Euro Stabilizes Ahead of Crucial Central Bank Decisions in September

The EUR/USD exchange rate has stabilized above 1.16 as investors prepare for crucial decisions from the Federal Reserve and European Central Bank in September.

Markets are divided over the Fed's next move, while another ECB rate hike is widely expected, making relative yields, energy prices, and fiscal backdrops key drivers for the pair.

MUFG is backing EUR/USD gains to 1.20 by the second quarter of 2027 as the dollar comes under pressure and the Euro area remains resilient.

Schroders, however, expects EUR/USD losses to 1.10 by the end of 2026, citing widening rate differentials in favor of the dollar and a weaker euro by year-end.