Exchange Rates UK Research’s latest August 2026 survey of major investment banks points to a gradually stronger Euro-to-Dollar exchange rate through 2027, although the near-term consensus remains cautious.

With EUR/USD currently around 1.1677, the median forecast falls to approximately 1.15 in Q3 2026 before recovering to around 1.165 in Q4.

The median then rises to 1.18 in Q1 2027 and remains at 1.18 in Q2, around 1.1% above the current exchange rate.

The headline finding is therefore not for an immediate euro breakout. Instead, the latest survey suggests near-term consolidation followed by modest euro appreciation as 2027 develops.

Individual forecasts remain much more divided, with the Q2 2027 range stretching from 1.10 to 1.21.

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Latest Survey Sees EUR/USD Recovering Towards 1.18

The latest Exchange Rates UK Research poll includes 25 bank forecasts for Q3 and 26 for Q4, providing a broad measure of institutional expectations.

The immediate outlook is relatively restrained.

The Q3 median around 1.15 sits below current spot, with the central 50% of forecasts concentrated roughly between 1.14 and 1.16.

By Q4, however, the median recovers towards the current market level.

The balance shifts more clearly in favour of the euro during 2027.

The median reaches 1.18 in both Q1 and Q2, while the central forecast range moves higher.

By Q4 2027, the median reaches approximately 1.20, although the number of banks providing forecasts declines at longer horizons.

There are significant differences beneath those averages.

Scotiabank forecasts EUR/USD at 1.20 in Q4 2026 and 1.21 by Q2 2027. ABN AMRO, CIBC, ING, MUFG, National Bank of Canada, TD Economics and UBS also have forecasts reaching 1.20 or above.

Nomura is particularly bullish further out, forecasting 1.22 in Q1 2027 and 1.25 by Q4.

The bearish camp is equally noteworthy.

HSBC forecasts EUR/USD falling to 1.10 by Q2 2027, while JP Morgan also sees 1.10. Goldman Sachs and Danske Bank project 1.12, while Citi maintains forecasts around 1.13–1.14.

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The breadth of these projections is important.

The median points modestly higher, but there is no overwhelming institutional agreement that EUR/USD must rise.

Euro Rebounds as Dollar Comes Under Fresh Pressure

The survey comes after a sharp change in EUR/USD momentum.

The pair fell to a 2026 low around 1.1325 during June before recovering through July and August.

EUR/USD gained 1.02% in July and is up another 1.15% so far in August, taking the exchange rate back towards 1.17.

Despite that recovery, EUR/USD remains around 0.5% lower for 2026 after beginning the year near 1.1733.

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Recent euro gains have coincided with renewed pressure on the US dollar.

Reuters reported that the dollar fell to a three-month low against the euro during the past week as investors became increasingly concerned about US Treasury market conditions and the government’s expanded programme of long-dated debt buybacks.

The US currency was also hurt earlier in the week as weaker retail sales and labour-market data encouraged traders to scale back expectations for another Federal Reserve rate increase.

There is a second development potentially supporting the bullish side of the EUR/USD survey.

Markets have become increasingly hawkish on the European Central Bank as higher energy prices threaten to keep Eurozone inflation elevated.

Traders now see the ECB deposit rate potentially approaching 3% by late 2027, a substantial change from expectations earlier in the summer.

The ECB’s own June projections put average Eurozone inflation at 3.0% in 2026, largely because of higher energy prices, before easing to 2.3% in 2027 and 2.0% in 2028.

The combination of reduced expectations for Federal Reserve tightening and greater concern about further ECB rate increases has therefore shifted relative interest-rate expectations in a direction that can support EUR/USD.

EUR/USD Outlook: Consensus Higher, But 1.10–1.21 Range Shows the Risk

The latest Exchange Rates UK Research survey gives a more nuanced signal than simply “banks are bullish on the euro”.

In the near term, the median actually expects EUR/USD to trade below today’s 1.1677 level.

It is during 2027 that the central forecast becomes more constructive, with 1.18 emerging as the median Q2 target and around 1.20 by late 2027.

That would represent moderate euro appreciation rather than a dramatic Dollar decline.

The more revealing figure may be the forecast dispersion.

At Q2 2027, the surveyed banks span approximately 1.10 to 1.21.

The central 50% is much tighter at roughly 1.15–1.20, but even that range encompasses substantially different outcomes for businesses and investors exposed to the pair.

The latest market recovery towards 1.17 has already erased much of the weakness seen during June.

Whether EUR/USD can extend that move towards 1.18 and eventually 1.20 will depend heavily on whether current expectations for a less hawkish Federal Reserve and a firmer ECB survive the next round of inflation, employment and energy-market developments.

For now, the median bank forecast favours the euro over the medium term, but the consensus is for measured appreciation rather than a one-way Dollar decline.