1.1700 (revised 2026-10-02) sits in the upper half of the firm spread — above the median of 1.1634 but below the top of the range at 1.2000. The lowest Dec-26 target in our coverage is hsbc at 1.1000, while nomura and rbc sit at the top with 1.2000. The desk's constructive euro view is thus more bullish than the median but not an outlier.
How other firms see it
Firms aligned with ING's constructive euro view — those targeting Dec-26 above the 1.1634 median — include rabobank at 1.1800, nomura at 1.2000, rbc at 1.2000, and cibc at 1.2200. The contrary camp, targeting significantly lower, includes hsbc at 1.1000, lloyds at 1.1200, citi at 1.1000, and socgen at 1.1400.
The EUR/USD trajectory intersects with the ECB rate path, which remains the dominant driver of the pair's medium-term direction. Watch also EUR/CHF, where the desk flags French sovereign spread relief as a marginal euro positive, and USD/JPY for any spillover from the Fed minutes into the dollar leg.
What the calendar says
No high-impact events are scheduled in the next 30 days for this jurisdiction, so the FOMC minutes themselves and oil-price developments remain the primary near-term catalysts. Without a calendar event to anchor positioning, the market will likely trade the minutes as a pure reaction-function exercise.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01ING expects the September FOMC minutes to avoid a dovish surprise given the 4-to-2 hawkish skew in the dot plot.
- 02Softish post-meeting US data raises the bar for a positive dollar reaction, limiting DXY upside near 102.0.
- 03Our internal consensus median EUR/USD Dec-26 target is 1.1634, with ING's 1.1700 sitting in the upper half of the firm spread.
- 04Oil remains the key wildcard — Brent briefly fell below $100/bbl before recovering on Strait of Hormuz tanker-strike reports.
Market implications
Watch DXY around the 102.0 level for stabilisation, with risks skewed to the upside if the minutes come across as comfortably hawkish. For EUR/USD, the 1.1253 spot sits well below our Dec-26 median of 1.1634, so any dovish surprise in the minutes could trigger a sharp squeeze higher. Brent holding above $100/bbl would reinforce the dollar-supportive, bond-negative backdrop the desk is flagging.
Risks to this view
A dovish reading of the minutes — for example, explicit concern about growth or a stronger-than-expected dovish dissent — would invalidate the desk's upside-risk framing and likely weaken the dollar. A sudden de-escalation in the Strait of Hormuz, sending Brent sharply lower, would remove the oil-driven drag on bonds and support a more benign dollar environment. Conversely, a hotter-than-expected inflation print before the December meeting could force markets to price additional hikes, overriding the softish-data argument.
EUR/USD — All Desk Targets
| Firm | Stance | YE 2026 |
|---|---|---|
Bank of America | Bullish | 1.1500 |
Rabobank | Bullish | 1.1800 |
Citi | Bearish | 1.0850 |
Articles FX Daily: Fed minutes shouldn’t rock the boat Published 07:55 FX Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download A hawkish dot plot in September suggests today's FOMC minutes shouldn’t surprise on the dovish side. At the same time, softish post-meeting data probably raise the bar for a positive dollar reaction today. Eyes should remain on oil, which is back on the rise this morning, and France, which is enjoying some relief in sovereign spreads Francesco Pesole , Frantisek Taborsky and Chris Turner The dollar may stabilise around current levels, but risks remain skewed to the upside USD: Looking for clarity in the minutes A rare good day for bonds let US stocks rise to new highs and left the safe-haven dollar weaker yesterday.
Brent briefly fell below $100/bbl before recovering after reports that Iran had stepped up strikes on tankers in the Strait of Hormuz. Stubbornly high oil prices continue to reflect concerns about further disruptions, even as actual oil flows have improved. With few signs of an imminent deal, energy prices should remain a drag on any meaningful recovery in bonds and, by extension, on a decline in the dollar.
Attention turns back to the Fed today with the release of the September FOMC minutes. Markets are still looking for greater clarity on the data-policy reaction function, particularly which inflation outcomes would justify another hike this year. The minutes should also offer some insight into any dovish dissent.
However, with the dot plot showing more members expecting two further hikes this year (4) than no further tightening (2), the scope for a dovish surprise appears limited. At the same time, data has been softish since the September hike and markets continue to firmly price a December move, setting a relatively high bar for a positive USD reaction. We expect some stabilisation around the 102.0 area in DXY, but risks remain on the upside.
Francesco Pesole EUR: Don't count on a French sentiment rebound French bonds' premium shrank further yesterday, with the 10y spread to bunds tightening to 125bp. The move appeared to be driven primarily by an improvement in global bond market sentiment and, to a lesser extent, by Marine Le Pen's pledge to reduce the budget deficit sharply to 3.7% of GDP next year. One indication of a lingering French premium is the French-Italian 10y spread, which remains wide at 22bp and has only corrected 5bp from last week’s peak.
While it’s clear that Le Pen is attempting to establish herself as the market-friendly candidate, our macro team notes that her plan currently rests on ambitious spending-cut targets rather than a fully costed programme, with major uncertainties around how €140bn of savings, particularly on pensions, would be achieved. We therefore aren’t convinced her words are enough to drive a material OAT recovery from here. The euro welcomed tighter spreads, but the rebound has lost steam overnight on the back of higher oil prices.
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