EUR/USD: Range trade persists with hawkish ECB – Scotiabank
EUR/USD remains confined to a narrow range despite hawkish ECB commentary, as markets await clearer directional catalysts. Scotiabank highlights persistence of the range-bound trading pattern, with the euro supported by ECB tightening expectations but unable to break above resistance near recent highs. This consolidation reflects market indecision amid conflicting signals from the Fed and ECB. The divergence between bullish EUR sentiment and spot's failure to rally suggests underlying caution, keeping a breakout in focus.
Where it sits in our coverage
Our consensus EUR/USD target sits at 1.1800 for Mar26 (median across 8 firms), with Morgan Stanley at the upper bound (1.2000) and BofA & Barclays at the lower (1.1700). Scotiabank's view aligns more closely with the consensus median, as the hawkish ECB stance supports EUR but range trade implies near-term consolidation. The current spot at 1.1500 is 2.6% below the consensus target, highlighting a potential catch-up trade if sentiment shifts.
How firms align
Several firms align with Scotiabank's bullish EUR view through their elevated targets: Goldman (1.1800), JPMorgan (1.1800), and MUFG (1.1800) all forecast Mar26 levels above spot. However, BofA and Barclays are less optimistic at 1.1700, suggesting a more cautious outlook. Morgan Stanley stands out with a 1.2000 Mar26 target but a bearish Dec26 forecast of 1.1600, indicating a near-term euro rally that may reverse.
What the data shows
All eight firms submitted forecast revisions on 2026-05-04, with no material changes from prior targets. Our recent published research, "/research/eurusd-consensus-divergence-may-2026", emphasizes the gap between consensus (1.22 Dec26) and spot, supporting a medium-term bullish view. The range-bound move suggests near-term positioning is balanced, but the consensus skew provides a floor for dips.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01EUR/USD stuck in range, hawkish ECB provides support but no breakout yet.
- 02Consensus Mar26 target at 1.18 implies upside from 1.15 spot, but near-term consolidation likely.
- 03Watch for breakout above 1.1550 resistance or below 1.1450 support to set direction.
- 04All 8 firms revised forecasts on May 4; no major changes, reinforcing range expectations.
Market implications
Next focus is on ECB commentary and US data for momentum. A break above 1.1550 could target the consensus Mar26 median of 1.18, while a move below 1.1450 risks a test of 1.13. The Dec26 consensus at 1.22 offers a longer-term bullish bias.
Risks to this view
A hawkish Fed pivot or stronger US data would invalidate the bullish EUR view, potentially driving EUR/USD below 1.14. Conversely, an ECB rate cut or dovish surprise would remove support and trigger a break lower. The current range could persist if both central banks maintain current stances.
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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EUR/USD: Recovery eyes full retracement – Scotiabank
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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.