Euro: Political risks keep EUR under pressure against US Dollar – MUFG
Political risks continue to undermine the euro, as highlighted by MUFG, which suggests that uncertainty in the eurozone diminishes the currency's valuation appeal against the US dollar. With current trading around 1.1253, the euro remains vulnerable to potential shocks, particularly in light of diverging monetary policy expectations. This heightened political backdrop mandates vigilance for traders as support levels on EUR/USD form key focus areas in the near term.
Where it sits in our coverage
Our consensus EUR/USD target stands at 1.1634, reflecting a median across multiple firms, while the range spans from 1.1200 to 1.2000. As noted, MUFG's bearish sentiment aligns with the lower end of this spectrum, contrasting with more optimistic targets from firms like Rabobank and Nomura, who anticipate 1.1759 and 1.1800, respectively.
How firms align
Rabobank and Nomura are among the firms with optimistic positions, targeting 1.1759 and 1.1700 for March 2026, respectively. Conversely, BofA and TMGM maintain more cautious outlooks, with targets of 1.1700 and 1.1447, indicating a scenario where political instability could weigh heavily on the euro's trajectory. See our internal reports at /research/rabobank and /research/nomura for more details.
What the data shows
Recent revisions, such as from Rabobank and BofA, reflect a diverse view on the euro's performance, emphasizing the relevance of current events. For further insights on the EUR/USD outlook, you can refer to /research/eurusd-ecb-rate-path.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01EUR/USD trading at 1.1253, technical support levels are critical to monitor.
- 02Focus on EUR dips as political risks escalate; watch for trading signals.
- 03Key resistance levels around 1.1700 could reshape market positioning.
Market implications
Next week’s political developments in the eurozone, particularly any shifts in governance or economic policymaking, could serve as catalysts for further volatility in the EUR/USD pair. Traders should keep the consensus target of 1.1634 in mind as they assess risk and reward potential.
Risks to this view
A significant turnaround in the euro's outlook could occur if political risks substantively alleviate or if the ECB signals a strong commitment to aggressive monetary policy divergence from the Fed. This would likely push EUR/USD beyond current technical resistance levels.
Sentiment by currency
USD+EUR JPY~GBP~Composite USD score: +0.65
Firms mentioned
Sources & References
How we cover this story
Other coverage on this pair
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Euro: Downtrend slows but further lows possible against US Dollar – UOB
UOB technical assessment flags EUR/USD vulnerability to fresh lows despite deceleration in downtrend momentum.