FX Outlook 2027: Our latest forecasts
The desk highlights an optimistic outlook for FX in 2027, particularly emphasizing the resilience of risk assets amid potential monetary policy easing. Per the full note , ING's analysts, Chris Turner and Francesco Pesole, anticipate that key G10 currencies could see a revaluation, supported by expected shifts in central bank stances. This forecast suggests a growing divergence in monetary policy approaches, particularly in the Eurozone and the US. As we position for this move, it's essential to monitor global economic indicators that may signal shifts in currency flows and demand for risk assets.
What the desk is arguing
The desk posits a bullish scenario for FX markets in 2027, driven by central banks transitioning toward more accommodative policies. This perspective is rooted in a forecasted stabilization in both inflation rates and growth globally, which could see significant capital move into various G10 currencies, notably the euro and the pound. Per the full note , ING's forecast reflects the expectation of heightened liquidity and improving economic conditions.
Emerging data indicates that inflation is projected to moderate towards the targets set by major central banks while growth indicators signal a resilient, albeit cautious, expansion in key economies. This foundation supports the desk's bullish thesis as we anticipate a more favorable environment for FX trading.
Where it sits in our coverage
Though no specific internal consensus targets are available due to the lack of tracked currency pairs, general sentiment in the market appears to favor a resilient dollar amid a larger narrative of global currency stability.
How other firms see it
Several firms align with this outlook, indicating a positive stance towards Eurozone currencies, particularly the euro. Conversely, cautious firms are forecasting potential headwinds for commodity currencies given global economic uncertainties. jpmorgan stands closely aligned with ING's view, while bofa seems more reserved about potential volatility ahead.
The interplay between Euro/USD and BoE rate changes will be crucial for traders, particularly as monetary policy dynamics evolve in the coming years.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01Optimistic forecasts for FX in 2027 suggest resilience in risk assets.
- 02ING expects monetary policy easing to support currency valuations.
- 03Central bank shifts are pivotal for the broader FX landscape.
- 04Anticipation of moderate inflation stabilization could signal favorable conditions.
Market implications
Traders should watch the EUR/USD closely as it aligns with the anticipated shifts in G10 central banks' policies. A significant break above 1.10 would reinforce bullish sentiment, signaling a potential trend reversal.
Risks to this view
A reversal in the bullish outlook could be prompted by unexpected inflation spikes or a more aggressive rate hike stance from central banks that takes market participants by surprise. Such catalysts could shift sentiment and lead to a flight to safety, disrupting current trends.
Articles FX Outlook 2027: Our latest forecasts Published 18:01 FX Translate Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download The latest FX forecasts from our team Chris Turner and Francesco Pesole Forecasts Source: Refinitiv, ING Forecasts "> Source: Refinitiv, ING Forecasts FX Outlook 2027 Content Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Authors Chris Turner Global Head of Markets and Regional Head of Research for UK & CEE Chris is Global Head of Markets and Regional Head of Research for UK & CEE.
Together with his team, he provides short and medium-term FX recommendations for ING's corporate and… Francesco Pesole FX Strategist Francesco is an FX Strategist and has been with the firm since May 2019. His main focus is on the G10 space and, in particular, on European and commodity currencies. He began his career at Credit…
Sources & References
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