EUR/USD Hits 12-Week Lows as Fed Rate Hike Bets Surge

The Euro to Dollar exchange rate (EUR/USD) has been under pressure in recent weeks, falling to 12-week lows near 1.1350 as surging US Treasury yields and expectations of further Federal Reserve tightening reinforce Dollar demand.

With the 10-year yield above 5.20% and markets increasingly pricing two more Fed hikes this year, the immediate balance of risks remains tilted towards further Euro losses.

Nordea forecasts that the Euro to Dollar (EUR/USD) exchange rate will test 1.12 in the first half of 2027 before gains to 1.17 over the second half of next year, while Standard Chartered is still backing medium-term EUR/USD gains with a 12-month forecast of 1.18.

ING noted that it sees the 1.1320-1.1330 area as the next key support for EUR/USD and warned that it could reach this level quickly if oil prices take another sharp leg higher or US data surprises to the upside over the next couple of weeks.