Modified: Monday, 5 October 2026 21:01 BST

– Written by


James Fuller

STORY LINK EUR/USD Forecast: Analysts Slash 12-Month Target to 1.12

The Euro to Dollar exchange rate (EUR/USD) traded near 1.1204 on Monday afternoon, down around 0.4% as concerns over French government finances weighed on the single currency.

Weaker US employment figures have failed to produce a lasting Euro recovery, with ING warning of further losses and Rabobank cutting its forecasts despite the softer American data.

EUR/USD Forecasts: ING warns of 1.10 risk

ING expects EUR/USD to retreat towards 1.1100-1.1120 in the near term, with French fiscal uncertainty threatening a deeper decline.

According to ING; “We stick with our 1.1100/1120 EUR/USD target for the time being, with the risk of an extension to the 1.10 area.”

EUR/USD has slipped further from Friday’s close near 1.1252, extending the pressure that drove a 2.5% decline during September.

ING noted that markets have removed around 30 basis points of expected European Central Bank tightening since late September, compared with only 13 basis points for the Federal Reserve.

The smaller adjustment to US expectations has preserved a source of support for the Dollar.

Rabobank has also become more cautious, lowering its three-month EUR/USD forecast to 1.13 from 1.16 and its 12-month projection to 1.12 from 1.18.

The bank commented; “We have revised our EUR forecasts lower across the board”.

The revised targets are close to current levels, but represent a substantial retreat from its previous expectations of a stronger Euro.

Rabobank warned that investors selling French bonds may increasingly move funds outside the Eurozone rather than switch into other Euro-denominated assets.

It added; “This raises the prospect that the EUR could be impacted by outflows.”

French public debt reached 119.0% of GDP in the second quarter, up from 117.5% during the opening three months of the year.

US economic developments nevertheless remain an important counterweight to the Euro’s domestic difficulties.

Non-farm payrolls increased by just 29,000 in September, while revisions removed 60,000 jobs from the previous two months and unemployment increased to 4.2%.

Annual wage growth also eased to 3.0%, providing further evidence that labour-market inflation pressures are cooling.

ING said “the Fed leadership is clearly leaning in the direction of an October hold”, although it still expects another increase later this year.

It added; “December remains our call on the next Fed hike.”

Deutsche Bank’s analysis published last week offered a more constructive outlook, forecasting EUR/USD at 1.17 by the end of 2026.

The bank believes resilient growth outside the US, an eventual easing of energy pressures and already substantial expectations of Fed tightening should limit sustained Dollar gains.

According to Deutsche Bank; “This global growth environment is not consistent with US exceptionalism.”

The forecast is under pressure following the latest decline, but the bank argued that conditions did not justify assuming the Dollar’s advance would continue.

“This is the wrong time to be chasing EUR/USD lower,” the analysts added.

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TAGS: Euro Dollar Forecasts