Published research this week leans firmly bearish on EUR/USD in the near term, with a 1.12–1.10 zone flagged as the next downside target.
The shared thread across multiple recent research notes: US–EU monetary policy divergence is doing the heavy lifting. Researchers point to elevated US yields, a still-hawkish Fed, and fading expectations for further ECB tightening as the core forces dragging the pair lower. One analysis highlights that the US–euro 2-year rate gap has reached its widest since September 2023, capping any euro rebound. Another flags weak German PMI data and a widening swap differential as compounding factors. Technically, the published consensus notes the pair has broken the key 1.14 support, with the next meaningful floor mapped at 1.12–1.125 and a broader target in the high 1.10s.
A contrarian thread of cyclical research disagrees on horizon, not direction — arguing markets have over-priced Fed hikes and that lower energy costs should support a steady euro recovery through late 2026, once the Fed pivots.