EUR/USD edges lower to near 1.1750 as Trump rejects new Iran peace offer
EUR/USD slipped to near 1.1750 after Trump rejected a fresh Iranian peace offer, fuelling safe-haven demand for the dollar. The move deepens the pair's deviation from consensus, as spot now trades 4.35% below the 1.22 consensus. The headline geopolitics may amplify bearish momentum, but the key driver remains the Fed vs ECB policy divergence. The rejection of talks adds a risk premium that could weigh on the euro if the standoff escalates.
Where it sits in our coverage
Our consensus EUR/USD target for Mar26 is 1.18 (median across 8 firms), with Morgan Stanley at the upper bound (1.20) and BofA/Barclays at the lower (1.17). The headline's bearish lean aligns with the lower third of the consensus range. Spot at 1.1750 is now 1.5% below our Mar26 consensus, reinforcing the divergence highlighted in our research.
How firms align
Bearish firms like BofA (Mar26: 1.17) and Barclays (Mar26: 1.17) are the most aligned with the headline's negative euro view. In contrast, Morgan Stanley (Mar26: 1.20) and ING (Mar26: 1.19) maintain a more bullish stance, arguing the current dip is overstated.
What the data shows
Recent forecast revisions show no major shifts in the last 14 days, with all firms reaffirming Mar26 targets. Our latest insight '/research/eurusd-consensus-divergence-may-2026' flags the 3.87% gap between spot and consensus, suggesting the market may be pricing in tail risks that consensus underweights.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01EUR/USD slips to 1.1750 as geopolitics weigh; spot now 4.35% below 1.22 consensus.
- 02Support at 1.1700 (BofA/Barclays Mar26 target) is the first line of defence.
- 03Trump's rejection of Iran peace talks adds a risk premium that could cap euro gains.
- 04Consensus maintains 1.18 for Mar26; the gap suggests markets are pricing in deeper risks.
Market implications
Watch the 1.1700 level (lower bound of consensus range). A break could accelerate to 1.1600, given the lack of firm support. The next catalyst is the FOMC minutes on May 20 – any hawkish tilt would reinforce dollar strength. Our consensus for Dec26 at 1.22 remains as a longer-term anchor.
Risks to this view
A reversal of the geopolitical risk premium (e.g., de-escalation or renewed talks) could trigger a sharp euro recovery toward 1.19. Also, if ECB officials push back on market pricing of rate cuts, it could support EUR. The Morgan Stanley (1.20) and ING (1.19) targets would become more relevant in such a scenario.
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.