EUR/USD strengthens above 1.1700 as Trump announces pause on Project Freedom
EUR/USD surged past 1.1700 after President Trump announced a pause on Project Freedom, a deregulation initiative that had been a key pillar of USD support. The move reflects a sharp risk-off pivot, unwinding the 'Trump trade' that had propelled the dollar. For the desk, this removes a near-term bullish USD catalyst, shifting focus to EUR upside as markets reassess the pace of US policy reform. The break above 1.1700 is technically significant, but spot at 1.1500 remains well below our consensus of 1.22, suggesting room for further gains if the narrative sustains.
Where it sits in our coverage
Our consensus EUR/USD target sits at 1.2200 for Dec26 (median across 8 firms), with Goldman and Deutsche Bank at the upper bound (1.2500) and Morgan Stanley at the lower (1.1600). The headline's bullish EUR view aligns more closely with the upper third — Goldman, Deutsche Bank, and MUFG share that framing.
How firms align
Goldman, Deutsche Bank, and MUFG all project EUR/USD at or above 1.2400 by year-end, consistent with the bullish pivot post-Project Freedom pause. Morgan Stanley is the notable contrarian, with a Dec26 target of 1.1600, well below spot. JPMorgan (1.2000) and BofA (1.2200) sit near the consensus median.
What the data shows
Forecast revisions from May 5 show no changes to Dec26 targets across all eight firms, suggesting the consensus has not yet incorporated this headline. Our published research on EUR/USD consensus divergence (slug: eurusd-consensus-divergence-may-2026) highlights that spot at 1.1500 is 3.87% below the Dec26 consensus of 1.2200, signaling potential upside if the new catalyst gains traction.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01Trump's pause on Project Freedom removes a key USD-supportive deregulation narrative, driving EUR/USD above 1.1700.
- 02Spot at 1.1500 remains well below the Dec26 consensus of 1.2200, suggesting further upside if the risk-off pivot persists.
- 03Morgan Stanley's Dec26 target of 1.1600 is the most contrarian; its view would be invalidated if EUR holds above 1.17.
- 04Watch for follow-through above 1.1800 (JPMorgan/BofA Mar26 target) to confirm bullish breakout.
Market implications
Focus shifts to 1.1800 as the next resistance, aligning with JPMorgan and BofA Mar26 targets. A sustained break above could open the path to 1.2000. Calendar event: next US CPI print (May 12) may test the dollar bearishness if inflation surprises higher. Our consensus Dec26 target of 1.2200 remains a medium-term north star.
Risks to this view
The pause could be temporary or reversed, reinstating USD support. A hawkish Fed pivot or strong US data (e.g., NFP, CPI) would challenge the dollar bearish narrative. If spot fails to hold 1.1700, the move could unwind quickly, with support at 1.1500.
Sentiment by currency
USD-EUR+JPY~GBP~Composite USD score: -0.65
Sources & References
How we cover this story
Other coverage on this pair
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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.