Euro: Consolidation with downside risks against US Dollar – Scotiabank
The Euro is currently experiencing a consolidation phase against the U.S. Dollar, with Scotiabank highlighting downside risks that could affect institutional positioning. The EUR/USD pair's current spot at 1.1446 suggests a precarious balance as traders weigh the potential for a hawkish shift in U.S. monetary policy. This situation underscores the need for caution as market sentiment remains bullish on the dollar, potentially exposing the Euro to further declines.
Where it sits in our coverage
Our consensus EUR/USD target rests at 1.1700 (median across firms), reflecting a wide spread where RB's 1.2000 contrasts sharply with Stanchart's more conservative 1.1400. Scotiabank's latest targets, which suggest a downside bias with a March26 target of 1.1734, echo this median yet highlight a vulnerable positioning amid current market sentiment.
How firms align
Firms like RBC and Nomura maintain targets at 1.1700 for March26, aligning closely with Scotiabank's viewpoint. In contrast, the outlook from Lloyds of 1.1331 signals a more bearish stance, diverging from the consensus. For a deeper analysis, refer to our insights on the target deviations in /research/eurusd-ecb-rate-path-2026-09-16.
What the data shows
Recent forecast revisions indicate that firms are calibrating their projections; BNP Paribas adjusted its March26 target to 1.1600, suggesting caution amid downward revisions across the market. Additionally, our ongoing research indicates a continued divergence within our covered firms, highlighting concerns over the Euro's resilience.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01EUR/USD consolidation suggests potential for a downward breakout near 1.1400.
- 02Risk-off sentiment could trigger a sharper decline in EUR/USD.
- 03Hawkish surprises from the Fed may push EUR/USD lower than 1.1400.
- 04Long positions in the Euro appear increasingly vulnerable.
Market implications
Traders should closely watch the 1.1400 level as a key support point, as a break could lead to further selling pressure. Upcoming U.S. economic data releases could shift sentiment, impacting our consensus target of 1.1700.
Risks to this view
If the European Central Bank signals a more aggressive rate hike than anticipated, or if U.S. data disappoints, this could bolster the Euro and reverse current bearish sentiment. Any significant improvement in Eurozone economic indicators may lead to recalibrated targets.
Sentiment by currency
USD+EUR JPY~GBP~Composite USD score: +0.60
Firms mentioned
Sources & References
How we cover this story
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