Euro to Dollar Forecast: ING Keeps 1.18 Target as EUR/USD Holds 1.1670

Market impact: Moderately bullish EUR/USD, but highly event-dependent.

ING’s decision to retain a 1.17 September and 1.18 year-end forecast reinforces the view that the recent euro rally is not yet considered exhausted. The underlying market mechanism is primarily a weaker-dollar thesis: further adjustment of previously long USD positioning, softer US-rate expectations, or concerns over US Treasury and policy credibility could reduce demand for the dollar. ING also views euro positioning as relatively light, leaving scope for additional buying if US data or Federal Reserve expectations turn more dovish.

The 1.1660–1.1670 area is important in the near term because it represents the reported breakout-support zone. Holding above it would suggest consolidation after the late-August advance rather than an immediate reversal, keeping the path toward 1.17 and potentially 1.18 open. A sustained failure of that area would weaken the breakout structure and increase the risk that recent euro longs reduce exposure, particularly if broader risk assets also come under pressure.

The euro also has some fundamental support from stronger-than-expected German Ifo data and an upward revision to second-quarter German growth. However, these developments are more supportive of the euro’s downside protection than a standalone catalyst for a major further repricing, since the dominant driver remains the relative US–euro-area rates outlook.

Key risk to the bullish interpretation:

US July PCE inflation and Kevin Warsh’s Jackson Hole speech. A hawkish message, persistent US inflation, or reduced expectations for easier Fed policy could lift Treasury yields and the dollar, triggering a pullback in EUR/USD despite ING’s medium-term target. Conversely, softer inflation or renewed pressure for lower US rates would strengthen the bullish euro-dollar case.

Trading implication:

The immediate bias is constructive while the reported support zone holds, but the pair is vulnerable to sharp event-driven reversals. Traders should monitor US PCE details—not only the headline but also core and services inflation—Fed communication, US yields, dollar positioning, and whether EUR/USD can remain above the breakout area after the event risk passes.