Euro slips as Hormuz firefight revives US Dollar demand
Tensions in the Hormuz Strait have resurfaced, rekindling safe-haven demand for the US Dollar as geopolitical uncertainties weigh on the Euro. While the EUR/USD trades around 1.1500, the market appears cautious, with technical indicators suggesting limited downside until more clarity emerges on the situation in the Persian Gulf. This backdrop reinforces a bullish sentiment on the USD amidst heightened global risk perception, making it essential for traders to monitor this evolving landscape closely.
Where it sits in our coverage
Our consensus EUR/USD target sits at 1.1700 (median across firms), with Citi at the lower bound (1.1300) and UBS at the upper bound (1.2000). The current spot at 1.1500 indicates a significant divergence from these forecasts, as traders await catalysts to justify a reversion towards consensus levels.
How firms align
Goldman Sachs and JPMorgan maintain higher outlooks for the Euro, with targets of 1.1800 and 1.1800 for March 2026, respectively. On the other hand, Citi stands on a more bearish position, forecasting EUR/USD will reach only 1.1300 by March 2026, indicating a disagreement with the prevailing sentiment around the Euro's strength. See our insights on these positions in the internal coverage reports for further context.
What the data shows
Recent revisions from leading firms indicate a consensus increase for EUR/USD, with Morgan Stanley and Commerzbank adjusting their March 2026 targets to as high as 1.2000. This ongoing shift presents an interesting scenario as the price currently trades significantly below these expectations, hinting at potential upward momentum if market sentiment stabilizes. Refer to /research/eurusd-divergence-consensus-vs-spot-may-2026 for extensive analysis on this divergence.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01EUR/USD trades at 1.1500, diverging from a consensus target of 1.1700.
- 02Geopolitical tensions may support the USD, limiting EUR/USD upside until clarified.
- 03Watch for geopolitical developments in Hormuz as potential catalysts for price movement.
- 04A bullish USD sentiment is likely until the situation stabilizes.
Market implications
Going forward, traders should closely watch the 1.1400 support level, which could trigger further volatility in the EUR/USD pair. Additionally, any developments or announcements related to the Hormuz Strait tensions will be crucial in shaping market sentiment. Our consensus target of 1.1700 remains an important benchmark for assessing future Euro strength.
Risks to this view
Should the situation in the Hormuz Strait de-escalate unexpectedly, a reversal in safe-haven demand could significantly strengthen the Euro against the Dollar. Additionally, any positive economic data from the Eurozone could challenge current bearish views, leading to a recalibration of targets across the board.
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: Rangebound against US Dollar despite ECB repricing – Societe Generale
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.