EUR/USD gathers strength above 1.1700 as ECB keeps rates steady
EUR/USD pushed above 1.1700 after the ECB held rates steady, signaling a pause in its hiking cycle. The move reflects relief that the ECB is not tightening further, which eases rate-differential pressure against the hawkish USD backdrop. Our composite sentiment score of -0.35 confirms a modest USD-bearish tilt, but the euro's gain is more about positioning than conviction. With spot at 1.1500, the rally is a technical bounce within a broader bearish trend.
Where it sits in our coverage
Our consensus EUR/USD target for Mar26 stands at 1.1800 (median across 8 firms), with Morgan Stanley at the upper bound (1.2000) and BofA/Barclays at the lower (1.1700). Spot at 1.1500 is 2.6% below consensus, suggesting the market is pricing a more bearish scenario. The ECB's decision aligns with the upper-middle of the consensus range, where JPMorgan, Goldman, and ING sit.
How firms align
JPMorgan and ING share the headline's constructive EUR view, with Mar26 targets of 1.1800 and 1.1900 respectively. Goldman Sachs (1.1800) aligns similarly. On the contrary, BofA and Barclays are more bearish at 1.1700, implying limited upside from current levels. Their lower targets argue that the ECB's pause will not sustain EUR gains given US rate advantage.
What the data shows
Our published research 'eurusd-consensus-divergence-may-2026' highlights the 3.87% gap between spot and the Dec26 consensus of 1.2200. The ECB hold does not change the fundamental divergence story; it merely removes a near-term risk. Forecasters remain split on whether the EUR can close that gap.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01ECB hold removes a hiking tail risk, supporting EUR short-term.
- 02EUR/USD spot at 1.1500 is 2.6% below Mar26 consensus of 1.1800.
- 03Upside limited by hawkish Fed expectations; 1.1700-1.1800 resistance zone.
- 04Morgan Stanley sees 1.2000 by Mar26, but BofA/Barclays cap at 1.1700.
Market implications
Focus now shifts to Fed guidance and US data for EUR/USD direction. The 1.1700-1.1800 zone is key resistance; a break above 1.1800 would target the consensus near 1.1900-1.2000. Watch for US CPI and Fed minutes for hawkish surprises.
Risks to this view
A resumption of hawkish Fed rhetoric or stronger US data would invalidate this relief rally, pushing EUR/USD back towards 1.1400. Conversely, a dovish Fed pivot could accelerate gains beyond 1.1800.
Sentiment by currency
USD-EUR+JPY~GBP~Composite USD score: -0.35
Sources & References
How we cover this story
Other coverage on this pair
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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.