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FX BANK FORECAST · COVERAGE
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Aggregated year-end forecasts, scenario shifts, and curated analyst notes from 38 institutional desks. No promotion.
FX BANK FORECAST · COVERAGE
Aggregated year-end forecasts, scenario shifts, and curated analyst notes from 38 institutional desks. No promotion.
The desk anticipates market movements as the impending U.S. midterm elections and the Treasury's refunding announcement approach. Per the full note from ing-think, the expected outcomes appear to be already priced in, although a surprise result might yield significant implications for Treasuries. The consensus suggests the Democrats would likely win both the House and the Senate, reinforcing a possible market bias away from the dollar if investor sentiment shifts. Current consensus targets position EUR/USD towards 1.15, with a wider range extending from 1.1162 to 1.2000.
The desk frames the situation as having two main catalysts that will drive trading sentiment this week: the U.S. midterms and the Treasury's upcoming refunding operations. According to the commentary, the prevailing expectation is for a Democratic sweep, which, while broadly expected, could reinforce market tailwinds for other assets over the dollar.
Moreover, the refunding announcement is critical, as it could signal a shift in debt issuance patterns. Current discussions indicate the Treasury might explore reducing long-end issuance if managed effectively, which could further influence demand for U.S. bonds.
Our internal consensus target for EUR/USD stands at 1.1500, with a range from 1.1162 to 1.2000. Specific firm targets include: - commerzbank: Dec-26 target at 1.2200 - investec: Dec-26 target at 1.1700 - rabobank: Dec-26 target at 1.1800
This positions our outlook near the upper bound of the current spread, aligning with prevailing expectations for a weaker dollar trajectory.
Firms significantly aligned with this perspective include ing, which is closely monitoring the potential impact of the elections and refunding operations. Conversely, mizuho and citi show relatively more cautious outlooks, suggesting a stronger dollar scenario under different political outcomes.
The market should also be cognizant of movements in the GBP/USD pair, as the implications of the midterms may ripple across sentiment affecting the UK economy.
No high-impact events are scheduled over the next 30 days, but the market remains highly attuned to the fallout from the U.S. midterm elections this week, which will likely be a pivotal driver ahead of future trading sessions.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
Market implications
Traders should watch for potential volatility in the EUR/USD near the 1.15 level, particularly as midterm results are announced. Positioning ahead of the refunding statement could also introduce swings in Treasuries.
Risks to this view
Unexpected outcomes in the midterms, specifically if Republicans retain control over both chambers, would likely shift market sentiment negatively for risk assets and the euro, potentially triggering a dollar rally.
| Firm | Stance | YE 2026 |
|---|---|---|
Citi | Bearish | 1.0850 |
UBS | Bullish | 1.1600 |
UOB | Bearish | 1.1140 |
All 31 desk targets for EUR/USD
Articles Rates Spark: US midterms and expanding European government bond concerns Today, 16:08 Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Tuesday will be nothing more than the day ahead of a much bigger day – Wednesday, by which time we'll have guidance on the midterm implications, and we'll have the US refunding announcement. In Europe, political jitters in Belgium highlight that France is not the only one struggling to consolidate its finances Padhraic Garvey, CFA and Benjamin Schroeder Along with the results of the US midterm elections, the Treasury's refunding operations loom large The midterms and refunding loom large on Wednesday Two things for Treasuries to get their teeth into in the coming days. First, the signals from the midterm elections.
Expect this to be an issue for trading on Wednesday, as projections emerge through Tuesday night. The basic market discount is for the Democrats to take the House, and maybe the Senate. The only big surprise would be if the Republicans held on to both, which would be a huge surprise, as it would, in fact, suggest an endorsement from the US electorate for the war, tariffs and the current immigration policy, among other contentious issues that have emboldened the left and caused right-leaning independents to swing left.
In all probability, this would be bond negative, on the theory that it's more of the same until disproven. The more probable blue sweep should have little market impact, as it should be broadly discounted. The second big thing for Wednesday is the refunding announcement.
At the previous one, there was a clear intimation of no change to the rhythm of issuance. And the questions posed to primary dealers a few weeks back did not suggest anything big or imminent in terms of change. However, there has been some growing talk of the refunding including a reduction in long-end issuance.
More likely, if the Treasury were minded to do so, it would be an indication that it has the flexibility to do so going forward. Either that, or no change to the issuance profile, is probable. We don't think the Treasury needs to panic here by changing tack on issuance.
Swap spreads are well-behaved. Better to leave such a policy for a time when there is a material need to tighten swap spreads. European bond spreads will remain in focus for some time, and it’s not just France The European government bond space has also moved back into focus at the start of the week, although France has fared better than one might have feared.
In an unscheduled review, Fitch lowered the outlook on France’s A+ rating to negative, citing weaker growth, higher borrowing costs and a wider deficit since the August review. Nonetheless, the 10y OAT/Bund spread still tightened by around 4bp against the backdrop of a broader tightening in government bond spreads at the start of the week, which seems to have been driven by some easing of geopolitical tensions, with oil prices coming off their highs. To be fair, France has been trading at levels more akin to a BBB name for some time already, suggesting spreads are already wider than pure fundamentals would imply.
There was one important exception to the tightening trend. In contrast to the broader trend, 10y Belgian government bond spreads widened by up to 4bp versus Bunds. The backdrop was that the prime minister tendered his resignation after his coalition failed to agree on a budget.
The King did not immediately accept the resignation and called on coalition parties to find a compromise. The King will receive the prime minister next on 6 November. The headlines underscore that it is not only France that faces the challenge of consolidating its finances.
In the summer, the Belgian central bank forecast a deficit of 5.3% for this year and 5.5% in 2027. Tuesday’s events and market view Investors will be looking forward to the US midterm elections as the main political event of the week. In terms of data, the US will release the JOLTs job openings data for September ahead of Friday’s official payrolls data.
In the absence of the data releases, the focus in Europe will be on a busy schedule of ECB speakers, including Kocher, Moulin, Nagel and Sleijpen. In primary markets, Germany auctions 5y bonds (€5bn) and Austria sells 4y and 9y bonds (€1.73bn in total). The UK auctions 10y green gilts (£3.25bn).
Rates Daily 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 Padhraic Garvey, CFA Regional Head of Research, Americas Padhraic Garvey is the Regional Head of Research, Americas.
He's based in New York. His brief spans both developed and emerging markets and he specialises in global rates and macro relative… Benjamin Schroeder Senior Rates Strategist Benjamin Schroeder is a senior rates strategist at ING in Amsterdam. Before joining ING in 2016, he worked in fixed income research at Dresdner Kleinwort and Commerzbank in Frankfurt, Germany.… In this article The midterms and refunding loom large on Wednesday European bond spreads will remain in focus for some time, and it’s not just France Tuesday’s events and market view
How we cover this story
Market pricing of Democratic mid-term gains is supporting EUR/USD higher; watch for DXY breaks below key levels as positioning adjusts.
ECB hawkish messaging supports December tightening expectations, capping EUR/USD downside but positioning resistance at 1.1275 amid energy headwinds.
ECB hawkish positioning provides near-term floor for EUR/USD around 1.1200 despite dollar strength from potential US political outcomes.
USD weakness ahead of midterm elections reflects typical pre-event risk-off positioning; watch for directional conviction post-results.
EUR/USD spot at 1.1191 sits 2.68% below the 31-firm median Dec-26 target of 1.15, exposing a consensus that remains structurally bullish despite tape underperformance.
Cable trades at 1.3409, roughly 0.67% below the 20-firm median Dec-26 target of 1.35, with a 0.26 dispersion that signals deep disagreement on the BoE-Fed divergence trade.
EUR/USD trades 2.65% below the 32-firm median Dec-26 target of 1.15, with a 0.135-wide dispersion band that signals deep disagreement on the Fed-ECB policy path.
31 investment banks see EUR/USD at 1.1508 by Dec 2026
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