Deutsche Bank Euro To Dollar Forecast: EUR/USD Heading Above 1.20 In 2026 - Exchange Rates UK

What the desk is arguing

Deutsche Bank argues that EUR/USD will grind higher above 1.20 in 2026, driven by a narrowing interest rate differential and improved eurozone growth dynamics. The bank sees the pair reaching 1.18 by March 2026, 1.21 by June, and 1.25 by year-end.

This thesis rests on the expectation that the ECB will begin cutting rates later than markets price, while the Fed eases more aggressively, compressing the US-EU rate spread. Additionally, eurozone fiscal expansion and a rebound in manufacturing activity should support the euro.

The desk implicitly rejects the narrative that structural headwinds—such as energy dependence and political fragmentation—will keep EUR/USD anchored below 1.20. Instead, they see these as transient, with the euro undervalued on a purchasing power parity basis.

Where it sits in our coverage

Our internal consensus for EUR/USD shows a Dec-26 median of 1.22, with a firm range from 1.16 (Morgan Stanley) to 1.25 (Goldman Sachs, Deutsche Bank). Deutsche Bank’s 1.25 year-end target sits at the very top of that range, indicating an above-consensus bullish view.

Several firms align closely with Deutsche Bank’s bullish trajectory. For instance: - Goldman forecasts 1.25 for Dec-26. - MUFG targets 1.24 for Dec-26. - ING expects 1.22 for Dec-26.

On the other hand, Morgan Stanley is notably bearish at 1.16 for Dec-26, while Barclays sits at 1.21, nearer to the median. Deutsche Bank’s call is thus at the bullish extreme, alongside Goldman.

How other firms see it

Goldman Sachs is closely aligned with Deutsche Bank, both calling for 1.25 by Dec-26. MUFG (1.24) and ING (1.22) also share a bullish bias, though slightly less aggressive. These firms collectively see euro appreciation driven by catch-up to fair value.

Morgan Stanley stands out as contrary, forecasting Dec-26 at 1.16—well below consensus. They cite persistent eurozone weakness and a stronger USD due to relative growth outperformance. Barclays (1.21) is modestly bearish relative to the median, while JPMorgan (1.20) is also below consensus.

In summary, the majority of our tracked firms lean bullish, but Deutsche Bank’s 1.25 target is among the most optimistic, shared only by Goldman.