José Luis Escrivá: Capital flows, exchange rates, and geopolitics - the value of trust in a changing global order

What the desk is arguing

The desk frames this as a pivotal moment for the EUR/USD, driven by the interplay of trust in financial systems and geopolitical developments. Escrivá's insights highlight how capital flows are increasingly sensitive to these factors, which could lead to significant fluctuations in exchange rates.

Supporting this view, recent data indicates that capital flows into the Eurozone have been resilient, despite global uncertainties, with a reported increase of 5% in Q1 2026. This resilience suggests that investors may still have confidence in the Eurozone, which could support the euro against the dollar.

Where it sits in our coverage

Our consensus target for EUR/USD stands at 1.075, with a range of 1.04 to 1.12. Notable firm targets include: - jpmorgan: 1.10 (Mar26) - bofa: 1.04 (Mar26)

This view aligns closely with jpmorgan, which sees a stronger euro, while bofa presents a more cautious outlook at the lower end of the range. The desk's call is positioned towards the upper bound, reflecting a more optimistic sentiment on the euro's strength.

How other firms see it

Firms like jpmorgan and goldman are aligned with our bullish stance on the euro, citing strong economic fundamentals and a potential ECB pivot. Conversely, bofa and citi express caution, highlighting risks from geopolitical tensions that could undermine the euro's strength.

Watch the EUR/USD trajectory closely, as it is likely to mirror the ECB's policy decisions and the evolving geopolitical landscape, particularly in relation to US monetary policy and its impact on global capital flows.

What the calendar says

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