The euro may weaken in the months ahead if expectations rise for further European Central Bank (ECB) rate cuts, according to a report from Standard Chartered. Strategists at the bank said that while the ECB has already shifted to an easing stance, markets could begin pricing in another rate cut as early as December, particularly if inflation continues to undershoot the central bank’s 2% target.
The bank added that additional cuts in 2026 could also come into view if price pressures stay subdued. Beyond monetary policy, headwinds include U.S. tariffs, which threaten to hurt euro-area exports and growth, along with domestic challenges such as political uncertainty in France and bureaucratic hurdles in Germany slowing fiscal disbursements.
Still, Standard Chartered pointed to some structural positives for the common currency, including tentative progress on capital-market reforms and modest signs that global reserve managers are diversifying toward the euro. These, however, remain limited in scope.
The bank expects the euro to decline to $1.13 by the second quarter of 2026, down from recent levels near $1.17, as growth concerns and policy divergence continue to weigh.
—
Standard Chartered’s bearish euro view reflects mounting expectations for deeper ECB easing and persistent growth risks
