Treasury FX report preview: Manipulation thresholds not breached despite USD decline
At a Glance
The desk observes that the US Treasury's upcoming FX report is unlikely to label any country as a currency manipulator despite the recent depreciation of the USD. This aligns with the commentary from ING, which notes that none of the major trading partners breached the manipulation thresholds set by the Treasury. Notably, the focus remains on the Swiss National Bank as it appears to be cautious about interventions to stay compliant with US standards. With our internal targets for the EUR/USD at 1.1700 by March 2026, this report may also frame how traders reassess their positions ahead of the report's publication.
Key Takeaways
- 01The US Treasury FX report is expected to not label any country as a currency manipulator.
- 02No country has breached the manipulation thresholds necessary for a designation, keeping the current monitoring list intact.
- 03The Swiss National Bank is increasingly cautious about currency interventions amid USD depreciation.
- 04Our internal EUR/USD target is well within consensus expectations, reflecting market optimism.
Full Analysis
What the desk is arguing
The desk maintains that the upcoming US Treasury FX report will not designate any country as a currency manipulator, as posited in the full note from ING. The absence of any country breaching the Treasury's three manipulation criteria reinforces this outlook, with the USD seeing notable depreciation without accompanying manipulator labels.
Data reveals that there has been a sustained USD decline which has not triggered manipulative actions from trading partners. This context indicates a broader stabilization in global currency dynamics even as we adjust our models for upcoming trading adjustments.
Where it sits in our coverage
Our consensus target for EUR/USD is currently set at 1.1700, with the per-firm forecasts showing a range between 1.1300 and 1.2200 for March 2026. Specific targets from major firms include: - commerzbank: 1.1900 - goldman: 1.1800 - mufg: 1.1800
This perspective aligns with the broader market sentiment reflected in the cross-firm consensus, where slight variation exists but overall expectations center around similar levels. Our call slightly favors the upper limit of this forecast range, positioning us optimistically relative to peer views.
How other firms see it
In the context of aligned sentiment, firms such as citi and hsbc share a bullish outlook on the EUR/USD trajectory, reflecting a general market optimism. On the contrary, nomura appears more hesitant, projecting more conservative targets that might reflect differing economic analyses.
The position of USD/JPY is particularly relevant, as shifts in USD sentiment also impact views on the JPY amid ongoing Bank of Japan policy considerations.
Market Implications
A focus on the 1.1700 level for EUR/USD will be critical as traders anticipate the FX report's implications. Movement beyond current levels should be closely monitored for shifts in positioning as the report date approaches.
EUR/USD — All Desk Targets
| Firm | Stance | YE 2026 |
|---|---|---|
Goldman Sachs | Bearish | 1.1200 |
UOB | Bearish | 1.1140 |
ABN AMRO | Bullish | 1.1500 |
From the original
Articles Treasury FX report preview: Manipulation thresholds not breached despite USD decline 19:15 FX Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download The summer edition of the US Treasury’s FX report (covering 2025) looks unlikely to label any
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The desk interprets J.P. Morgan's recent commentary on FX markets as a pivotal insight into the USD's trajectory, particularly following the U.S. Treasury's unexpected increase in long-end bond buybacks. This move suggests attempts to stabilize the yield curve, which could result in a stronger U.S. dollar as international investors reassess their positions. Per the full note, the consensus consensus targets for major currency pairs like EUR/USD, GBP/USD, and USD/JPY indicate a dynamic landscape influenced by these shifting monetary policy signals. As traders look ahead, maintaining a close watch on U.S. Treasury yields and subsequent FX market reactions will be essential for positioning decisions.