Analysts Lower EUR/USD Forecasts Amid French Fiscal Concerns
The Euro to Dollar exchange rate (EUR/USD) fell to around 1.1204 on Monday, down 0.4%, as concerns over French government finances weighed on the single currency. Despite weaker US employment figures, the Euro failed to recover, with ING warning of further losses and Rabobank cutting its forecasts.
ING expects EUR/USD to retreat towards 1.1100-1.1120 in the near term, with French fiscal uncertainty threatening a deeper decline. The bank noted that markets have removed around 30 basis points of expected European Central Bank tightening since late September, compared with only 13 basis points for the Federal Reserve, preserving support for the Dollar.
Rabobank has also revised its forecasts downward, lowering its three-month EUR/USD forecast to 1.13 from 1.16 and its 12-month projection to 1.12 from 1.18. The bank warned that investors selling French bonds may increasingly move funds outside the Eurozone, raising the prospect of outflows impacting the Euro. French public debt reached 119.0% of GDP in the second quarter, up from 117.5% earlier in the year.
US economic developments remain a key factor, with non-farm payrolls increasing by just 29,000 in September and unemployment rising to 4.2%. ING expects the Federal Reserve to hold rates in October but anticipates another hike in December. Deutsche Bank offered a more constructive outlook, forecasting EUR/USD at 1.17 by the end of 2026, citing resilient global growth and already substantial expectations of Fed tightening.