EUR/USD outlook: Hits pre-war levels, on track for further gains on growing risk appetite
EUR/USD has surged to 1.1500, breaking above pre-war levels as risk appetite strengthens and safe-haven USD weakens. The move is driven by growing equity market optimism and expectations of shifting monetary policy dynamics. This breach signals potential for sustained EUR gains if the current risk-on environment persists, but the trade remains contingent on broader sentiment trends.
Where it sits in our coverage
Our consensus EUR/USD target for Mar26 stands at 1.1800 (median across 8 firms), with Morgan Stanley at the upper bound (1.2000) and BofA at the lower (1.1700). The headline's bullish view aligns closely with the upper third of our consensus — JPMorgan and ING share that framing, with targets of 1.1800 and 1.1900 respectively for Mar26.
How firms align
JPMorgan and Goldman both target 1.1800 for Mar26, matching the consensus median and supporting the bullish narrative. ING is slightly more bullish at 1.1900, while BofA and Barclays are more conservative at 1.1700, suggesting caution on sustained upside.
What the data shows
Our published insight /research/eurusd-consensus-divergence-may-2026 notes that the Dec26 consensus sits at 1.2200, significantly above current spot. This divergence underscores the market's expectation of further EUR gains, aligning with the headline's view of continued upside.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01EUR/USD broke above pre-war level at 1.1500 amid risk-on sentiment, targeting Dec26 consensus of 1.2200.
- 02Consensus for Mar26 is 1.1800, with upside potential if risk appetite persists.
- 03Watch for further equity market gains to fuel USD weakness and push EUR/USD higher.
- 04Consensus divergence from current spot suggests 3.87% upside potential by year-end.
Market implications
Next catalyst: US equity market performance and any shift in Fed rhetoric. A sustained risk-on mood could drive EUR/USD toward our Mar26 consensus of 1.1800, while a break below 1.1400 would signal reversal.
Risks to this view
Renewed geopolitical tensions or hawkish Fed surprises could reverse risk appetite, forcing EUR/USD back below pre-war levels. A sharp equity sell-off would likely revive USD safe-haven demand, invalidating the bullish view.
Sentiment by currency
USD-EUR+JPY~GBP~Composite USD score: -0.65
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.