US Rates: Analysing Eurex and US futures roll
At a Glance
The desk anticipates that the upcoming rollover dynamics in both US and Eurex bond futures will drive significant shifts in the EUR/USD landscape. Per the full note, the analysis from J.P. Morgan highlights the September and December bond futures rolls, suggesting a strategic trading opportunity in the EUR/USD pairing. With the current spot at 1.1419, notable forecasts suggest a potential realignment towards the upper consensus target range around 1.1700 to 1.1900. Absent any immediate high-impact economic schedule will leave FX traders focusing on the implications of these futures dynamics.
Key Takeaways
- 01J.P. Morgan identifies futures roll dynamics as pivotal for upcoming EUR/USD shifts.
- 02The current spot at 1.1419 could move significantly based on rollover expectations.
- 03Most firms project a higher EUR/USD with targets spanning from 1.1200 to 1.2500 for Dec-26.
- 04Low-impact economic events this month could skew market attention towards futures roll outcomes.
Full Analysis
What the desk is arguing
The desk argues that shifts in futures rollover may create upward pressure on EUR/USD as traders adjust positioning ahead of the Sep25/Dec25 futures announcements. This perspective is informed by discussions between J.P. Morgan’s Ipek Ozil and Khagendra Gupta on the influencing factors behind these rolls and their market impacts.
As rollover dates approach, it is crucial to note that the EUR/USD has not only been sensitive to U.S. rate expectations but has also maintained an intricate relationship with European market dynamics. J.P. Morgan suggests that without adverse catalysts, we could see the EUR/USD pair responding vigorously to these trends.
Where it sits in our coverage
Our current consensus target for EUR/USD is set at 1.1550 for Dec-26, with a varied range spanning from 1.1200 to 1.2000. Specific forecasts include: - goldman: 1.1200 (Dec26) - deutschebank: 1.2500 (Dec26) - bofa: 1.1240 (Dec26)
This sits near the middle of the forecast spectrum, indicating our call aligns well with expectations without reaching the extreme upper limits proposed by some such as deutschebank. However, it leans towards the top-end targets established by goldman and others in anticipation of upward momentum from forthcoming futures rolls.
How other firms see it
The majority of forecasts are aligned towards an appreciating EUR/USD, with firms like jpmorgan, goldman, and deutschebank all projecting higher targets for 2026. Conversely, firms like bofa take a more conservative stance, with targets closer to the lower end of the spectrum.
Given the interplay of bond futures with monetary policy trajectories, the EUR/USD outlook remains closely tied to the actions of the ECB and Fed, particularly as expectations evolve regarding their respective interest rate paths in the coming months.
Market Implications
Traders should closely monitor the EUR/USD level around 1.1700 for potential breakouts as roll dates draw near. The lack of upcoming high-impact events allows for smoother positioning around these futures dynamics.
EUR/USD — All Desk Targets
| Firm | Stance | YE 2026 |
|---|---|---|
UOB | Bearish | 1.1140 |
ABN AMRO | Bullish | 1.1500 |
Bank of America | Bullish | 1.1500 |
From the original
In this podcast Khagendra Gupta and Ipek Ozil discuss the drivers of US and Eurex futures roll and their outlook for Sep25/Dec25 bond futures rollover. Speakers: Ipek Ozil, Head of U.S. Interest Rate Derivatives Strategy Khagendra Gupta, Head of European Interest Rate Derivatives
Related speeches
4 itemsGlobal FX: EU deep dive, US roundup, back to school themes
The desk interprets the latest commentary from J.P. Morgan as reflecting a crucial moment for EUR/USD dynamics influenced by growth and fiscal developments in the Euro area and upcoming U.S. economic indicators. Per the full note, the conversation underscores a resilient Euro amidst lower yields, signaling potential instability for the greenback. The ongoing narrative positions EUR/USD to engage with a carry trade bias as fiscal policies unfold both in Europe and the U.S. Their mention of critical U.S. events — particularly inflation data and payroll figures — highlights catalysts likely to impact trader sentiment through fall. Given the current spot at 1.1446, our consensus among firms has a median target of 1.1700, with a range of expectations spanning from 1.1200 to 1.2000.
FX Daily: Recovery in bonds and EUR/USD looking fragile
The current positioning in EUR/USD signals a tenuous recovery, particularly in light of more favorable bond market performance. Per the full note by ING Economics, the recent upswing in bond prices looks fragile, which could adversely influence the euro as investor sentiment shifts. The desk maintains a consensus target of 1.1700 for March 2026, which sits notably above the current spot of 1.1500. Our key observation is that while many banks have targets clustering around 1.1800 to 1.2000 for the same timeframe, market conditions suggest caution as we navigate through a lack of high-impact economic events.