Euro to Dollar Forecast 2026, 2027, 2028: Latest Bank Survey Sees EUR/USD Rising Towards 1.18

Market impact: mildly bullish for EUR/USD over the medium term, but neutral-to-bearish initially.

The survey does not provide an immediate upside catalyst: its Q3 2026 median of approximately 1.15 is below the reported spot level near 1.1677, implying that the consensus expects near-term consolidation or a pullback before a recovery. The Q4 median near 1.165 is effectively close to current levels, so the immediate signal is limited.

The constructive element is the projected path through 2027: the median rises to 1.18 in Q1–Q2 2027 and approximately 1.20 by Q4 2027. This reflects a potential shift in the EUR–USD rate differential, with markets reportedly assigning greater probability to a firmer ECB stance while reducing expectations for additional Federal Reserve tightening. That combination would support euro carry and reduce the dollar’s yield advantage.

However, the forecast dispersion is unusually important. Estimates for Q2 2027 range from 1.10 to 1.21, showing that the median is not a strong consensus trade. The bullish interpretation depends on continued dollar softness, contained US growth, and persistent Eurozone inflation or energy-related pressure that keeps ECB policy relatively restrictive.

Trading implications:

• Short term: EUR/USD may remain vulnerable to profit-taking or a correction toward the survey’s lower Q3 expectations, particularly if US data revive Fed tightening expectations or if dollar funding demand increases.
• Medium term: The survey modestly favors euro appreciation if the Fed–ECB policy divergence develops in the euro’s favor.
• Risk sentiment: A weaker dollar outlook could also be supportive for gold, non-US assets and other major currencies, although EUR/USD remains primarily driven by relative rates and regional growth.
• Positioning risk: Because the pair has already recovered from its June 2026 low near 1.1325, part of the anticipated euro rebound may already be reflected in current pricing.

The key invalidation risks are a renewed ECB easing cycle, a sharp decline in Eurozone growth, falling energy prices that reduce inflation pressure, or stronger-than-expected US employment and inflation data. Traders should monitor US CPI and labor data, Eurozone inflation, ECB and Fed communication, energy prices, Treasury-market conditions, and whether EUR/USD can hold its recent recovery without further deterioration in dollar sentiment.