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 , 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 , 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
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