UBS Forecast: Sell Dollar Rallies, Buy EUR/USD Below 1.16 Target 1.20 - Exchange Rates Org UK

What the desk is arguing

UBS advises selling dollar rallies and buying EUR/USD on dips below 1.16, targeting a move to 1.20. The call reflects a structural bearish view on the USD, citing fiscal and growth divergence. With spot already at 1.15, the recommendation implies fading any USD strength from current levels.

The desk is implicitly rejecting the notion that EUR/USD downside risk dominates. By setting an entry below 1.16, they argue that any dollar rebound is temporary and should be sold into. Their target to 1.20 suggests confidence in EUR/USD trend reversal.

Where it sits in our coverage

Our consensus for Mar26 is 1.18, ranging from 1.17 to 1.20, and the Dec26 consensus stands at 1.22. UBS's target of 1.20 is in line with the lower end of consensus for Mar26 and slightly below the Dec26 median. This suggests UBS is less bullish than the average firm over the longer term.

Key firm targets for Dec26: * Goldman: 1.2500 * JPMorgan: 1.2000 * Morgan Stanley: 1.1600 * MUFG: 1.2400 * Deutsche Bank: 1.2500 UBS's 1.20 target aligns with JPMorgan's and is below the most bullish calls from Goldman and Deutsche Bank.

How other firms see it

Goldman (Dec26: 1.25) is more bullish, expecting continued EUR strength. JPMorgan (Dec26: 1.20) is closely aligned with UBS's target. Morgan Stanley (Dec26: 1.16) is contrarily bearish, forecasting EUR/USD to end 2026 near current spot.

Other firms with moderate bullish views: * ING (Dec26: 1.22) * BofA (Dec26: 1.22) * Barclays (Dec26: 1.21) These are slightly above UBS's target, indicating a general consensus for EUR appreciation but with UBS taking a more conservative stance.