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

What the desk is arguing

Morgan Stanley's analysis suggests a bullish outlook for the euro in the near term, with a peak forecasted at $1.23 in early 2026. This anticipated rise is likely fueled by robust economic indicators and a potential tightening of monetary policy from the European Central Bank (ECB).

However, the firm also warns of a subsequent decline to $1.16, signaling a critical reevaluation of eurozone fundamentals that could arise as the global economic climate shifts, impacting trade and investor confidence.

Where it sits in our coverage

Currently, our consensus target for the euro stands at 1.075, with a range between 1.04 and 1.12. Morgan Stanley's peak forecast of $1.23 diverges from our more conservative outlook, suggesting a potential overestimation of euro strength given the prevailing macroeconomic headwinds.

In our internal analysis, we see other firms also projecting varying targets for the euro:

• Barclays: 1.10 (Mar-26)
• JPMorgan: 1.10 (Mar-26)
• BNP Paribas: 1.05 (Mar-26)

How other firms see it

The sentiment on the euro's trajectory varies among different analysts. Some firms maintain a more bearish stance compared to Morgan Stanley, suggesting a cautious outlook on the currency.

• BofA: Targeting 1.04 and adopting a contrary stance, they reflect concerns over economic growth in the Eurozone impacting the euro's strength.
• SocGen: Also leaning bearish with targets closer to our lower end of the range, emphasizing vulnerabilities in the eurozone's economic backdrop.