Macro Monthly Podcast with UBS Asset Management
At a Glance
The desk observes a generally bullish recalibration of growth alongside a decline in inflation pressures, presenting a favorable macro backdrop for currency pairs such as EUR/USD. Per the full note source, Evan Brown highlights a re-acceleration in growth, boosted by fiscal policies like the One Big Beautiful Bill Act, which is expected to positively influence financial incomes early in 2026. This shift supports a more optimistic stance on global growth and suggests that recent inflationary pressures may ease, making the environment conducive for strategic currency plays. This outlook diverges from the more cautious perspectives expressed by some firms, hinting at a potential push in the euro towards our consensus target of 1.075 over the coming months.
Key Takeaways
- 01The macro outlook is turning positive with growth recovering and inflation pressures easing.
- 02Supportive fiscal policies, such as the One Big Beautiful Bill Act, will enhance financial incomes and growth.
- 03The desk's view aligns with bullish sentiment among major firms while diverging from more cautious stances.
- 04EUR/USD is poised for upward movement, with a consensus target of 1.075.
Full Analysis
What the desk is arguing
The desk posits that improved global growth and decreasing inflation rates create a favorable environment for currencies such as the euro against the US dollar. Per the full note source, Evan Brown shared that fiscal policy is evolving into a tailwind for economies, particularly highlighting the One Big Beautiful Bill Act and its positive impact on financial growth prospects.
Brown's assessment indicates that a recovery in growth trajectories, particularly following the government shutdown-induced weakness in Q4 of last year, bodes well for the euro. He suggests that the supportive fiscal measures taking shape in major economies, including Germany and Japan, will further reinforce this positive outlook.
Where it sits in our coverage
Our current consensus target for EUR/USD is 1.075, with a range between 1.04 and 1.12 as tracked among key firms. Notable predictions include: - jpmorgan: 1.10 for Mar26 - bofa: 1.04 for Mar26
The desk's optimistic stance aligns with jpmorgan, which also favors a bullish position, while it diverges from bofa, which holds a more bearish view. Our estimate sits comfortably at the higher end of the consensus range.
How other firms see it
Firms such as jpmorgan maintain an optimistic growth outlook that complements the desk's thesis. Conversely, bofa appears more skeptical regarding sustained growth and is expressing caution over inflationary risks.
These discussions are particularly relevant for EUR/USD trading strategies, as shifts in fiscal policy in the US and Europe continue to play a pivotal role in shaping currency valuations and central bank actions.
Market Implications
Traders should closely monitor the EUR/USD pair as it approaches our target of 1.075, particularly as fiscal measures begin to take effect. Key positioning signals, including any shifts from the ECB or Fed, may provide critical insights into how this dynamic evolves.
From the original
Join Evan Brown, Head of Multi-Asset Strategy and Portfolio Manager, for an assessment of the current macro and market environment as we have entered 2026. Hosted by Fatou Konteh, Multi-Asset Specialist. Recorded on 26.01.07
Related speeches
4 items2026 Outlooks - Goldman Sachs
The desk posits that the easing of monetary policies by key central banks could lead to a weakening of the dollar against major currencies, particularly the euro. Per the full note from Goldman Sachs, this shift is anticipated as economies begin to recover from post-pandemic constraints, creating a supportive environment for EUR/USD appreciation. Current positioning suggests traders are increasingly bullish on the euro, with speculative net positions leaning in favor of the common currency. With a consensus target set at 1.075, the outlook indicates a potential upside in the EUR/USD pair for 2026.
Global FX: EUR-USD divergences, systematic signals, sterling struggles
The FX desk is adopting a more bullish outlook on the dollar as diverging economic data strengthens the case for a stronger USD against the EUR. This shift comes on the heels of recent macroeconomic indicators that signal a slowdown in the Eurozone while the U.S. economy shows resilience. Consensus expectations remain generally supportive of the euro, but the disparity is stark as several firms adjust their projections closer to the desk's new view. Market participants should prepare for potential volatility as traders weigh whether to side with the bullish sentiment or bet against it.
FX: Cyclical dollar bullishness takes over
The desk is adopting a bullish stance on the US dollar, aligned with emerging cyclical factors suggesting a rally. Per the full note from ing-think, investor sentiment has shifted significantly from fears of a structural dollar decline to anticipation of a cyclical rebound, in part due to a prolonged period of tighter US monetary policy. Current data highlights that European buy-side hedge ratios for the dollar have returned to under-hedged positions at around 68%, underscoring confidence in holding dollar-denominated assets. Meanwhile, the consensus target for EUR/USD currently sits at 1.1717, with projections pointing to a gradual ascent towards 1.2000 by year-end. This context underscores the pivotal role of evolving US monetary dynamics, particularly as recent forecasts suggest no immediate high-impact events ahead that might disrupt this trajectory.
How should I be positioned? with Richard Bernstein (RBA) and Jason Draho (UBS CIO)
As we look ahead to 2026, the desk notes Richard Bernstein's emphasis on the surprisingly robust U.S. GDP growth, which is tracking around 4%, significantly above expectations, suggesting an optimistic macro backdrop for risk assets going into the new year. Per the full note [source], this supports a potential bullish positioning in the FX space, likely favoring currencies like the USD as the Fed's role remains pivotal. Consensus views align around a strong U.S. economic outlook, reflecting a potential shift in monetary policy trajectories that could influence currency valuations significantly.
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