After Wall Street's worst selloff since the 2025 tariff shock, here's what investors need to watch next
The recent selloff on Wall Street marks the most significant decline since the 2025 tariff shock, impacting sectors well beyond AI. Given the current volatility, this provides a critical moment for FX traders who will need to navigate both risk sentiment and shifting market dynamics. The repercussions of a broad stock market rout could lead to increased demand for safe-haven currencies like the USD, but also create headwinds for riskier assets globally. As investors digest this situation, attention will be focused on how these trends play out in upcoming economic indicators and central bank communications.
Where it sits in our coverage
Our consensus EUR/USD target sits at 1.075 (median across 8 firms), with Goldman at the upper bound (1.12) and BofA at the lower (1.04). Marketwatch's analysis highlights significant market turbulence; however, we are currently observing a divergence in sentiment across firms.
How firms align
JPMorgan is aligned with the more bullish outlook, targeting 1.10 in the upcoming months. In contrast, BofA's bearish view suggests a more cautious approach with a target of 1.04. Both firms have distinct stances that illustrate varied interpretations of the current risk environment.
What the data shows
Recent forecasts reflect an uncertain macroeconomic backdrop, with revisions leaning towards caution as market sentiment remains fragile. For related insights, see our publication on risk sentiment and its impact on currency valuation at /research/risk-sentiment-impact.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01Market volatility post-selloff opens opportunities for USD appreciation.
- 02Traders should monitor safe-haven flows amid risk-off sentiment.
- 03Consensus targets suggest potential EUR/USD movement to 1.075, barring external shocks.
Market implications
Investors should keep a close eye on major economic releases, particularly those affecting central bank policy. The next Federal Reserve meeting is crucial and could substantially influence USD valuation as sentiment shifts.
Risks to this view
A sudden recovery in equities or surprising macro data could invalidate the bearish sentiment and lead to a rapid unwinding of safe-haven positions, significantly altering outlooks.
Sentiment by currency
USD+EUR~JPY+GBP~Composite USD score: +0.65
Sources & References
How we cover this story