Euro holds early gains against US Dollar amid US-Iran deal hopes
The euro continues to maintain its early gains against the US dollar, buoyed by optimism surrounding potential US-Iran negotiations which could impact the broader geopolitical landscape. This development could have implications for energy prices and, consequently, inflation dynamics within the Eurozone. As markets weigh these factors, the EUR/USD remains sensitive to shifts in sentiment regarding US foreign policy and economic repercussions.
Where it sits in our coverage
Our consensus EUR/USD target currently sits at 1.1700 for March 2026 (median across multiple firms), with the upper bound set by UBS at 1.2000 and the lower bound from Citi at 1.1300. The headline's context aligns with expectations for a stronger euro, particularly as we see targets clustering around the 1.20 mark from several firms.
How firms align
Goldman, Morgan Stanley, and MUFG are among the aligned firms with targets set at or above 1.1800 for March 2026, indicating a bullish sentiment in line with the current gains in the euro. This outlook is supported by recent revisions from firms such as Commerzbank and RBC, which also project strength in the euro against the dollar ( eports inancial).
What the data shows
Nomura and Deutsche Bank have recently revised their forecasts upwards for March 2026, pushing their targets closer to the consensus of 1.1700. Our recent analysis, detailed in /research/eurusd-consensus-divergence-may-2026, highlights that the pair trades significantly below these consensus estimates, suggesting a recalibration in market expectations is possible as geopolitical risks unfold.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01Euro shows resilience, trading at 1.1500, yet targets suggest further upside.
- 02Watch market reactions to US-Iran negotiations; could catalyze significant moves.
- 03Potential for a surge above 1.1800 hinges on geopolitical stability.
- 04Strong consensus among firms points to expectations of continued euro strength.
Market implications
Traders should closely monitor any developments in US-Iran relations, targeting levels around 1.1700 and above for potential breakout signals. The consensus target reflects a belief in upside strength for the euro, which should be validated through subsequent market activity.
Risks to this view
A failure to progress in US-Iran talks could rapidly shift sentiment, leading to dollar strength and a pullback below current levels. Additionally, any unexpected economic data from the US could further complicate the euro’s potential appreciation.
Sentiment by currency
USD-EUR+JPY~GBP~Composite USD score: -0.35
Sources & References
How we cover this story
Other coverage on this pair
Euro: Limited downside against US Dollar with ECB hike message – MUFG
ECB's continued hike messaging supports EUR/USD floor around current levels; limited downside signals reduced momentum for USD longs.
Euro: Gains capped against US Dollar by Fed story – ING
Fed rate expectations remain supportive of USD strength, structurally limiting EUR/USD upside despite recent euro resilience.
EUR/USD Price Forecast: 20-day EMA remains key barrier as Iran uncertainty persists
Euro slips as Hormuz firefight revives US Dollar demand
Geopolitical risk in Persian Gulf elevates safe-haven demand, likely to support USD/JPY parity and cap EUR/USD downside until tensions clarify.
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.