EUR/USD softens to near 1.1750 amid extended US‑Iran ceasefire
EUR/USD softened to near 1.1750 as the US-Iran ceasefire extension reduced geopolitical risk, prompting safe-haven USD bids. This move contradicts our consensus view of a stronger euro by March 2026, with spot now 2.2% below the median target of 1.18. The dollar's rallies are being met with resistance near 1.17, suggesting the ceasefire's impact may be temporary. Our prior research highlighted the divergence between spot and consensus, a gap that macro drivers like ECB-Fed policy divergence could close.
Where it sits in our coverage
Our consensus EUR/USD target for March 2026 is 1.1800 (median across 8 firms), with Morgan Stanley at the upper bound (1.2000) and BofA/Barclays at the lower (1.1700). The current spot of 1.1500 sits below even the most bearish firm targets, implying a 2% upside to consensus. Fxstreet.com's view aligns with the bearish tail—BofA and Barclays share that framing, while Morgan Stanley's 1.2000 target is starkly contrary.
How firms align
Morgan Stanley's March 2026 target of 1.2000 stands as the most bullish, diverging sharply from the bearish sentiment in the headline. ING (1.1900) and Goldman (1.1800) are also above consensus, while BofA (1.1700) and Barclays (1.1700) align with Fxstreet's USD-bullish view. Deutsche Bank's 1.1800 target sits at the median, reflecting a cautious stance.
What the data shows
Our research piece /research/eurusd-consensus-divergence-may-2026 highlighted that EUR/USD consensus stood at 1.22 while spot was 3.87% below. That gap has since widened, underscoring persistent disagreement on euro strength. No forecast revisions have been made by our tracked firms in response to this headline.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01EUR/USD breaks below 1.18 consensus target, touching 1.1750 on safe-haven USD flows.
- 02Geopolitical risk premium unwinding is transitory; focus returns to ECB-Fed rate paths.
- 03Our 1.1800 March 2026 consensus suggests current dip is a buying opportunity above 1.17.
- 04Morgan Stanley's 1.2000 target versus BofA's 1.1700 highlights extreme forecast dispersion.
Market implications
Watch for a test of 1.1700 support; a clean break would target 1.1600. Thursday's US CPI release could reinforce USD strength if data surprises to the upside. Our consensus implies mean reversion toward 1.18, but only if geopolitical calm persists.
Risks to this view
A sudden escalation in US-Iran tensions would reverse USD gains, pushing EUR/USD back above 1.18. Euro-area growth data (e.g., ZEW survey) missing expectations could amplify euro weakness, invalidating the consensus view.
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.