EUR/USD Price Forecast: Tests 1.1600 amid flaring geopolitical tensions, higher Oil prices
The EUR/USD is testing the key psychological level of 1.1600 as rising geopolitical tensions and increasing oil prices bolster the Euro. This surge corresponds with a growing geopolitical risk premium, which typically favors the Euro given its dependency on energy imports. With sentiment leaning bearish on the USD—fueled by ongoing concerns regarding the Fed’s policy trajectory—traders should stay vigilant as market dynamics shift and impact cross-currency moves.
Where it sits in our coverage
Our current consensus target for EUR/USD stands at 1.1700 for March 2026, significantly above the spot price of 1.1500. The spread among firms varies, with UBS projecting the highest target at 1.2000, while Citi places the lowest at 1.1300, indicating diverse perspectives on the Euro's potential rise against the USD.
How firms align
Morgan Stanley and Goldman Sachs are particularly optimistic, targeting 1.2000 and 1.1800 for March 2026, respectively, aligning well with the bullish sentiment reflected in today's analysis. In contrast, BofA’s target of 1.1700 and 1.1900 for March and June 2026 suggests a more cautious outlook, which can be seen at /reports/bofa.
What the data shows
Recent forecasts suggest a uniformly bullish stance among major firms, with highlights from our analysis in /research/eurusd-ecb-rate-path emphasizing that EUR/USD currently trades significantly below the December 2026 consensus of 1.20. This discrepancy hints at potential for upward adjustments as energy price dynamics evolve.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01EUR/USD testing 1.1600 as geopolitical tensions rise.
- 02Bullish sentiment favors Euro due to rising oil prices.
- 03Watch for Fed policy changes that could alter USD strength.
Market implications
Next week’s calendar includes important U.S. jobs data, which could influence the Fed's policy outlook and subsequently impact EUR/USD positions. Traders should keep an eye on the 1.1600 handle, as a sustained break could lead to further gains toward the consensus target.
Risks to this view
A shift in U.S. monetary policy, hinting at a more aggressive rate hike schedule, could quickly reverse the bullish sentiment towards the Euro. Additionally, any de-escalation in geopolitical tensions may undermine the sudden strength observed in the Euro.
Sentiment by currency
USD-EUR+JPY~GBP~Composite USD score: -0.35
Sources & References
How we cover this story
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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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