EUR/USD Price Forecast: Consolidates below mid-1.1700s as Iran risks, Fed bets support USD
EUR/USD remains capped below the mid-1.1700s as a combination of elevated geopolitical risks related to Iran and rising Fed rate expectations continues to underpin the US dollar. The pair's inability to push through resistance highlights persistent USD demand, with markets pricing in further tightening from the Federal Reserve. This consolidative phase reinforces the broader bearish bias for EUR/USD, especially as risk-off flows favor the greenback. The headline's framing aligns with our view that the USD is being supported by both safe-haven flows and monetary policy divergence, keeping the pair under pressure.
Where it sits in our coverage
Our consensus EUR/USD target for Mar26 stands at 1.1800 (median across 8 firms), with a relatively narrow range of 1.1700–1.2000. Current spot at 1.1500 trades comfortably below the consensus, highlighting a persistent gap between expectations and reality. The headline's bearish EUR/USD view aligns more closely with the lower end of our forecast range—Barclays and BofA share that cautious stance, targeting 1.1700 for Mar26.
How firms align
Among the firms that recently revised forecasts (May 5), BofA and Barclays maintain the most bearish EUR/USD positions at 1.1700 for Mar26, directly supporting the headline's emphasis on USD strength. Meanwhile, Morgan Stanley's 1.2000 target and Goldman's 1.1800 (with a Dec26 target of 1.2500) suggest a more optimistic view that contrasts with the current risk-off momentum. JPMorgan and ING sit in the middle, reinforcing the consensus but not fully embracing the bearish tone.
What the data shows
Our recent published research (e.g., /research/eurusd-consensus-divergence-may-2026-20260512-2102) notes that EUR/USD trades 3.77% below the Dec26 consensus of 1.2200, a gap that underscores sustained downside pressure. The May 5 forecast revisions showed no significant changes to Mar26 targets, suggesting firms have not yet adjusted to the recent USD rally catalyzed by Iran risks and hawkish Fed expectations.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01EUR/USD consolidates below mid-1.1700s, with spot at 1.1500 well below consensus forecasts.
- 02USD demand boosted by geopolitical tensions and Fed rate expectations; risk-off flows favor dollar.
- 03Next catalyst: Fed speakers and Iran developments; a break above 1.1750 could signal a shift.
- 04Consensus Dec26 target at 1.2200 suggests room for recovery, but short-term headwinds remain strong.
Market implications
Look for a test of the 1.1700 support level; a break below could open the way toward 1.1550. Key events to watch include Fed minutes and any escalation in Iran tensions. Our consensus Mar26 target of 1.1800 provides a near-term upside ceiling unless risk sentiment improves.
Risks to this view
A de-escalation in Iran tensions or a dovish surprise from the Fed could reverse USD gains and push EUR/USD back above 1.1700. Disappointing US data would also undermine the hawkish Fed narrative, potentially triggering a sharp rebound toward our consensus targets.
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.