EUR/USD: Dollar seen weakening versus Euro – BNP Paribas
BNP Paribas has issued a bearish USD view versus EUR, arguing the dollar faces structural headwinds that will weaken it against the euro in the near term. This aligns with a broader market narrative of fading US exceptionalism, though EUR/USD spot at 1.1500 remains well below consensus targets. The call adds to growing conviction that eurozone recovery and potential Fed pivot could drive EUR higher, but the gap between spot and median forecasts signals positioning risk.
Where it sits in our coverage
Our consensus EUR/USD target for Mar26 stands at 1.1800 (median across 8 firms), with Morgan Stanley the most bullish at 1.2000 and BofA/Barclays the most bearish at 1.1700. BNP Paribas's view aligns with the upper end of consensus, echoing the median bias for a stronger EUR. The 3.87% gap between spot (1.1500) and the Mar26 consensus suggests markets are pricing in significant upside, but the range of 1.1700-1.2000 indicates divergence on timing and magnitude.
How firms align
JPMorgan, Goldman Sachs, ING, Morgan Stanley, MUFG, and Deutsche Bank all target Mar26 EUR/USD at or above 1.1800, supporting BNP's bullish EUR view. BofA and Barclays sit at the lower bound of 1.1700, representing a more cautious stance. Morgan Stanley's Mar26 target of 1.2000 is the most aggressive, while its Dec26 target of 1.1600 actually flips bearish—highlighting a sharp divergence in longer-term outlooks.
What the data shows
Our recent research 'EUR/USD Consensus at 1.22 While Spot Sits 3.87% Below' highlights that investors are paying a premium for EUR upside, yet spot has failed to converge. BNP's call adds weight to the consensus, but the wide Dec26 range (1.1600 from MS to 1.2500 from Goldman/Deutsche) underscores uncertainty over the euro's trajectory beyond the short term.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01BNP Paribas expects USD weakness to drive EUR/USD higher, aligning with median consensus of 1.1800 for Mar26.
- 02Spot at 1.1500 is 3.87% below Mar26 consensus, leaving room for further upside but also downside risk if momentum stalls.
- 03Morgan Stanley's Dec26 target of 1.1600 is a notable contrarian outlier, warning of potential reversal.
- 04Divergence between Mar26 and Dec26 forecasts suggests market is pricing near-term euro strength but medium-term uncertainty.
Market implications
Watch for EUR/USD to test the 1.18 resistance level (Mar26 median) in coming months, with potential catalyst from ECB policy or US data. A break above 1.20 (Morgan Stanley's Mar26 target) would signal stronger bullish momentum. Our consensus Dec26 target of 1.2200 suggests sustained upside, but the wide range demands caution.
Risks to this view
If US economic data surprises to the upside or Fed rhetoric remains hawkish, the dollar could regain momentum, invalidating the bearish USD view. EUR-specific risks include renewed eurozone political instability or a growth slowdown, which would weigh on the euro. The contrarian Dec26 target from Morgan Stanley highlights that the bullish consensus is not without dissent.
Sentiment by currency
USD-EUR+JPY~GBP~Composite USD score: -0.65
Sources & References
How we cover this story
Other coverage on this pair
EUR/USD strengthens as mixed US labor data and hopes for a US-Iran deal pressure the Greenback.
Soft US labor print reduces Fed rate-hike conviction; geopolitical risk-off from Iran talks risk-off flows weaken USD safe-haven demand.
EUR/USD: Recovery eyes full retracement – Scotiabank
EUR/USD recovery momentum suggests technicians are positioning for mean reversion toward recent highs, indicating potential USD weakness into resistance.
EUR/USD: Binary path around Gulf deal – ING
EUR/USD: Oil shock, real rates and conflict risks – Commerzbank
Oil shock transmission via real rates and geopolitical premium widens USD carry advantage; EUR structural support erodes as terminal rates diverge.
Cross-firm research
EUR/USD Trades 3.87% Below Consensus: What the Gap Reveals
EUR/USD spot at 1.1727 sits 3.87% below the eight-firm median Dec-26 target of 1.22, exposing a structural divergence that demands explanation.
EUR/USD Consensus at 1.22 While Spot Sits 3.87% Below
Eight sell-side firms hold a median Dec-26 target of 1.22 for EUR/USD while spot trades at 1.1727, a gap that demands explanation.