The dollar story improves

中文标题

美元前景改善

ING THINK10/15/2026updated 10/17/2026

Multiple economies

Citable research brief

Core conclusion · Tlines extraction

ING argues EUR/USD will remain in a 1.10-1.15 range over the next three to six months, as a hawkish Fed and ECB repricing tied to French fiscal concerns keep real rate differentials at their widest since 2022. Neither driver looks set to reverse soon. A renewed rise in foreign investors' FX hedge ratios is the key risk to this constructive dollar view.

Institution: ING THINK
Published: 10/15/2026
Research topic: Fed Policy · EUR/USD · US Dollar (DXY)
Time horizon: 2022

Fed Policy · FED EUR/USD · EURUSD US Dollar (DXY) · DXY

Key arguments

Persistent US rate support and French debt concerns keep real rate differentials tilted against the euro, at their widest since 2022.
The Fed faces a solid labour market, above-target inflation and mildly restrictive policy; hawkish pricing is unlikely to fade before next spring, when base effects bring inflation closer to 2%.
The near 75bp of ECB hikes priced in look precarious, as French debt losses dragged euro short-dated swap rates lower in early October.
The main dollar risk is a renewed rise in foreign investors' FX hedge ratios, which are already at very low levels, triggered by White House intervention in financial, trade or foreign policy, perhaps after the November midterms.

Key numbers

EUR/USD range: 1.10-1.15
Forecast horizon: three to six months
Fed hikes priced over next 12 months: three hikes
ECB hikes priced into the market: nearly 75bp
Foreigners' share of US bond and equity markets: around 20%

Main risks

A renewed rise in FX hedge ratios among foreign investors could weigh on the dollar.
Fresh White House intervention in financial, trade or foreign policy, perhaps after the November midterms, could prompt higher hedging.
Downside EUR/USD risks if a sharp deterioration in the French debt story demands a greater risk premium for the euro.

Corresponding source evidence

There are no signs of international investors leaving US markets, and by our calculations, foreigners have kept their share of US bond and equity markets steady at around 20%.
Today, the Federal Reserve is faced with a solid labour market, above-target inflation and the prospect of taking policy into mildly restrictive territory.
While we are not looking for the central bank to deliver on all three hikes priced in over the next 12 months, we doubt that the current hawkish Fed pricing will leave the market until next spring.

Context: the conclusion is Tlines' automated extraction, not the institution's wording. Quoted evidence is publisher wording. Scope and date must travel with the conclusion.

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