EUR/USD Forecast: The ECB Meeting Becomes the Main Driver for the Euro This Week

Market impact: mixed, with a near-term event-risk bias for EUR/USD.

The strong U.S. payrolls result has raised the relative attractiveness of dollar assets by increasing the perceived probability of further Federal Reserve tightening. That creates a bearish fundamental backdrop for EUR/USD, particularly because the ECB and Fed are both being priced as potentially more restrictive, limiting the euro’s ability to benefit from a simple rate-differential trade.

The ECB decision on September 10, 2026 is unlikely to be market-moving by itself because the reported 25-basis-point increase to a 2.50% deposit rate is already almost fully priced. The key risk is therefore the communication and updated policy outlook. A message that keeps additional tightening credible—especially in response to euro-area inflation reaching 3.3% in August—could support the euro by forcing markets to price a higher ECB terminal rate. Conversely, a cautious message that treats the increase as sufficient would likely expose EUR/USD to renewed downside as the dollar retains stronger support from U.S. labor-market resilience.

The German factory-order data provide some support for the euro-area growth narrative, but the quality of the improvement is mixed: headline gains were concentrated in large contracts, while orders excluding those contracts and foreign demand weakened. This reduces the likelihood that the data alone will materially alter ECB expectations.

Technically, the article identifies consolidation around 1.1620, with 1.1655 as the near-term upside reference and 1.1525 as the broader downside level if support fails. These should be treated as reaction zones rather than predictive targets. A sustained move above the upper range would require either hawkish ECB guidance or softer U.S. rate expectations; a break below the lower range would indicate that the Fed-growth advantage is dominating.

What traders should monitor:

the ECB press conference and projections, any change in market pricing for additional ECB hikes, U.S. Treasury yields and Fed-rate expectations, and next week’s U.S. inflation report. The main risk to a bearish-euro interpretation is an ECB communication that validates further tightening; the main risk to a bullish-euro interpretation is that the ECB hike is delivered with limited forward guidance while U.S. inflation remains firm.