Euro: Bearish sentiment persists into year-end against US Dollar – MUFG
As bearish sentiment for the Euro intensifies against the US Dollar, MUFG's outlook suggests further potential declines as year-end approaches. The current EUR/USD spot at 1.1253 raises the stakes as traders assess whether critical support levels will hold. Persisting bearish flows could lead to a technical breakdown, intensifying the urgency for market participants to closely monitor developments.
Where it sits in our coverage
Our consensus EUR/USD target currently stands at 1.1600 (median across 12 firms), reflecting a varied spread from 1.1000 at HSBC to 1.2200 at CIBC. The bearish sentiment reflected in MUFG's analysis aligns with firms like HSBC and TMG that are targeting lower levels into 2026.
How firms align
Specifically, HSBC's targets of 1.1000 for Dec26 and TMG's projections of 1.1448 for June26 highlight a cautious approach contrasting with more optimistic forecasts from firms like CIBC, which sees 1.2200 for the same tenor. Both insights can be found in their respective reports, demonstrating the divergence in expectations among FX analysts.
What the data shows
Recent forecast revisions also indicate a shift towards bearish sentiment, with UOB revising their March26 target down to 1.1536. Our published research indicates a significant gap between the current spot and consensus at 1.1600, suggesting that traders may need to reassess positions, particularly in light of the persistent EUR/USD divergence noted in previous insights.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01Persistent bearish flows for EUR/USD highlight breakdown risks.
- 02Traders should focus on support levels; break below 1.1200 could trigger further declines.
- 03Watch for revisions across consensus targets as firms like UOB adjust expectations.
Market implications
Looking ahead, the 1.1200 support level will be crucial. A breach here may trigger accelerated selling, while the consensus target at 1.1600 calls for careful positioning ahead of economic data releases.
Risks to this view
A reversal in sentiment could occur if the European Central Bank signals a more aggressive rate stance, contradicting the bearish outlook. Positive economic indicators from the Eurozone could also challenge this current view.
Sentiment by currency
USD+EUR JPY~GBP~Composite USD score: +0.65
Firms mentioned
Sources & References
How we cover this story
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