Introduction to EUR/AUD Forecast
The EUR/AUD pair ended 2025 on a higher note but experienced a decline in December 2025. This decline was largely due to the Reserve Bank of Australia’s hint at a possible interest rate hike in 2026 if inflation risks persist. The pair remains in a long-term uptrend, but recent price actions suggest that this uptrend may have stalled following the RBA’s hawkish hints.
Current Market Situation
The EUR/AUD pair is currently trading at 1.7505, a significant support level for the second half of 2025. This price level is crucial as it could either provide a pivot for a renewed bounce to the upside or usher in a period of decline. The pair’s movement is sensitive to the monetary policy trajectory of Europe and Australia, as well as China, global risk appetite, and commodities market dynamics.
Fundamental Drivers of EUR/AUD Forecasts
There are four key fundamental drivers behind the EUR/AUD forecasts for 2026:
- ECB vs RBA Monetary Policy Divergence: The European Central Bank’s (ECB) and Reserve Bank of Australia’s (RBA) monetary policies play a significant role in determining the EUR/AUD forecasts. Any market repricing that sees rates staying higher for longer or signals a new rate hike will be supportive of the Aussie Dollar, pressurizing the EUR/AUD.
- Australian Commodity Channels: Commodity prices, particularly LNG and iron ore, significantly influence Australian terms of trade. Changes in export prices feed directly into AUD demand and relevant exchange rates, making commodity price dynamics crucial for EUR/AUD 2026 forecasts.
- China’s Growth Data: As Australia’s largest trade partner, China’s growth and trade cycles significantly impact Australia’s economic activity and the Aussie Dollar. This exposure makes the Australian Dollar sensitive to Chinese growth and trade data.
- Eurozone Growth Data: The Eurozone’s growth may slow in 2026 due to weaker global trade. However, domestic demand, especially from defense spending, is expected to support the economy.
Current EUR/AUD Forecasts for 2026
Prevailing bank-driven EUR/AUD forecasts for 2026, based on current assumptions, see a range-to-lower EUR/AUD. This is derived from an expectation of an ECB stable policy outlook versus a hawkish RBA stance. EUR/AUD weakness will be driven by a stronger global cycle, resilience in commodity prices, upbeat Chinese data, and further hawkishness by the RBA.
Technical Outlook
The daily chart reveals various price levels, with the most notable being the 1.8152 and 1.7501 price levels. These are the borders of the medium-term range that has been intact since June 2025. The 1.7501 support is under pressure, and further AUD strength could buckle this support, ushering in a decline towards the 1.7072 significant support.
EUR/AUD Forecast Targets
Several banks have provided their EUR/AUD forecast targets for 2026:
- NAB’s October 2025 FX forecast update projects that the Australian Dollar will gain ground against the Euro, with the EUR/AUD pair trading at 1.70 in mid-2026 and at 1.72 in late 2026.
- Westpac’s EUR/AUD forecast sees a 1.754 target in March 2026, 1.724 for June 2026, and 1.695 for September and December 2026.
- The Commonwealth Bank of Australia’s EUR/AUD forecast is 1.587 for March 2026, 1.563 for Q2 and Q3 2026, and 1.538 by end-2026.
- UBS’s EUR/AUD forecast implies a target of 1.714 for 2026.
Conclusion
In conclusion, the EUR/AUD forecasts for 2026 are influenced by various fundamental drivers, including ECB vs RBA monetary policy divergence, Australian commodity channels, China’s growth data, and Eurozone growth data. The technical outlook suggests that the pair is currently under pressure, with the 1.7501 support level being crucial. Based on current assumptions, most bank-driven forecasts see a weakening of the EUR/AUD in 2026. However, any changes in global risk appetite, Chinese data, or commodity prices could impact these forecasts.
Frequently Asked Questions
What is the current EUR/AUD exchange rate?
The closing price on Friday, 2 January 2026, was 1.7505.
What are the current EUR/AUD forecasts for 2026?
Most bank sources project a weakening of the EUR/AUD based on ECB vs RBA monetary policy divergence and an expectation of a stronger commodity cycle for 2026.
