Crypto & Forex May 18, 2026 0 Comments

Why The Bearish Dollar Crowd Might Just Be Setting The Euro Up For A Surprise Rally—Here’s What Societe Generale Didn’t Tell You

Ever notice how the EUR/USD pair has been playing hard to get lately? Slipping from 1.18 down to 1.16, you’d expect it to keep falling given this risk-off vibe and all the gloom hanging over the markets. But nope — it hit the brakes, and honestly, that’s pretty fascinating. Kit Juckes from Societe Generale throws some light on this stubborn hold, blaming it on the bearish Dollar consensus and a market still betting big on multiple ECB hikes. Makes you wonder: are we just waiting for the rate expectations to do a complete 180 before we see any real fireworks here? It’s a classic tug-of-war between rate markets and currency moves, and the USD is caught right in the middle, struggling to shake off negative sentiment even as futures bailed on long positions again. If you’re like me, always watching these shifts like a hawk, this standoff says a lot about the bigger story brewing beneath — and it’s worth keeping a close eye on those FOMC minutes coming up. Ready to dive deeper? LEARN MORE.

Kit Juckes at Societe Generale highlights that EUR/USD has lost downward momentum after slipping from 1.18 to 1.16, despite risk-off conditions and tumbling sentiment indicators. He links this resilience to a bearish Dollar consensus and to markets still pricing multiple ECB hikes, suggesting rate expectations must shift before EUR/USD trends decisively.

Euro holds despite risk-off backdrop

“Rates and equity markets are in ‘risk-off’ mode, the SG Sentiment Indicator is tumbling and yet, EUR/USD, having slipped from 1.18 to 1.16, has run out of downward momentum!”

“To some extent, this reflects the bearish USD consensus (President Trump wants a weaker dollar and lower rates and isn’t doing anything to make foreign investors relaxed about holding long dollar positions), and to some extent it reflects the fact that while the front end of the US rates curve is now pricing in a decent chance of a Fed hike this year (in which regard, Wednesday’s FOMC Minutes will be interesting) it is still pricing in 3 ECB hikes (and 2 ½ from the bank of England).”

“This still suggests that we need the rates market to move before FX can: If European rate hike expectations are questioned by the market (they look excessive given the economic outlook) the dollar is likely to get a lift (as it would if the FOMC minutes trigger a further rethink of the likely Fed rate path), but even so, any upward trend in the dollar is likely to be slowed by the underlying negative sentiment.”

“Currently, the futures market is busy, once again, giving up on long USD positions.”

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)