Euro: Soft undertone but fair value higher against US Dollar – Scotiabank
Scotiabank's analysis presents a soft undertone for the Euro against the US Dollar, suggesting that while the current sentiment may seem bearish, fair value estimates remain higher. This consideration comes at a pivotal time as the EUR/USD spot sits at 1.1253, yet the market consensus points towards a target as high as 1.1700 by March 2026. The disconnect between spot rates and expectations may present trading opportunities, especially if the market adjusts to align more closely with the forecasted fair value.
Where it sits in our coverage
Our consensus EUR/USD target is 1.1700 for March 2026, reflecting a range among firms from 1.1200 to 1.2000. The firm positions vary significantly, with Rabobank at the upper end of the scale at 1.1759 and TMGM at the lower end at 1.1447. Scotiabank's view aligns closely with the broader consensus, supporting the narrative of higher fair value despite current weaknesses.
How firms align
Several firms echo the sentiment highlighted by Scotiabank. For instance, Rabobank forecasts 1.1759 and SocGen aligns closely with an estimate of 1.1700. Conversely, TMGM and Mizuho have more conservative targets at 1.1447 and 1.1300, respectively, reflecting bearish perspectives. Detailed positions can be found in our recent reports, such as /reports/rabobank and /reports/socgen.
What the data shows
Recent forecast revisions suggest a tightening of bullish sentiment; for instance, Rabobank recently adjusted its March target to 1.1759. Meanwhile, our published research reveals an ongoing divergence, as reflected in /research/eurusd-ecb-rate-path-2026-10-13, which outlines a 3.6% gap between current trading levels and consensus targets.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01EUR/USD spot at 1.1253, but consensus is significantly higher at 1.1700.
- 02Current market sentiment appears soft, indicating potential for tactical positioning.
- 03Watch for a potential adjustment towards median targets if economic indicators align.
- 04The spread in forecasts highlights bullish opportunities against bearish stances.
Market implications
Traders should pay close attention to upcoming economic data releases that could sway sentiment towards higher targets. Specifically, any alignment of fiscal policy or inflation data with the ECB's projections could cue a move towards the consensus target of 1.1700. Continued divergence from this level could trigger shifts in positioning.
Risks to this view
A significant catalyst that could invalidate the bullish view on the Euro against the Dollar includes unexpected geopolitical events or a stronger-than-expected U.S. economic performance. If the USD strengthens further, pushing the EUR/USD well below 1.1200, it could necessitate a reevaluation of the bullish forecasts.
Sentiment by currency
USD EUR+JPY~GBP~Composite USD score: -0.35
Firms mentioned
Sources & References
How we cover this story
Other coverage on this pair
Euro holds mild gains above 1.1200 as US Dollar drifts with US CPI on tap
EUR/USD holding above 1.1200 ahead of US CPI print; directional USD moves likely contingent on inflation data beat/miss versus consensus.