Euro: Limited downside against US Dollar with ECB hike message – MUFG
MUFG's analysis reinforces the Euro's resilience against the US Dollar, showing a limited downside as the European Central Bank (ECB) continues to signal potential rate hikes. The messaging from the ECB supports the assertion that current levels may hold firm, signaling reduced momentum for long USD positions. This context is critical as it highlights the divergence in monetary policy stances between the Eurozone and the US, likely influencing trader sentiment and positioning in the near term.
Where it sits in our coverage
Our consensus EUR/USD target stands at 1.1700 (median across 11 firms), with Goldman at the upper bound (1.1800) and Citi at the lower (1.1300). MUFG's view aligns closely with this consensus, reflecting a bullish sentiment on the Euro amid expectations of continued ECB tightening.
How firms align
Several firms echo MUFG’s sentiment, with JPMorgan and Deutsche Bank targeting 1.1800 for March 2026, reinforcing the outlook for a stronger Euro relative to the Dollar. Note the alignment with other institutions such as Morgan Stanley, predicting a similar trajectory for the Euro against the Dollar through to mid-2026, as outlined in our reports on /research/eurusd-consensus-divergence-may-2026.
What the data shows
Recent forecast revisions indicate a general bullish trend for the Euro, with significant revisions from Commerzbank and ING towards 1.1900 for March 2026. Insights from our research also highlight a notable drop in spot prices compared to the consensus target of 1.20, underlining potential upside for the Euro in the coming months, as discussed in /research/eurusd-divergence-consensus-gap-may-2026.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01Limited downside for EUR/USD near 1.1500 as ECB signals continue.
- 02Expect traders to anticipate ECB tightening to support Euro strength.
- 03Watch for EUR/USD to test levels near 1.1700 as firms adjust forecasts.
- 04Mixed forecasts suggest stability around current levels but with bullish leanings.
Market implications
Traders should closely monitor the 1.1700 level as a key support point for EUR/USD, especially leading up to the next ECB meeting. Consensus among firms suggests upward potential, urging players to reassess their positions as the currency pair approaches this critical threshold.
Risks to this view
A reversal of this view could occur if the ECB alters its current tightening message or if US economic data unexpectedly strengthens, supporting a stronger Dollar. Additionally, any geopolitical developments that impact Eurozone stability could further complicate the near-term outlook for EUR/USD.
Sentiment by currency
USD~EUR+JPY~GBP~Composite USD score: -0.30
Firms mentioned
Sources & References
How we cover this story
Other coverage on this pair
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.
Euro: Rangebound against US Dollar despite ECB repricing – Societe Generale
Bank desks on this topic
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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
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.