Euro slides as Waller warning, Iran strikes lift US Dollar
The Euro has come under pressure following Christopher Waller's hawkish remarks regarding Fed policy and escalating tensions in Iran, which have bolstered the US Dollar. This dual impact has prompted a reaffirmation of risk-averse sentiment among investors, leading to increased demand for the dollar as a safe haven asset. With the euro currently trading around 1.1434, the market is now closely monitoring the extent of this bearish trend, particularly in light of Fed communications and geopolitical developments. This scenario emphasizes the need for traders to reassess their positions as sentiment shifts.
Where it sits in our coverage
Our consensus EUR/USD target sits at 1.1750 (median across 12 firms), with Commerzbank at the upper bound (1.2200) and Citi at the lower (1.1000). This divergence highlights a noticeable spread among forecasts, reflecting varying perspectives on Eurozone economic resilience and US monetary policy direction.
How firms align
Citi and Goldman maintain lower targets for March 2026, at 1.1300 and 1.1800 respectively, suggesting a bearish stance consistent with the headline's positioning. Conversely, Commerzbank and MUFG present more bullish outlooks with targets at 1.1900 and 1.1800, indicating a divergence in expectations regarding Euro strength amid current events.
What the data shows
Recent forecast revisions show Goldman adjusting its March target to 1.1800 as of early July, aligning with the bearish sentiment noted in external analyses. Further insights can be found in our research on the EUR/USD divergence, particularly the report highlighting that the pair is trading 2.85% below the December consensus expectation of 1.1750 — see /research/eurusd-ecb-rate-path.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01EUR/USD trades at 1.1434 amidst geopolitical and monetary policy shifts.
- 02Investors are reacting to a mix of Fed hawkishness and risk-off sentiment towards the Euro.
- 03Key support levels to watch include faint trends around current pricing amid Fed guidance.
- 04Lack of positive economic signals from Europe may fuel further dollar gains.
Market implications
Next, traders should monitor the 1.1400 level for signs of further euro weakness, particularly as the market anticipates upcoming FOMC communications. Our consensus target remains at 1.1750, and any move below 1.1400 could trigger additional sell-offs in the Euro.
Risks to this view
A reversal in current views could occur if European economic data surprises positively, potentially challenging the Fed's hawkish narrative. Additionally, any easing of geopolitical tensions in the Middle East may serve to bolster the Euro against the Dollar.
Sentiment by currency
USD+EUR JPY+GBP~Composite USD score: +0.65
Sources & References
How we cover this story
Other coverage on this pair
Euro climbs above 1.1400 as US Dollar loses ground
EUR/USD break above 1.1400 signals weakening USD momentum; monitor whether move sustains or reverts on thin flows.
EUR/USD Price Forecast: Rises to near 1.1450 after breaking above nine-day EMA
Technical break above nine-day EMA suggests momentum building toward 1.1450, though lacks fundamental catalyst confirmation.
Euro: Range trading with downside risks against US Dollar – UOB
EUR/USD positioned in range with structural downside bias; implies USD strength thesis intact unless technical support breached.