ABN AMRO’s Bill Diviney has revised the bank’s outlook for the euro, citing diverging monetary policy paths between the European Central Bank (ECB) and the US Federal Reserve, as well as increased risks from upcoming French and US elections [1]. While the bank continues to expect the US dollar to weaken broadly, it has made a modest adjustment to its EUR/USD forecasts due to these developments [1].
Specifically, ABN AMRO now anticipates the ECB will deliver one more rate hike, while the Federal Reserve is expected to remain more dovish than market expectations [1]. As a result, the bank projects the EUR/USD exchange rate to reach 1.18 by the end of 2026 and 1.23 by the end of 2027 [1]. These projections represent a slightly reduced upside for the euro compared to previous forecasts, reflecting the impact of election-related uncertainties and the revised policy outlook [1].
The report highlights that the combination of policy divergence and election risks has tempered expectations for euro appreciation in the near term, even as the broader trend points to a weakening US dollar [1]. No immediate market reaction or analyst opinions beyond ABN AMRO’s forecast adjustments are discussed in the article [1].
CONCLUSION
ABN AMRO has lowered its euro upside forecasts due to diverging central bank policies and heightened election risks. The bank now expects EUR/USD to reach 1.18 in 2026 and 1.23 in 2027, signaling a more cautious outlook for the euro’s appreciation.