HSBC Forecasts EUR/USD Decline Towards 1.10 Level as Dollar Gains Strength

Key Facts

Amid a diverging economic performance between the US and the Eurozone, HSBC expects renewed US Dollar strength to weigh on EUR/USD, pushing the pair lower towards 1.10 over the coming months. According to reports, this forecast is driven by a combination of resilient US economic growth and shifting interest-rate expectations that favor the US Dollar over the Euro. This outlook suggests a challenging period ahead for the single currency as it faces renewed selling pressure.

This forecast arrives as recent economic data highlights cooling inflationary pressures in the Eurozone, with Germany's annual CPI slowing to 2.3% in July 2026 from a previous 2.6%, per market data. Meanwhile, other major institutions like ING have echoed similar sentiments; recent research notes suggest that the yield spread between US Treasuries and German Bunds continues to support the Greenback, especially as the Federal Reserve monitors robust labor market indicators.

Looking ahead, traders are focused on the upcoming US Monetary Policy Report scheduled for later today, which could provide further clues on the interest rate trajectory.