Euro to Dollar Week-Ahead Forecast: US Inflation to Test Euro Rebound

Modified: Monday, 9 November 2026 13:46 BST - Written by James Fuller

STORY LINK Euro to Dollar Week-Ahead Forecast: US Inflation to Test Euro Rebound

The Euro to Dollar exchange rate (EUR/USD) recovered to around 1.1195 on Monday afternoon, gaining 0.5% as the Dollar surrendered part of Friday's advance.

Tuesday's US inflation report will provide the next test of the recovery, with banks divided over whether weaker demand for defensive assets can outweigh expectations of another Federal Reserve rate increase.

EUR/USD Forecasts: US inflation tests 1.12 recovery

ING expects EUR/USD to recover above 1.1200 this week, provided global stock markets avoid another sharp sell-off.

According to ING; "Unless risk sentiment faces new instability this week, we expect EUR/USD to make its way back above 1.120."

The bank estimates that the Euro is around 2% below the level suggested by its short-term valuation model, arguing that Friday's Dollar gains went further than interest-rate movements justified.

EUR/USD ended Friday at 1.1140, down around 0.2% over the week, despite reaching a November high of 1.1273.

The US employment report strengthened the case for further Fed tightening, with payrolls increasing by 165,000 in October and average hourly earnings rising 0.4% on the month.

ING still expects a December rate increase, although it is less convinced that further tightening will be necessary in 2027.

In its assessment of Friday's jobs figures, the bank commented; "While we do expect a December rate rise, we continue to doubt the need for additional hikes next year."

October's US consumer price figures are due on Tuesday 10 November at 13:30 GMT.

ING's Monday currency note forecasts monthly increases of 0.3% in both headline and core prices, which it believes would reinforce expectations of a December hike.

A stronger reading could interrupt the Euro's recovery, while softer underlying inflation would give investors greater reason to question how much further US rates need to rise.

Rabobank remains cautious over the medium-term Euro outlook, forecasting EUR/USD at 1.10 in three months in its 3 November monthly report.

The bank argues that French fiscal concerns can encourage investors to move money outside the Eurozone rather than switch into other Euro-denominated assets.

It nevertheless sees scope for relief if France resolves its immediate budget difficulties.

According to Rabobank; "There may be some near-term respite for the EUR if a French budget is in place by the end of the year."

UniCredit takes a more constructive view, forecasting EUR/USD at 1.14 in the fourth quarter of 2026 and 1.16 in the second quarter of 2027.

Its outlook, published before Friday's employment report, depends partly on a narrowing gap between US and German bond yields.

The bank commented; "If the rise in US bond yields eases further, mainly when looking at 2027, the USD would lose part of its grip."

Friday's updated Eurozone GDP estimate and US producer-price figures will provide further evidence on growth and inflation after Tuesday's release.

A softer US inflation reading and steadier equities would favour another attempt at November's 1.1273 high, while renewed Dollar demand could send EUR/USD back towards Friday's 1.1140 close.

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TAGS: Euro Dollar Forecasts