Euro: Rally vulnerable to reversal against US Dollar – Scotiabank
Scotiabank's analysis highlights a precarious momentum-based rally for the Euro against the US Dollar, suggesting that the current upside lacks robust fundamental backing. This indicates a potential tactical sell opportunity, particularly as technical indicators show vulnerability in the Euro's strength. Given the recent market sentiment towards the USD being bullish, this is a crucial moment for traders watching the EUR/USD pair for signs of reversal.
Where it sits in our coverage
Our consensus EUR/USD target currently stands at 1.1700, with a median spread of targets ranging from 1.1200 to 1.2000 across various firms. Scotiabank's analysis suggests that upside moves for the Euro may be limited, aligning somewhat with the upper variations of the targets set by firms like NOMURA and RBS, who project 1.1700 for March 2026.
How firms align
Firms such as RBC and Investec are more optimistic, projecting 1.1600 and 1.1455 respectively for March 2026. Meanwhile, Scotiabank's cautious stance contrasts sharply with the more bullish targets from firms like Morgan Stanley at 1.2000 for the same tenor, indicating divergent views within the market. Their reports provide a crucial context for our understanding of potential volatility in the EUR/USD pair.
What the data shows
Recent forecast revisions from Deutsche Bank and UOB suggest upward adjustments, with targets rising to 1.1800, reflecting an optimistic sentiment for the Euro longer-term. For further insights, refer to our report on this topic in /research/eurusd-ecb-rate-path-2026-08-23, which discusses the consensus at 1.1677 versus various targets, highlighting the nuances in market expectations.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01Scotiabank warns of limited support for Euro's current rally against the USD.
- 02Watch for potential reversal signals as technical indicators show weakness in Euro strength.
- 03Higher targets from firms like Morgan Stanley could fuel buying, but caution is advised.
- 04The Euro faces key resistance levels that, if breached, might signal a more bullish outlook.
Market implications
Traders should focus on the 1.1400 and 1.1500 levels as critical thresholds for the Euro. Key calendar events such as upcoming ECB meetings may provide the volatility needed to test these areas. Our consensus suggests caution at the current rate of 1.1446.
Risks to this view
A strong shift in EUR sentiment could occur if the ECB unexpectedly alters its policy stance or if U.S. economic data significantly underperforms, leading to a rapid appreciation of the USD. This would necessitate reassessing current bullish targets for the Euro.
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
Euro: Further gains eyed toward 1.1800 against US Dollar – UOB
EUR/USD technical target of 1.1800 suggests directional bias toward euro strength; traders should monitor resistance levels and macro catalysts driving momentum.
EUR/USD Price Forecast: Corrects further as US Dollar extends recovery
USD strength momentum extends EUR/USD correction, likely testing technical support levels watched by systematic traders and hedge funds.
Morning briefing: EUR/USD is expected to regain momentum above 1.1700
Technical break above 1.1700 may attract momentum flows; watch for ECB/Fed divergence confirmation to validate further EUR/USD upside.