Morgan Stanley sees euro peaking at $1.23 in early 2026 before sliding to $1.16 - investingLive

What the desk is arguing

Morgan Stanley sees the euro peaking at $1.23 in early 2026 before a subsequent decline to $1.16. This view indicates optimism regarding the euro's strength driven by robust Eurozone economic indicators, yet acknowledges the potential pressures from U.S. monetary policy shifting into a tightening phase.

The firm’s prediction implies that while the euro's rise appears to be driven by current economic momentum, it fails to account for potential challenges such as persistently high inflation in the U.S. leading to a more aggressive Fed response. If the ECB remains dovish, the euro could face downward pressure sooner than anticipated.

Where it sits in our coverage

Our consensus target for EUR/USD is currently set at 1.075, reflecting a much lower valuation compared to Morgan Stanley’s forecast. This divergence suggests a significant difference in expectations regarding future economic performance and central bank actions, with Morgan Stanley indicating a potential appreciation that contrasts sharply with our current outlook.

According to our internal data, other firms such as a few prominent institutions have published target figures that reflect varying market insights:

• Barclays: 1.09 by Dec-2026
• JPMorgan: 1.10 by Mar-2026
• Deutsche Bank: 1.12 by Jun-2026

How other firms see it

Firm perspectives on the euro's future vary significantly, with some aligning closely with Morgan Stanley's bullish sentiment while others take a more cautious stance.

• RBC: aligned, projecting a peak of 1.20 by 2026
• Bofa: contrary, with a forecast of 1.04 for Mar-2026
• Nomura: aligned, expecting 1.15 as an eventual target