Euro: Range trading persists against US Dollar as ECB turns hawkish – DBS
The EUR/USD pair continues to trade within a narrow range around 1.1500, reflecting market indecisiveness amidst a hawkish pivot from the ECB. The recent ECB rhetoric suggests tightening monetary policy may be on the horizon, which has implications for the Euro’s strength against the Dollar. Despite this potential bullish sentiment, the market remains cautious, with firm targets for the Euro not straying far from current levels.
Where it sits in our coverage
Our consensus EUR/USD target sits at 1.1700 (median across firms), with Goldman at the upper bound (1.1800) and Citi at the lower (1.1300). DBS's perspective aligns with the sentiment around a hawkish ECB but remains cautious about immediate movements in the currency pair.
How firms align
Goldman, Morgan Stanley, and JPMorgan are aligned in their bullish views, with targets clustering around 1.1800 to 1.2000 for March. Conversely, Citi adopts a more bearish outlook with a March target of 1.1300, indicating a divergence in market positioning. This reflects a more cautious sentiment that could keep the pair range-bound in the near term.
What the data shows
Recent forecasts suggest that while bullish sentiment is increasing, overall targets remain relatively conservative, especially given the ECB's uncertain policy path. For a deeper analysis, refer to our published research on this topic /research/eurusd-ecb-rate-path.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01EUR/USD holding around 1.1500 amidst mixed signals from the ECB.
- 02Keep an eye on ECB announcements; hawkish signals could drive momentum.
- 03Current consensus suggests potential upside toward 1.1700 in the medium term.
Market implications
Watch for ECB communications or economic data that could influence expectations around interest rates. Market positioning around the 1.1500 level is critical; a break could signal a new trend. The consensus target of 1.1700 provides a benchmark for potential upside moves.
Risks to this view
If the ECB fails to deliver on hawkish expectations, or if U.S. economic data surprises to the upside, it could lead to a recalibration of consensus views, pushing EUR/USD lower than current levels.
Sentiment by currency
USD~EUR+JPY~GBP~Composite USD score: -0.30
Sources & References
How we cover this story
Other coverage on this pair
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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
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