BNP Paribas forecasts EUR/USD at 1.21 in Q4 2026 and 1.25 in Q4 2027 amid ECB tightening and AI-driven investment.
BNP Paribas expects the European Central Bank to raise rates by 25 basis points twice in 2026, pushing the deposit facility rate to 2.5%. The moves aim to counter inflation rebounding to 3.0% in 2026 and 3.3% in 2027, up from 2.1% in 2025.
Eurozone GDP growth is projected to slow to 1.0% in 2026 and recover to 1.3% in 2027, down from 1.5% in 2025. Resilience is attributed to investment in defense, AI, and electrification, offsetting energy shock spillovers from the Middle East conflict.
The bank forecasts EUR/USD at 1.21 by Q4 2026 and 1.25 by Q4 2027, citing gradual USD depreciation and diversification away from the dollar.