EUR/USD trades above 1.1700 after paring latest losses
EUR/USD has recovered above 1.1700 after paring recent losses, driven by a softer USD backdrop and repositioning ahead of next week's ECB meeting. The move comes as the pair continues to trade well below our consensus forecasts, with spot at 1.1500 against a median year-end target of 1.2200. This divergence underscores persistent bearish sentiment that may be overextended, particularly with the eurozone growth outlook stabilizing. The headline's reference to 'paring losses' suggests short-covering rather than a fundamental shift, but the magnitude of the deviation from consensus warrants attention.
Where it sits in our coverage
Our consensus EUR/USD target is 1.1800 for March 2026 (range 1.1700–1.2000 across 8 firms), with the median climbing to 1.2200 by December 2026. The current spot at 1.1500 sits roughly 2.6% below the near-term consensus, a gap that has widened after recent selling. FHX's coverage aligns more closely with the upper half of forecasts — firms like Goldman and Deutsche Bank target 1.2500 by year-end, while the more cautious Barclays and BofA are at 1.2100–1.2200.
How firms align
Goldman Sachs and Deutsche Bank are among the most bullish, both targeting 1.2500 by December 2026, which implies significant upside from current levels. Morgan Stanley stands out as the sole bearish outlier, forecasting 1.1600 by year-end 2026, a call that contradicts the broader consensus. The headline's implied recovery aligns well with the majority view, though the timing remains uncertain.
What the data shows
Our published research "/research/eurusd-consensus-divergence-may-2026" highlights that EUR/USD consensus at 1.22 while spot sits 3.87% below, reinforcing the case for mean reversion. The latest price action above 1.1700 suggests the pair may be testing that divergence, but sustained gains require a catalyst such as a more dovish Fed or improved eurozone data.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01EUR/USD recovers to 1.1700+ after recent slide, but still 2.6% below Mar26 consensus of 1.1800.
- 02Consensus year-end target of 1.2200 implies 6% upside from current 1.1500 – divergence remains wide.
- 03Morgan Stanley's 1.1600 Dec26 target is lone bearish outlier; majority sees material upside.
- 04ECB meeting next week could be near-term catalyst; hawkish tilt may support euro.
Market implications
Look for a break above 1.1750 to confirm short-term momentum; failure could retest 1.1500 again. The ECB decision on 12 September is the next major risk event, with any hawkish surprise potentially aligning spot with our consensus trajectory. Our median 1.1800 Mar26 target remains achievable if the eurozone data flow continues to stabilize.
Risks to this view
A dovish ECB surprise or renewed US economic outperformance would likely push EUR/USD back toward the 1.1400 area, invalidating the recovery narrative. Similarly, a spike in geopolitical risk could trigger broad USD demand, widening the gap between spot and consensus. Morgan Stanley's bearish target of 1.1600 would become more plausible if the Fed remains on hold while the ECB cuts deeper.
Sentiment by currency
USD~EUR~JPY~GBP~Composite USD score: +0.00
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.