ING
2026 FX Outlook
LIVE10 November 2025USD bearish
Back to CurrenciesBullish
EUR/USD
Fiscal renaissance lifts the euro
ING Forecast Path
vs Prior ForecastCurrent target: 1.22Prior target: 1.2Revision: +1.7%
Cross-Firm Forecast Comparison
Key Drivers
German fiscal spending
ECB-Fed rate differential
Eurozone PMI trajectory
EU defense investment
Current account surplus
All Firm Targets (Dec '26)
GSBullish1.2500
DBStrongly Bullish1.2500
MUFGBullish1.2400
INGBullish1.2200
BofABullish1.2200
BARCModerately Bullish1.2100
JPMModerately Bullish1.2000
MSBullish (H1), Fading (H2)1.1600
Key Issues for 2026
1.German fiscal expansion is a game-changer for Eurozone growth
2.ECB-Fed rate convergence supports EUR strength
3.Defense spending creates multi-year investment pipeline
4.EU current account surplus provides structural support
5.EUR no longer a low-yielder with ECB terminal near 2%
Risk Scenarios
Very bullish1.28+
US fiscal crisis or aggressive Fed cuts on recession fears
Base case1.20-1.22
Fed delivers moderate insurance cuts, Eurozone growth holds above trend
Moderately bearish1.14-1.16
US exceptionalism narrative returns, Fed pauses
Most bearish1.08-1.10
Eurozone recession, ECB cuts to 1%, Fed holds at 4%
Analysis Summary
Euro set to benefit from German fiscal expansion, improved Eurozone growth momentum, and a narrowing ECB-Fed rate differential. The fiscal impulse from defense spending and infrastructure investment provides a structural tailwind that should push EUR/USD above 1.20.