EUR/USD Price Forecast: Holds above 1.1700 as USD bulls seem hesitant ahead of FOMC meeting
EUR/USD holds above 1.1700 as dollar bulls pause ahead of the FOMC decision, with the pair trading at 1.1500. The headline notes hesitancy despite a hawkish Fed bias, but our coverage suggests a deeper disconnect: spot is 3.87% below the consensus 2026 target of 1.22. The market appears to be pricing in a more cautious Fed outcome, yet the analyst community sees a medium-term euro rebound. This divergence sets up a binary event risk for the FOMC, where a hawkish surprise could drive EUR/USD below 1.15, while a dovish outcome could trigger a mean reversion toward 1.17.
Where it sits in our coverage
Our consensus EUR/USD target for Mar26 sits at 1.1800 (median across 8 firms), with Morgan Stanley at the upper bound (1.2000) and BofA and Barclays at the lower (1.1700). The headline's 'holds above 1.1700' aligns with the lower end of our consensus range, reflecting the market's hesitancy to push the dollar further despite FOMC risks. Spot at 1.1500 is already well below any firm's Mar26 target, indicating potential upside if the Fed underwhelms.
How firms align
Firms like ING (Mar26 1.1900) and Goldman (Mar26 1.1800) are more aligned with the headline's implied euro resilience, betting on a softer USD. Conversely, BofA and Barclays (both 1.1700) offer the most bearish euro views, consistent with the current spot but not with the consensus. Morgan Stanley's 1.2000 target is the most bullish, reflecting a strong euro rebound expectation.
What the data shows
Our research /research/eurusd-consensus-divergence-may-2026 highlights that EUR/USD spot is 3.87% below the Dec26 consensus of 1.2200, the widest gap among major pairs. This suggests the market is pricing in a risk premium ahead of the FOMC, and a dovish outcome could trigger a catch-up rally toward the Mar26 median of 1.1800.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01EUR/USD holds above 1.1700, but spot at 1.1500 is 3.87% below the Dec26 consensus of 1.2200.
- 02FOMC decision is the key catalyst; a hawkish surprise risks breaking 1.1500 support, while a dovish outcome could spark a rally to 1.1800.
- 03Consensus Mar26 median of 1.1800 provides a medium-term target, but near-term direction hinges on the Fed's dot plot.
- 04Morgan Stanley's 1.2000 Mar26 target is the most bullish; BofA/Barclays at 1.1700 are the most bearish.
Market implications
Watch the FOMC dot plot and Powell's tone. A hawkish shift (median rate higher) could push EUR/USD below 1.1500, testing 1.1400. A dovish hold likely triggers a short squeeze toward our Mar26 consensus of 1.1800. The level to watch is 1.1700: a close above would confirm bullish momentum toward the consensus.
Risks to this view
A hawkish Fed surprise (e.g., 2024 median rate hike or upward inflation revisions) would invalidate the bullish euro view, driving EUR/USD below 1.1500 to test 1.1400. Conversely, a sharp risk-off event due to geopolitical tensions could also boost the dollar despite a dovish Fed.
Sources & References
How we cover this story
Other coverage on this pair
EUR/USD strengthens as mixed US labor data and hopes for a US-Iran deal pressure the Greenback.
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.