Morgan Stanley forecasts EUR/USD to reach 1.23 by spring before falling - Investing.com UK

What the desk is arguing

Morgan Stanley's expectation for EUR/USD to hit 1.23 by spring highlights a significant bullish sentiment, supported by anticipated interest rate dynamics and economic recovery in the Eurozone. The firm is leaning on factors such as potential easing of U.S. monetary policy and sustained economic growth in Europe as catalysts for this upward movement in the exchange rate.

However, they also caution that after reaching this peak, a retracement is likely, suggesting a more complex interplay of market factors that could lead to a decline later in the year. This view potentially contrasts with other market participants who remain more conservative in their expectations for the euro's strength against the dollar going into 2026.

Where it sits in our coverage

Currently, the consensus target for EUR/USD across various firms stands at 1.1800 for March 2026, with a range between 1.1700 and 1.2000, reflecting a more moderate outlook than Morgan Stanley's bullish forecast. Their own target aligns closely with the upper end of that range but suggests a strong upward momentum from current levels, which could create divergence in market sentiment.

Notably, several key players project targets close to Morgan Stanley's, but with slight variations: - JPMorgan: Mar26 1.1800 - Goldman: Mar26 1.1800 - MUFJ: Mar26 1.1800

How other firms see it

Several other firms maintain a more cautious tone regarding the euro's outlook against the dollar, reflecting the potential for macroeconomic headwinds. For instance, BofA projects a more conservative Mar26 target of 1.1700, indicating they are aligned with a bearish view overall.

Conversely, some firms take a more optimistic stance, although their targets still fall short of Morgan Stanley's bullish expectations: - Goldman: Mar26 1.1800 - ING: Mar26 1.1900 - MUFJ: Mar26 1.1800