Euro rebounds from intraday lows as US Dollar loses momentum after PCE data
The Euro has staged a rebound from its intraday lows as traders reassess the implications of the latest PCE data, which revealed softer inflation pressures than anticipated. This outcome suggests that the Fed may not be as aggressive in tightening its monetary policy, undercutting the US Dollar's momentum and fostering bullish sentiment in the EUR/USD pair. The rebound may signal a shift in market sentiment, as investors look to the ECB’s responses amid changing economic conditions. This dynamic aligns with our view that the euro could continue to strengthen in the medium term.
Where it sits in our coverage
Our consensus EUR/USD target currently stands at 1.1700 for March 2026 (median across firms), while the range of forecasts spans from 1.1300 to 1.2000. This positioning indicates a bullish sentiment overall, with firms like Morgan Stanley and JPMorgan contributing higher-end targets of 1.2000 and 1.1800, respectively.
How firms align
Notably, Goldman Sachs and BNP Paribas are positioned in alignment with this upward momentum, targeting 1.1800 and 1.1600, respectively, as outlined in their recent forecasts. Conversely, Citi's much more conservative stance at 1.1300 suggests a significant divergence in expectations for the euro's trajectory relative to the broader sentiment reflected in the headline's analysis.
What the data shows
Recent revisions indicate an upward trend, with notable adjustments from ING targeting 1.1900 for March 2026. Published insights on the EUR/USD indicate a considerable disparity between current trading levels and consensus projections, particularly with the pair trading approximately 3.16% below the December 2026 consensus target of 1.2000, as discussed in our previous reports (/research/eurusd-divergence-consensus-vs-spot-may-2026).
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01EUR/USD rebounded to 1.1500 after weak PCE data.
- 02Traders should focus on ECB's policy stance amid changing data.
- 03Expect volatility as positioning shifts post-PCE data.
Market implications
Moving forward, monitor the 1.1700 level as a critical target in March 2026, as any break above could reinforce bullish trends. Additionally, upcoming ECB announcements could further influence positioning, emphasizing the need for traders to stay attuned to economic data releases.
Risks to this view
A reversal in this bullish outlook could occur if the Fed surprises the market with a more hawkish stance during future meetings, especially if inflation pressures return stronger than expected. This scenario would likely trigger renewed strength in the US Dollar, undermining the current bullish euro sentiment.
Sentiment by currency
USD-EUR+JPY~GBP~Composite USD score: -0.55
Sources & References
How we cover this story
Other coverage on this pair
Euro: Weak EU trade and sentiment weigh against US Dollar – BNY
Deteriorating EU trade data and sentiment metrics now offset dollar weakness, establishing fresh EUR/USD downside bias for Q1.
Euro: Risk-off pressure persists against US Dollar – Danske Bank
Risk-off environment continues to favor USD strength as safe-haven demand outweighs fundamentals, pressuring EUR/USD lower.
Euro: Mild downside bias within range against US Dollar – UOB
EUR/USD positioned for mild downside within established range; suggests near-term consolidation with USD resilience at current levels.
Euro slumps below 1.1600 against US Dollar amid fears of US-Iran war resumption
Geopolitical escalation in Middle East typically triggers safe-haven demand for USD and JPY, supporting dollar strength and pressure on risk-sensitive assets like EUR.
Bank desks on this topic
FX Daily: Iran fall-out coming home to roost in EUR/USD
https://think.ing.com/articles/fx-daily-iran-fall-out-coming-home-to-roost-in-eur-usd/
FX Daily: Iran fall-out coming home to roost in EUR/USD
https://think.ing.com/articles/fx-daily-iran-fall-out-coming-home-to-roost-in-eur-usd/
FX Daily: Iran fall-out coming home to roost in EUR/USD
EUR/USD was hit in March on expectations that the stagflationary shock from Iran would resonate more in Europe than the US. The inflationary effects have been plain for all to see, but this week's release of European PMIs warns that the stagnationary effect is just starting to la
Morgan Stanley: How Much Will FX Hedging Flows Boost EUR/USD? - eFXdata
Morgan Stanley: How Much Will FX Hedging Flows Boost EUR/USD? eFXdata
Cross-firm research
EUR/USD Trades 3.16% Below Dec-26 Consensus as 18 Firms Hold 1.20 Median
With spot at 1.1621 and the 18-firm median Dec-26 target at 1.20, EUR/USD sits 3.16% below consensus—a gap that demands explanation.
EUR/USD Trades 3.2% Below Dec-26 Consensus as Targets Cluster Near 1.20
Spot at 1.1612 sits 3.2% below the 18-firm median Dec-26 target of 1.20, exposing a consensus that remains structurally bullish EUR despite the pair's failure to close the gap.
EUR/USD Trades 4% Below Dec-26 Consensus: What the Gap Reveals
EUR/USD spot at 1.1711 sits 4.01% below the eight-firm median Dec-26 target of 1.22, exposing a structural tension between macro conviction and current tape.