BNP Paribas forecasts US GDP growth of 2.4% in 2026, up from 2.1% in 2025. It puts 2026 inflation at 3.3%, and expects inflation to remain above target through 2028 due to higher oil prices and tariffs.<\/p>\n
The Fed Funds target range is projected to stay at 3.5%\u20133.75%. The forecast includes a Federal Open Market Committee shift to a \u201ctwo-sided outlook\u201d, indicating readiness to raise or cut rates if needed.<\/p>\n
BNP Paribas expects the US dollar to weaken gradually against the euro under its base-case scenario. It describes this scenario as a gradual normalisation in the Middle East and ongoing price pressures.<\/p>\n
The bank forecasts EUR\/USD at 1.21 by Q4 2026 and 1.25 by Q4 2027. The article states it was produced with the help of an AI tool and reviewed by an editor.<\/p>\n
We see the US economy running hotter than its potential this year, with growth on track for 2.4%. The most recent data from Q1 2026 confirmed this strength, showing an annualized growth rate of 2.6%. This momentum suggests the economy is comfortably absorbing the current level of interest rates.<\/p>\n
Inflation is proving stubborn and is expected to average 3.3% this year, a trend we also observed through much of 2025 when it consistently stayed above target. This persistence makes it unlikely the Federal Reserve will consider rate cuts in the near term. We therefore expect the Fed Funds target range to remain steady at 3.5%-3.75% for the remainder of the year.<\/p>\n
This economic picture points to a gradual weakening of the US dollar against the euro. With the American economy’s outperformance becoming less pronounced and diversification flows continuing, the dollar’s appeal should slowly fade. We are targeting a EUR\/USD rate of 1.21 by the end of this year.<\/p>\n
For traders, this outlook suggests positioning for a slow and steady rise in the EUR\/USD pair, which currently sits near 1.1850. Buying long-dated call options on the euro could be an effective way to gain exposure to this anticipated upward drift. The relatively low market volatility means these options are not excessively priced right now.<\/p>\n
Given the expectation for a steady Fed, options that profit from a lack of interest rate movement, such as selling strangles on SOFR futures, could also be considered. The main takeaway for the coming weeks is to prepare for a patient, grinding move higher in the euro, not a sharp breakout.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" BNP Paribas sees stronger 2026 US growth, inflation above target, steady Fed rates, and gradual dollar weakening.<\/p>\n","protected":false},"author":38,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[46],"tags":[],"class_list":["post-46541","post","type-post","status-publish","format-standard","hentry","category-live-updates"],"acf":[],"aioseo_notices":[],"featured_image_src":null,"featured_image_src_square":null,"author_info":{"display_name":"josephine","author_link":"https:\/\/www.vtmarketsglobal.com\/en\/author\/josephine\/"},"_links":{"self":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts\/46541","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/users\/38"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/comments?post=46541"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts\/46541\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/media?parent=46541"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/categories?post=46541"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/tags?post=46541"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}