ING
2026 FX Outlook
Macro Scenarios
ING EUR/USD scenario analysis and USD macro framework
EUR/USD Fair Value by Scenario
Base case highlighted in red
Rate Spread Sensitivity
Fed-ECB spread vs EUR/USD fair value
Fed vs ECB Rate Assumptions
Central bank rate assumptions across scenarios
Most bullish EUR/USD scenario. Fed cuts aggressively due to US slowdown while ECB holds at terminal. Rate convergence drives EUR/USD to multi-year highs.
ING base case. Fed delivers 100bp of insurance cuts while ECB remains at terminal. EUR/USD grinds higher on narrowing differential and improving Eurozone growth.
Synchronized global slowdown leads both central banks to cut. EUR/USD range-bound as relative rate differential unchanged. Growth differentials become key driver.
Most bearish scenario. US economy remains resilient forcing Fed to hold, while Eurozone weakens prompting additional ECB cuts. EUR/USD retreats toward parity zone.
Tail risk scenario. US fiscal situation deteriorates sharply, triggering capital flight from USD assets. EUR/USD surges as reserve diversification accelerates. Twin deficits become the dominant narrative.
USD Macro Scenario Matrix
Growth x Inflation framework for the dollar
ING base case. Fed cuts gradually, USD weakens in orderly fashion. EUR, AUD, Scandis outperform. EM carry thrives. DXY to 95 by year-end.
Fed cuts delayed but still coming. USD weakens more slowly. EUR/USD grinds toward 1.18-1.20. Carry still works but with lower Sharpe ratio.
Initial safe haven USD bid, then aggressive Fed cuts drive sharp dollar weakness. EUR/USD overshoots to 1.25+. AUD, NZD initially weak then recover. EM carry unwinds violently.
Most challenging scenario for FX. USD initially supported by safe haven, but stagflation erodes confidence. EUR/USD volatile with no clear trend. Gold outperforms all currencies.
Best scenario for risk FX. Synchronized global growth drives capital out of USD into higher-beta currencies. AUD, NOK, SEK, EM FX all surge. DXY breaks below 94.
Tail risk for our bearish USD view. US growth re-accelerates, Fed pauses or hikes. USD rallies broadly. EUR/USD back to 1.10-1.12. EM FX under pressure. Carry mixed.