FX Daily: Looking for stabilisation
At a Glance
The desk interprets current market dynamics as a moment of stabilization for the euro, anticipating a potential rebound against a strong dollar. Per the full note, this calm in risk sentiment could allow EUR/USD to maintain levels above 1.130. In light of expected US data, particularly the core PCE, the path forward suggests a bearish USD potential, with the market pricing in a quasi-dovish Fed stance for December. Recent consensus reflects a broad range for EUR/USD targets, indicating a divided outlook among leading firms.
Key Takeaways
Full Analysis
What the desk is arguing
The desk believes the euro is positioned for stabilization against the dollar due to recent reductions in risk sentiment. Per the full note, if sentiment continues to improve, we can expect fundamental data and Fedspeak to drive currency movements.
Today's releases, particularly personal income and core PCE figures, are critical. The desk anticipates core PCE could print at 0.2% MoM, slightly below expectations, reinforcing the notion that aggressive Fed hawkishness might already be priced into the market.
Our baseline view circumscribes the EUR/USD from breaching below 1.130, suggesting that a sustained decline in the dollar may be forthcoming if these data points align favorably for the euro.
Where it sits in our coverage
Currently, the consensus target for EUR/USD is 1.1700, with a range from 1.1200 to 1.2000. Specific targets from notable firms include: - citi: Dec-26 target at 1.1200 - deutschebank: Dec-26 target at 1.2500 - ubs: Dec-26 target at 1.2000 With our view aligning closely with the upper end of market expectations, the desk is optimistic but remains cautious.
How other firms see it
A significant number of firms, including goldman and mufg, express bullish views on the euro, anticipating targets around 1.1800 to 1.2600. Conversely, citi holds a more conservative outlook, eyeing an upper target of only 1.1300 for the same period.
For related currency movements, keep an eye on risk sentiment indicators and the dollar index as both will impact EUR/USD volatility directly, particularly in response to upcoming economic data releases.
Market Implications
Watch for EUR/USD to hold above 1.130, especially if today's core PCE comes in at 0.2% or lower. A breakthrough in the euro's momentum could shift targeting higher towards consensus levels around 1.1700.
EUR/USD — All Desk Targets
| Firm | Stance | YE 2026 |
|---|---|---|
UOB | Bearish | 1.1140 |
ABN AMRO | Bullish | 1.1500 |
Bank of America | Bullish | 1.1500 |
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Articles FX Daily: Looking for stabilisation 07:32 FX Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Calmer markets are allowing several currencies to take a breather against the strong dollar. If sentiment keeps stabilising from here, data and Fedsp
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The desk interprets the latest commentary from J.P. Morgan as reflecting a crucial moment for EUR/USD dynamics influenced by growth and fiscal developments in the Euro area and upcoming U.S. economic indicators. Per the full note, the conversation underscores a resilient Euro amidst lower yields, signaling potential instability for the greenback. The ongoing narrative positions EUR/USD to engage with a carry trade bias as fiscal policies unfold both in Europe and the U.S. Their mention of critical U.S. events — particularly inflation data and payroll figures — highlights catalysts likely to impact trader sentiment through fall. Given the current spot at 1.1446, our consensus among firms has a median target of 1.1700, with a range of expectations spanning from 1.1200 to 1.2000.