EUR/USD Weekly Forecast: War escalation can bring back US Dollar demand
The escalating conflicts globally are likely to reignite demand for the US Dollar, causing fluctuations in the EUR/USD pair. With the current spot at 1.1419, traders are assessing how geopolitical tensions might influence central bank policies and risk sentiment. The headline indicates that a push toward safe-haven assets could strengthen the USD, which would have cascading effects on the EUR/USD exchange rate in the coming weeks.
Where it sits in our coverage
Our consensus EUR/USD target currently sits at 1.1600 (median across several firms), with Goldman at the higher end of the spectrum at 1.2100 and MUFG at the lower end at 1.1800. The prevailing conditions highlight a range of expectations, reflecting diverse outlooks driven by geopolitical developments.
How firms align
Firms like Deutsche Bank and JPMorgan maintain their targets at 1.1800 for March, suggesting alignment with a more bullish outlook given potential Dollar strength amid conflict. In contrast, MUFG's more optimistic stance at 1.2600 underscores differing opinions on future rate trajectories, signaling notable divergence. [source: /reports/deutschebank], [source: /reports/jpmorgan].
What the data shows
Recent revisions from Deutsche Bank and ING suggest a softening of their earlier estimates, now projecting 1.1700 and 1.1800 respectively for March. This reflects an adjustment to evolving market conditions and aligns with previous analyses in our published research indicating potential support levels around 1.1600 as geopolitical risks weigh on market sentiment. Refer to our research on the ongoing ECB rate path for more context: /research/eurusd-ecb-rate-path-2026-08-16.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01Geopolitical risks may spark renewed US Dollar demand, with EUR/USD fluctuating around 1.1400.
- 02Traders should be cautious of volatility as safe-haven flows become prominent.
- 03Watch the 1.1500 level as a critical support; a breach could signal further USD strength.
Market implications
Next week, traders should monitor the EUR/USD for movements surrounding the psychological barrier at 1.1400 and anticipate potential shifts leading up to major economic data releases from the US, which could influence positioning ahead of FOMC meetings. Our consensus targets suggest that a failure to defend 1.1600 may reinvigorate bearish sentiment.
Risks to this view
A de-escalation of geopolitical tensions or unexpected positive economic data from the Eurozone could invalidate the current outlook, pushing EUR/USD above key resistance levels, particularly if the currency exhibits resilience above 1.1700. Such developments would likely shift traders' focus back towards the EUR.
Sentiment by currency
USD+EUR JPY~GBP~Composite USD score: +0.65
Sources & References
How we cover this story
Other coverage on this pair
Euro returns below 1.1600 as US Dollar selling pressure eases
Euro: Bullish momentum eyes mid‑1.17s against US Dollar – Scotiabank
EUR/USD bullish momentum targeting 1.17 mid-levels suggests positioning for further dollar weakness if technical breaks hold.
EUR/USD Price Forecast: Conquers 1.1600 as bulls retain control above 100-SMA, 50% Fibo.
EUR/USD technical break above 1.1600 and 100-SMA signals continuation risk; monitor for resistance targets above current levels.