EUR/USD retreats near 1.1750 with ZEW survey, US-Iran talks on focus
EUR/USD has slipped back towards the 1.1750 handle as the ZEW survey disappointed and markets monitor US-Iran nuclear talks. The ZEW economic sentiment for Germany fell sharply, denting hopes for a rapid eurozone recovery and weighing on the single currency. Meanwhile, potential progress or collapse in US-Iran negotiations injects a geopolitical risk premium that typically favors USD safe-haven flows. The move lower comes despite EUR/USD already trading well below consensus targets, suggesting that near-term sentiment has turned more bearish. The key question is whether this dip is a buying opportunity or the start of a deeper correction towards our median consensus at 1.18.
Where it sits in our coverage
Our consensus EUR/USD target for March 2026 stands at 1.1800 (median across 8 firms), with spot currently at 1.1500 — a 2.6% discount. The range spans Morgan Stanley's bullish 1.2000 to BofA and Barclays' more cautious 1.1700. The headline's bearish tilt aligns more closely with the lower third of our consensus range, particularly BofA and Barclays, which target 1.1700.
How firms align
Among the firms we track, BofA and Barclays are most aligned with the headline's bearish view, as both target just 1.1700 for March 2026, reflecting a cautious stance on EUR upside. Conversely, Morgan Stanley stands out as the most bullish, with a March target of 1.2000, while Goldman and Deutsche Bank target 1.1800 — closer to the median. See our /reports/bofa and /reports/barclays pages for details.
What the data shows
Our recent research piece /research/eurusd-consensus-divergence-may-2026 highlighted that EUR/USD consensus at 1.22 for year-end 2026 implies significant upside from current levels, but noted that the divergence between firms is widening. The headline's ZEW-driven sell-off validates the caution expressed by BofA and Barclays, while the more bullish firms may need to see a catalyst — such as US-Iran deal or stronger eurozone data — to maintain their forecasts.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01ZEW miss and Iran uncertainty push EUR/USD towards 1.1750 support; a break below could test 1.1700 (BofA/Barclays March target).
- 02Consensus median at 1.1800 for March 2026 — spot at 1.1500 offers 2.6% upside if catalyst emerges.
- 03Geopolitical risk premium from stalled Iran talks could reinforce USD safe-haven bids, capping EUR/USD.
- 04Watch for US-Iran negotiation outcome: progress = EUR relief rally; collapse = further USD strength.
Market implications
Near-term, EUR/USD is testing support around 1.1750; a close below that opens the path towards 1.1700. The next catalyst is the US-Iran talks outcome, which could rapidly shift sentiment. If a deal is reached, expect a euro bounce towards our median consensus of 1.1800. If talks collapse, expect a continued grind lower towards BofA's 1.1700 target. Also watch eurozone PMIs and US ISM data for additional directional cues.
Risks to this view
A sudden escalation or collapse of US-Iran talks would invalidate any near-term EUR recovery and likely push EUR/USD towards the 1.1700 support. Conversely, a strong rebound in eurozone data or a dovish shift from the Fed could reignite EUR buying, challenging our bearish view and potentially driving spot back towards the 1.1800 consensus median.
Sentiment by currency
USD+EUR-JPY~GBP~Composite USD score: +0.30
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.