In its baseline outlook, ING expects the US dollar to weaken through 2026 due to a softer economic backdrop in the United States, growing doubts over Federal Reserve independence, and a more constructive economic outlook in the Eurozone. Under this scenario, the bank projects EUR/USD to climb toward 1.22 by the end of next year.
ING also highlights alternative paths. Should confidence in the dollar deteriorate sharply, the EUR/USD pair could, according to the bank’s estimates, rally as high as 1.35.
However, if the Eurozone were to face a renewed debt crisis, the situation could shift dramatically, pushing the pair down toward the 0.98 area.
If concerns mount over Trump’s economic policies and the US economy slides into recession, the dollar could come under significant selling pressure. Such a scenario would likely be accompanied by aggressive Federal Reserve rate cuts — particularly if threats to the central bank’s independence intensify.
ING notes that this would trigger a substantial outflow of global capital from US markets, accelerating the dollar’s decline.
At the same time, the bank warns that France’s budget issues may become a notable risk factor. If these concerns escalate into a broader Eurozone debt crisis, the outlook for the region could worsen sharply, potentially forcing the ECB into deeper and faster rate cuts.
In this adverse scenario, ING believes EUR/USD could fall below parity.