Eurozone and Germany Composite PMIs revised higher: Here's what it means for EUR/USD
The recent upward revisions to the Eurozone and Germany Composite PMIs signal stronger-than-expected economic activity, reinforcing a hawkish stance for the ECB. This enhancement in data is crucial as it supports the euro's bullish outlook against the dollar, particularly in the context of ongoing monetary policy divergence. Given the resilient improvement in the euro area's economic indicators, the EUR/USD pair is poised for potential upside momentum.
Where it sits in our coverage
Our consensus EUR/USD target currently stands at 1.1700 (median across firms), with Goldman at the upper bound (1.1800) and Citi at the lower end (1.1300). This positioning aligns with the positive sentiment drawn from the recent PMI revisions, indicating a bullish trajectory for the euro.
How firms align
Firms like JPMorgan and MUFG share an optimistic outlook, both targeting 1.1800 for March 2026, suggesting alignment with the bullish case presented by the PMI data. Conversely, BofA’s lower target of 1.1700 indicates a more cautious stance, which differs from the prevailing bullish sentiment.
What the data shows
The upward revisions in the Composite PMIs could translate into stronger GDP growth forecasts for the Eurozone, which may necessitate adjustments in interest rate expectations. Our research underlines this divergence in monetary policy paths and can be referenced in /research/eurusd-ecb-rate-path.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01Stronger PMIs suggest a bullish outlook for EUR/USD, current spot at 1.1500.
- 02Expect upward pressure on the euro if ECB maintains hawkish bias.
- 03Key resistance level emerges around 1.1700 if bullish momentum continues.
Market implications
Traders should watch for EUR/USD to approach the 1.1700 level, with any sustained move above it potentially setting a new bullish trend. Upcoming ECB policy announcements are key calendar events to monitor.
Risks to this view
Any signs of economic weakness in subsequent data could invalidate the bullish view, particularly if inflation pressures prompt a more dovish stance from the ECB. Additionally, adverse geopolitical developments may also impact market sentiment.
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 slips against the US Dollar as upbeat US economic data reinforces hawkish Fed bets
Strong US data firming Fed hawkish repricing widens USD/EUR rate differential, pressuring euro from both policy divergence and growth momentum.
EUR/USD Price Forecast: Tests 1.1600 amid flaring geopolitical tensions, higher Oil prices
Geopolitical risk premium and oil strength typically support EUR/USD upside as energy importer dynamics shift; monitor if Fed policy divergence accelerates the move.
Euro: Downside risks within range against US Dollar – UOB
UOB identifies EUR/USD downside risks; range-bound setup suggests asymmetric short exposure warranted near resistance levels.
Euro stalls as Oil shock keeps the US Dollar in play
Oil price volatility sustaining safe-haven USD demand while offsetting hawkish ECB factors, pressuring EUR/USD momentum.
Bank desks on this topic
Dollar faces renewed strength if US-Iran talks fail, MUFG warns
MUFG analysts warn the dollar could strengthen further if US-Iran talks collapse, with energy-driven inflation risks potentially pushing Fed officials toward a more hawkish stance and lifting US yields. - The US dollar faces renewed upward pressure if Washington and Tehran fail t
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