Global FX: Interrogating the optimistic baseline

What the desk is arguing

J.P. Morgan presents an interrogation of the optimistic narrative surrounding the U.S. dollar, suggesting that this narrative may be overly reliant on favorable cyclicality amid significant market volatility. The analysts point to the turbulence in U.S. equities, alongside unstable industrial commodity prices, as critical factors challenging the assumption of sustained dollar weakness.

Furthermore, the geopolitical landscape adds another layer of complexity that could undermine the dollar’s bearish outlook. By refusing to take the optimistic baseline at face value, J.P. Morgan underscores the importance of revisiting fundamental data and market signals to assess whether the current narrative holds under pressure.

Where it sits in our coverage

Our consensus target for the U.S. dollar remains at 1.075, with a firm spread indicating a range between 1.04 and 1.12. This perspective aligns with J.P. Morgan's belief that the dollar faces challenges, while still keeping within a range driven by cyclical dynamics.

In terms of specific firm forecasts, we note the following insights:

• JPMorgan: Target of 1.10 for Mar26.
• Goldman Sachs: Target of 1.08 for Dec26.
• Citi: Target of 1.06 for year-end 2026.

How other firms see it

While J.P. Morgan offers a critical lens on the optimistic baseline narrative, other firms hold varying perspectives. For instance, BofA maintains a contrary view, advocating for a stronger dollar and setting a target at 1.04 for Mar26.

In contrast, firms like Goldman Sachs and Citi align more closely with the cautious stance taken by J.P. Morgan, indicating that they see potential vulnerabilities for the dollar given current market conditions. Their forecasts reflect a more tempered approach amid ongoing volatility in financial markets.

• BofA: Target of 1.04 for Mar26 (contrary)
• Goldman Sachs: Target of 1.08 for Dec26 (aligned)
• Citi: Target of 1.06 for Dec26 (aligned)