Dollar eases slightly on the day as risk mood holds steadier
At a Glance
The dollar is experiencing a slight pullback as traders await developments in the US-Iran conflict, which is keeping market sentiment relatively stable. Per the full note from Justin Low at investinglive.com, the lack of new information has resulted in a cautious optimism among traders, with the dollar easing slightly while major currencies like the euro and pound gain modestly. This sentiment is reflected in the bond market, where persistent inflation concerns are limiting the dollar's decline. As traders assess the potential for a framework deal regarding the Strait of Hormuz, the dollar's movements remain muted, with EUR/USD hovering near 1.1760, indicating a balance between risk appetite and geopolitical caution.
Full Analysis
What the desk is arguing
The desk contends that the dollar's recent weakness is largely a function of geopolitical uncertainty and market sentiment rather than a definitive shift in fundamentals. Per the full note from investinglive.com, the dollar's slight decline is accompanied by a steady rise in equities, suggesting that traders are maintaining a cautiously optimistic outlook despite ongoing tensions.
Supporting this view, WTI crude oil prices are down slightly, and S&P 500 futures are up, indicating a risk-on environment. The EUR/USD pair's current level around 1.1760 reflects this cautious optimism, as traders remain hesitant to push the dollar significantly lower without clearer signals from the geopolitical landscape.
Where it sits in our coverage
Our consensus target for EUR/USD is 1.075, with a range between 1.04 and 1.12. Notable firm targets include: - jpmorgan: 1.10 (Mar26) - bofa: 1.04 (Mar26)
This view aligns with jpmorgan, which sees potential for a stronger euro, while bofa holds a more bearish outlook. The desk's call is positioned at the upper bound of the consensus range, indicating a belief in the euro's resilience against the dollar in the near term.
How other firms see it
Firms aligned with a bullish euro perspective include jpmorgan and citi, while bofa and goldman express a more cautious stance on euro strength. The divergence in outlooks highlights differing interpretations of the ECB's potential rate hikes relative to the Fed's.
The trajectory of EUR/USD is closely tied to the ECB's monetary policy decisions and the evolving situation in the US-Iran conflict, which could influence risk sentiment and currency flows significantly.
What the calendar says
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AUD/USD — All Desk Targets
| Firm | Stance | YE 2027 |
|---|---|---|
Goldman Sachs | Bullish | 0.7000 |
UOB | Bearish | 0.6835 |
Citi | Bearish | 0.6700 |
From the original
There's not too much happening on the session as markets are largely waiting on fresh leads from the US-Iran conflict. So far, there's nothing new as we continue to wait on the supposed framework deal to at least free up the Strait of Hormuz. It still remains to be seen how such