New data release: ECB wage tracker indicates negotiated wage pressures stable in 2026

What the desk is arguing

The desk posits that the ECB wage tracker, indicating stable negotiated wage growth at 2.6% for 2026, reflects a broader trend of moderated inflationary pressures in the euro area. Per the full note source, this figure is unchanged from previous assessments, suggesting that wage pressures are stabilizing rather than escalating, which could influence ECB policy decisions moving forward.

Supporting this view, the tracker shows a decrease in negotiated wage growth from 3.8% in 2025 to 2.6% in 2026 when excluding one-off payments. This moderation is significant as it aligns with the ECB's ongoing efforts to manage inflation expectations while maintaining economic stability.

Where it sits in our coverage

Our consensus target for EUR/USD is 1.075, with a range from 1.04 to 1.12. Specific firm targets include: - jpmorgan: 1.10 (Mar26) - bofa: 1.04 (Mar26)

The desk's view aligns closely with the upper end of the consensus range, indicating a more optimistic outlook for the euro compared to bofa, which holds a more cautious stance.

How other firms see it

Firms like jpmorgan and citi are aligned with the desk's perspective, anticipating a stronger euro as wage growth stabilizes. Conversely, bofa remains skeptical, projecting a weaker euro outlook based on their inflation expectations.

The EUR/USD trajectory is closely tied to upcoming inflation data releases, particularly the CPI figures on June 2, which will provide insights into the effectiveness of the ECB's wage management strategies and overall inflation control.

What the calendar says

With the CPI YoY data set for release on June 2, market participants should be vigilant as this could significantly impact the euro's performance against the dollar, especially in light of the ECB's wage growth outlook.