Euro to Dollar Forecast Next 6 Months

The Euro to Dollar exchange rate (EUR/USD) remains one of the most important barometers in global currency markets. As 2026 unfolds, forecasts from major investment banks and research desks are highlighting a broad shift in sentiment away from recent dollar strength towards a more euro‑friendly backdrop. 

This article synthesises those forecasts from institutions such as Goldman Sachs, J.P. Morgan, Morgan Stanley, UBS and MUFG to offer a clear view on where EUR/USD could be headed over the next six months.

What Analysts Are Forecasting for EUR/USD in 2026

Institutional forecasts for EUR/USD in 2026 show a consensus leaning towards euro appreciation, driven primarily by expectations of Federal Reserve monetary easing and a weakening U.S. dollar, even as the eurozone economy finds firmer footing.

According to a wide consensus of banks and forecasters, most projections place EUR/USD between 1.18 and 1.25 by the end of 2026, with the median around 1.20.

Below is a summary of key bank forecasts that provide varying scenarios for the pair through the rest of 2026:

Goldman Sachs

Goldman’s 2026 outlook highlights continued dollar weakness, underpinned by diminishing demand for U.S. assets and softening economic differentials. Their broader FX research positions the dollar on the back foot relative to major peers.

Multiple commentary sources also point to Goldman’s specific euro/dollar target range, with some forecasts placing EUR/USD near 1.25 by year‑end under a scenario where structural dollar weakness persists and other central banks maintain more stable policy positions than the Fed.

J.P. Morgan

J.P. Morgan Global Research sees the euro appreciating steadily against the dollar. Their previous forecasts projected EUR/USD around 1.19 by late 2025 and climbing further to about 1.22 by early 2026.

The bank highlights factors such as softer U.S. data, currency hedging flows, and weakening net real yields in the U.S. relative to Europe as persistent drivers supporting euro strength.

Morgan Stanley

Morgan Stanley’s view blends both strength and caution. The bank’s research expects the pair to reach around 1.23 in the spring of 2026 before a potential retracement later in the year on the back of stabilising U.S. economic performance.

This forecast reflects a two‑phase outlook where euro gains in early 2026 are more the result of dollar softness than a sudden jump in eurozone fundamentals.

UBS and Other Banks

UBS has also contributed to the bullish EUR/USD narrative with projections putting the pair near 1.20 by the end of 2026, although it notes political uncertainties in Europe could temper gains.

MUFG expects EUR/USD to trade above 1.20 over the cycle, citing the euro’s resilience amid relatively stable ECB policy and foreign inflows into European assets.

Other forecasters broadly align with these figures, placing EUR/USD in the 1.20–1.25 range by the close of 2026, particularly if the dollar’s momentum fades and central banks elsewhere begin to diverge from U.S. policy.

Quarterly Trajectory: Consensus Forecast

Building on these institutional inputs, some consensus outlook tables show the pair moving in a gradual upward trajectory throughout the year:

Period	Consensus EUR/USD
Q2 2026	~1.18
Q3 2026	~1.21
Q4 2026	~1.23+

These projections suggest that the euro’s gains against the U.S. dollar are expected to strengthen through the second half of 2026, reflecting a combination of expected U.S. rate cuts, softer domestic data in the United States and relatively steady eurozone fundamentals.

Drivers Behind the Forecasts

While specific forecasts are the focus of this piece, it helps to understand the overarching rationale among analysts:

Dollar Weakness Expected

Most research desks forecast reduced support for the U.S. dollar as global markets increasingly price in Fed rate cuts through 2026. Major banks such as Goldman Sachs emphasise that persistent inflation fears have eased and the dollar’s safe‑haven status may be waning, contributing to a weaker USD outlook.

ECB Stability Relative to Fed

Where the ECB appears comfortable maintaining rates and inflation settles near target, a rate differential in favour of the euro emerges as the Fed potentially moves towards easing. This relative stability supports upward pressure on EUR/USD over time.

External Confidence and Capital Flows

Institutions like MUFG underline returning foreign demand for European bonds and equities as a supportive flow for the euro, especially if U.S. asset attractiveness softens.

Potential Risks to the Forecast

Despite broadly bullish euro projections, there are risks that could deflate some upside:

• If U.S. data surprises to the upside or the Fed delays cuts, the dollar could regain strength.
• Geopolitical tensions or a renewed flight to safety might temporarily lift the dollar again.
• Political uncertainty in parts of Europe could weigh on confidence in the euro at times.

These scenarios are reflected in some institutions’ more cautious projections, such as Morgan Stanley’s later‑year moderation from spring highs.

Conclusion

The six‑month forecast for EUR/USD in 2026 reflects a shift in market sentiment among institutional analysts. While near‑term volatility remains possible, the broad trend among major banks points towards a stronger euro and weaker dollar, with impactful forecasts clustering in the 1.20+ range by the latter part of the year. 

Traders and investors should monitor Fed policy signals, economic releases in both the U.S. and the eurozone, and global capital flows, as these remain key drivers of currency movements.

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