Exchange Rates UK Research’s latest May 2026 survey of major investment banks shows the EUR/USD exchange rate is expected to remain relatively well-supported above 1.16 in the near term, with the broader balance of forecasts continuing to point towards a gradual move into the 1.20–1.24 region through 2027.

The latest poll also highlights a growing divide between banks expecting a structurally weaker US dollar over the coming years and a smaller group forecasting EUR/USD drifting back towards the low-1.10s.

Latest Survey Suggests EUR/USD Recovery Trend Remains Intact

The majority of forecasts in the latest Exchange Rates UK Research poll continue to favour gradual EUR/USD appreciation over the medium term.

Banks including Scotiabank, RBC Capital Markets, ING, SEB and Natixis all expect the pair to trade above 1.20 during 2027, while Nordea remains the most bullish institution in the survey with projections extending towards 1.28 longer term.

By contrast, Citi and Danske Bank remain more cautious on the euro outlook, forecasting EUR/USD drifting back towards the 1.12–1.14 region over time.

Overall, however, the balance of forecasts continues to point towards a broadly softer US dollar environment compared with the past several years.

That outlook reflects the pair’s broader recovery trend since mid-2025.

EUR/USD rallied strongly from lows near 1.13 during 2025 and spent much of early 2026 trading in the 1.16–1.18 region. Although momentum has slowed during May, the pair remains significantly above the lows below parity seen during the 2022 energy crisis and the broader dollar surge that dominated 2022–2024.

Recent price action also suggests markets are becoming more comfortable with EUR/USD stabilising above the 1.15 level after repeated pullbacks found support.

Dollar Weakness Narrative Continues to Dominate Forecasts

A key theme running through the latest bank forecasts is the growing importance of the long-term US dollar outlook.

Many institutions now expect the Federal Reserve to gradually move towards lower interest rates during 2026 and 2027 as US growth slows and inflation pressures moderate further.

At the same time, concerns surrounding US fiscal deficits and rising government debt continue to feature prominently in longer-term dollar outlook discussions.

By comparison, the euro has benefited from improving Eurozone growth expectations, easing energy market pressures and reduced concerns about fragmentation risks within the currency bloc.

The European Central Bank has also maintained a relatively cautious approach towards rate cuts, helping support yield differentials versus the US dollar.

However, banks remain cautious about forecasting a rapid EUR/USD rally.

Global growth concerns, geopolitical tensions and periodic safe-haven demand for the US dollar continue to generate volatility and limit the pace of euro gains.

EUR/USD Outlook: Banks Increasingly Comfortable Forecasting Higher Euro-Dollar

The latest Exchange Rates UK Research survey suggests a growing number of banks now view EUR/USD strength as a medium-term structural trend rather than simply a short-term correction.

Importantly, most forecasts now cluster above the average trading ranges seen between 2022 and 2024, reinforcing the idea that the market may be entering a new phase of broader US dollar weakness.

For now, the survey points to gradual appreciation rather than an aggressive breakout higher.

But with markets increasingly focused on Federal Reserve easing expectations and longer-term fiscal risks in the United States, institutional sentiment towards EUR/USD remains notably more constructive than it was even a year ago.