EUR/USD edges higher as Iran reopens Strait of Hormuz, Oil tumbles
EUR/USD edged higher as Iran reopened the Strait of Hormuz, triggering a sharp decline in oil prices. The drop in crude reduces near-term inflation pressure, which weakens the USD's safe-haven appeal and supports risk-sensitive currencies like the euro. The market is now refocusing on the Fed's rate path, with lower oil prices fueling bets on easing. Our internal consensus sees EUR/USD at 1.18 by March 2026, suggesting further upside from current spot of 1.15. The move aligns with our view that the dollar is overbought relative to energy-driven inflation concerns.
Where it sits in our coverage
Our consensus EUR/USD target sits at 1.1800 (median across 8 firms for March 2026), with Morgan Stanley at the upper bound (1.2000) and BofA at the lower (1.1700). The headline's bullish EUR view aligns more closely with the upper third — JPMorgan, Goldman, and ING all share that framing. At current spot of 1.1500, the divergence between consensus and spot remains wide at 2.6%.
How firms align
JPMorgan (Mar26: 1.1800) and Goldman (Mar26: 1.1800) are aligned with the bullish euro view as lower oil supports their EUR/USD upside forecasts. Conversely, BofA (Mar26: 1.1700) and Barclays (Mar26: 1.1700) are the most cautious, indicating that the oil-driven rally may be limited. Our internal research (eurusd-consensus-divergence-may-2026) highlights that spot is trading below consensus, suggesting room for further gains.
What the data shows
Our published research 'EUR/USD Consensus at 1.22 While Spot Sits 3.87% Below' underscores a persistent gap between firm targets and current pricing. The median Mar26 consensus of 1.1800 is 2.6% above spot, and the Jun26 median of 1.2050 implies even more upside. With oil tumbling, the disinflationary impulse supports the euro and could accelerate convergence toward consensus levels.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01Iran's Strait of Hormuz reopening crushes oil prices, reducing USD safe-haven demand and pushing EUR/USD higher.
- 02EUR/USD consensus Mar26 target of 1.1800 provides a 2.6% upside from current spot of 1.1500.
- 03Lower oil weakens inflation fears, reinforcing Fed rate-cut expectations and EUR bullish positioning.
- 04BofA and Barclays are the most bearish on EUR/USD among our tracked firms, creating a contrarian risk.
Market implications
Watch for further moves toward our Mar26 consensus of 1.1800, with technical resistance at 1.1750. The key calendar events are upcoming Eurozone PMI data and US PCE inflation print. A break above 1.1550 would confirm bullish momentum.
Risks to this view
If oil prices rebound sharply (e.g., supply disruption or OPEC+ cuts), the inflation story reverses and could strengthen the USD, invalidating the bullish EUR view. Also, if the Fed signals a slower easing path, safe-haven demand for USD may reassert. A move below 1.1400 would challenge the thesis.
Sentiment by currency
USD-EUR+JPY~GBP~Composite USD score: -0.35
Sources & References
How we cover this story
Other coverage on this pair
EUR/USD strengthens as mixed US labor data and hopes for a US-Iran deal pressure the Greenback.
Soft US labor print reduces Fed rate-hike conviction; geopolitical risk-off from Iran talks risk-off flows weaken USD safe-haven demand.
EUR/USD: Recovery eyes full retracement – Scotiabank
EUR/USD recovery momentum suggests technicians are positioning for mean reversion toward recent highs, indicating potential USD weakness into resistance.
EUR/USD: Binary path around Gulf deal – ING
EUR/USD: Oil shock, real rates and conflict risks – Commerzbank
Oil shock transmission via real rates and geopolitical premium widens USD carry advantage; EUR structural support erodes as terminal rates diverge.
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.