Euro weakens below 1.1650 as Iran uncertainty supports US Dollar
The Euro has slipped below the 1.1650 mark as geopolitical concerns surrounding Iran are fueling demand for the US Dollar, which has been a traditional safe haven in times of unrest. This move breaks technical support levels, reflecting heightened risk-off sentiment among investors. The situation is particularly pressing as traders assess the broader implications of these tensions and the potential for escalating conflict, which may continue to bolster the Dollar further against the Euro.
Where it sits in our coverage
Our consensus EUR/USD target currently stands at 1.1900 for March 2026 (median across firms), with firm positions ranging from a low of 1.1100 by Citi to a high of 1.2500 by Goldman. This suggests that while most firms remain bullish on the Euro in the medium term, there is notable divergence with some firms adopting a more cautious stance amidst recent developments.
How firms align
Firms including JPMorgan and Goldman project the Euro to strengthen toward levels of 1.1800 and 1.2100 respectively by March 2026, aligning with an overall optimistic outlook despite the current bearish sentiment reflected in the market. In contrast, Citi's significantly lower target of 1.1300 suggests a more pessimistic view, indicative of possible corrective pressures in the near term. For details, see our /research/jpmorgan and /research/goldman pages.
What the data shows
Recent forecast revisions indicate a slight adjustment in sentiment, with firms like MUFG maintaining a March target of 1.1800 while Deutsche Bank projects a bullish 1.2500 for December. Our previous insights highlighted a substantive divergence where EUR/USD trades approximately 4% below the overall December 2026 consensus target of 1.2200, suggesting an area of market apprehension near current levels.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01EUR/USD breaks below significant support at 1.1650, signaling bearish momentum.
- 02Traders should monitor safe-haven flows as geopolitical risks unfold.
- 03Key support now lies around 1.1500; a breach may prompt further selling.
- 04Geopolitical developments could reshape demand dynamics next week.
Market implications
Traders should watch the 1.1500 level closely as a potential pivot for future price movements. Upcoming geopolitical updates and economic data releases will be crucial for gauging market sentiment and could influence trends in the Euro. Given our consensus of 1.1900 for March 2026, a rebound here could be significant for a medium-term recovery.
Risks to this view
A de-escalation in tensions surrounding Iran or a surprisingly strong economic report from the Eurozone could invalidate the current bearish outlook on the Euro. If the EUR/USD manages to reclaim the 1.1650 level, it may trigger a reversal in sentiment among traders.
Sentiment by currency
USD+EUR-JPY~GBP~Composite USD score: +0.65
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.