UBS has raised its EUR/USD price target to 1.20 from 1.17, citing growing policy divergence between the Federal Reserve and the European Central Bank. The Swiss bank also lifted its stop-loss level to 1.15 from 1.13, reflecting an upgraded outlook for the currency pair.
The long position was first recommended on July 16 at a spot level of 1.1460. UBS attributed the adjustment to shifting expectations around U.S. and eurozone monetary policy. U.S. economic data have weakened the case for additional Fed rate hikes, with markets increasingly pricing out the possibility of further tightening. The bank now expects the Federal Reserve to hold rates steady at its September meeting, closing the window for near-term policy adjustments.
In contrast, European data have shown resilience, supported by fiscal easing measures. This has reinforced expectations that the ECB will proceed with a rate hike, creating a policy gap that favors the euro. UBS anticipates the EUR/USD pair will gradually trend higher as these dynamics unfold.
