Euro: Downside risks versus US Dollar focus on 1.1570 – UOB
As the euro faces mounting downside risks against the US dollar, the market keenly focuses on the 1.1570 threshold. This reflects growing concern regarding euro fundamentals, particularly amidst a strengthening dollar narrative. The current EUR/USD spot at 1.1500 signals a sharper repricing, with institutional sentiment suggesting increased bearishness towards the euro. The heavy reliance on economic data and monetary policy shifts will be key in determining whether the euro can hold its ground against the dollar in the near term.
Where it sits in our coverage
Our consensus EUR/USD target stands at 1.1750 (median across 12 firms), with Morgan Stanley at the upper end (1.2000) and Citi at the lower bound (1.1300). This positioning diverges from the current market sentiment, which appears to undervalue the euro compared to the anticipated trajectory of dollar strength. UOB's call aligns with the bearish framing, indicating risks surrounding the euro’s stability.
How firms align
Firms such as JPMorgan (Mar26 1.1800) and Deutsche Bank (Mar26 1.1800) lean towards more bullish forecasts for the euro, suggesting some divergence from the headline's bearish perspective. In contrast, Citi's forecast (Mar26 1.1300) significantly undercuts the consensus, illustrating a starkly different outlook.
What the data shows
Recent revisions from Goldman and ING indicate a stronger forecast for March 2026, now pegging their targets at 1.1800 and 1.1900, respectively. This aligns with our recent publication, highlighting that the EUR/USD trades 4% below the Dec-26 consensus, underscoring the existing market divergence.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01EUR/USD currently at 1.1500 faces key downside risk to 1.1570.
- 02Bearish sentiment is compounded by USD strength.
- 03Watch for economic data releases that could shift sentiment.
- 04Market divergence highlights potential for volatility.
Market implications
Going forward, traders should monitor breaks below 1.1500, with a critical support level at 1.1570. Additionally, upcoming economic data could further shape expectations and affect our consensus number of 1.1750 over the medium term.
Risks to this view
This view could be invalidated if the European Central Bank indicates stronger-than-expected monetary policy tightening, altering the current narrative around euro strength. A surprising uptick in eurozone economic growth could also counter the bearish sentiment.
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: Limited downside against US Dollar with ECB hike message – MUFG
ECB's continued hike messaging supports EUR/USD floor around current levels; limited downside signals reduced momentum for USD longs.
Euro: Gains capped against US Dollar by Fed story – ING
Fed rate expectations remain supportive of USD strength, structurally limiting EUR/USD upside despite recent euro resilience.
EUR/USD Price Forecast: 20-day EMA remains key barrier as Iran uncertainty persists
Euro slips as Hormuz firefight revives US Dollar demand
Geopolitical risk in Persian Gulf elevates safe-haven demand, likely to support USD/JPY parity and cap EUR/USD downside until tensions clarify.
Bank desks on this topic
FX Daily: Iran fall-out coming home to roost in EUR/USD
https://think.ing.com/articles/fx-daily-iran-fall-out-coming-home-to-roost-in-eur-usd/
FX Daily: Iran fall-out coming home to roost in EUR/USD
https://think.ing.com/articles/fx-daily-iran-fall-out-coming-home-to-roost-in-eur-usd/
FX Daily: Iran fall-out coming home to roost in EUR/USD
EUR/USD was hit in March on expectations that the stagflationary shock from Iran would resonate more in Europe than the US. The inflationary effects have been plain for all to see, but this week's release of European PMIs warns that the stagnationary effect is just starting to la
Morgan Stanley: How Much Will FX Hedging Flows Boost EUR/USD? - eFXdata
Morgan Stanley: How Much Will FX Hedging Flows Boost EUR/USD? eFXdata
Cross-firm research
EUR/USD Trades 3.16% Below Dec-26 Consensus as 18 Firms Hold 1.20 Median
With spot at 1.1621 and the 18-firm median Dec-26 target at 1.20, EUR/USD sits 3.16% below consensus—a gap that demands explanation.
EUR/USD Trades 3.2% Below Dec-26 Consensus as Targets Cluster Near 1.20
Spot at 1.1612 sits 3.2% below the 18-firm median Dec-26 target of 1.20, exposing a consensus that remains structurally bullish EUR despite the pair's failure to close the gap.
EUR/USD Trades 4% Below Dec-26 Consensus: What the Gap Reveals
EUR/USD spot at 1.1711 sits 4.01% below the eight-firm median Dec-26 target of 1.22, exposing a structural tension between macro conviction and current tape.