Italian confidence data improves further in August
The desk argues that the recent uptick in Italian consumer and business confidence indicates robust economic resilience, backed by a potential GDP growth forecast of 0.9% for 2026. Per the full note from ing-think, consumer confidence has increased for three consecutive months, reflecting improvements in household sentiment around economic stability and personal finances. This positive environment may influence the EUR's performance against the USD, as traders assess the sustainability of this momentum ahead of upcoming global economic data.
What the desk is arguing
The recent data release showing improved consumer and business confidence in Italy serves as a key indicator of underlying economic health. The desk characterizes this as a significant development, particularly given the reported consumer confidence index rise to 94.5 in August, reflecting a growing optimism among Italian households about their finances and the broader economy, as noted in the analysis from ing-think.
This analysis is supported by the observed 0.2% quarterly GDP growth in Q2 2026, which demonstrates that the Italian economy is exceeding initial expectations. Importantly, the rise in business sentiment, with the composite index reaching 96.9 for the first time since April, underscores a continued upward trend that could provide a buffer against external economic shocks.
Where it sits in our coverage
Our current consensus target for the EUR/USD pair is set at 1.075, aligning closely with jpmorgan's call of 1.10 for March 2026, while bofa holds a contrary view with a target of 1.04 over the same tenor. The desk's perspective harmonizes well within this range, indicating potential upward bias given the strengthening economic indicators.
How other firms see it
Firms like jpmorgan see the potential for a stronger EUR as consumer sentiment continues to recover, while bofa appears more cautious, anticipating a less favorable outlook that could see the EUR under pressure if economic conditions deteriorate. Observers should also monitor the EUR/USD trajectory alongside indicators from the European Central Bank, as shifts in monetary policy may influence the market's reaction to these confidence reports.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01Italian consumer and business confidence are improving, suggesting economic resilience.
- 02Consumer confidence rose for a third consecutive month, reflecting better household sentiment.
- 03Projected GDP growth in Italy is at 0.9% for 2026, supporting a bullish outlook on the EUR.
- 04Market participants should watch for upcoming data releases that may impact EUR/USD dynamics.
Market implications
Traders should keep an eye on the EUR/USD level around 1.075, as this confidence boost could lead to stronger demand for the euro. Upcoming economic data releases will be critical in testing the sustainability of this positive sentiment.
Risks to this view
Any significant downturn in key indicators such as retail sales or manufacturing output could undermine the current optimistic economic outlook, leading to a rapid reassessment of EUR strength. Political instability or adverse external shocks could further challenge market confidence.
Older quick take Quick take Published 12:55 Italy Italian confidence data improves further in August The improvement is widespread, affecting consumers and businesses alike, highlighting the resilience of the Italian economy and lending further support to our forecast of 0.9% GDP growth in 2026 Consumer confidence in Italy rose for a third consecutive month Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Paolo Pizzoli Senior Economist, Italy, Greece In the second quarter of 2026, the Italian economy managed to post a surprising 0.2% quarterly GDP growth, proving more resilient than expected. July's rise in consumer confidence and the aggregate economic sentiment indicator pointed to continued resilience in the third quarter. Today's August data strengthens that view, with further gains in consumer confidence and across all components of business sentiment.
Consumed confidence posted another modest gain The first encouraging signal comes from consumer confidence, which rose for a third consecutive month. At 94.5, up from 94.2 in July, it has recovered to its highest level since the US strike on Iran, though it remains three points below its pre-conflict level. The details are also reassuring: households reported a more favourable view of both the general economy and their own financial situation, concerns about future unemployment eased, and confidence in their ability to save improved.
That said, a decline in willingness to purchase durable goods suggests consumers remain cautious, preferring to postpone major purchases until inflation cools further. Retailers' confidence remained stable at relatively elevated levels, suggesting consumers may still be favouring non-durable goods over larger purchases. The business outlook also continues to improve, with the composite confidence index rising for a fourth consecutive month to 96.9, its highest level since April.
Manufacturing confidence continues to point to a slow bottoming-out Notwithstanding a modest monthly gain in August, confidence in manufacturing reached 89.9, the highest level since June 2023. The improvement was driven by accelerating production expectations, which compensated for cooling orders and rising stocks of finished products. The improvement was driven by accelerating production expectations, which compensated for cooling orders and rising stocks of finished products.
Sector-wise, it was the investment goods domain to shine, whilst intermediate goods set back. Overall, the manufacturing front continues to move along the slow-bottoming-out path which started in mid-2024, irrespective of tariff and geopolitical threats. The fairly volatile construction sector data recorded a rebound in August, which more than compensated the sharp July fall.
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