Euro: Trading mildly softer against US Dollar – Scotiabank
EUR/USD is trading mildly softer near 1.1500, according to Scotiabank, with no evident fresh catalyst. The move appears driven by positioning adjustments or technical breakdown, warranting close monitoring for deeper pullbacks. This weakness contrasts with consensus forecasts pointing to a recovery above 1.18 by March 2026, highlighting a growing divergence between spot and expectations. The absence of a clear trigger suggests market participants are re-evaluating the euro's fundamental outlook amid persistent USD strength.
Where it sits in our coverage
Our consensus EUR/USD target for March 2026 sits at 1.1800 (median across 8 firms), with Morgan Stanley at the upper bound (1.2000) and BofA/Barclays at the lower (1.1700). Scotiabank's dovish view aligns more closely with the lower third of the consensus – BofA and Barclays share similar bearish leanings for the short term, though the consensus is heavily tilted toward a stronger euro by year-end.
How firms align
BofA and Barclays sit at 1.1700 for March 2026, the most bearish among the panel, aligning with the headline’s cautious tone. In contrast, Morgan Stanley is the most bullish at 1.2000, while Goldman and Deutsche Bank target 1.1800, also supporting upside. The current spot well below all targets indicates a broad disconnect that could either validate the bearish view or present a contrarian opportunity.
What the data shows
Recent forecast revisions (all dated 2026-05-05) show no changes in targets, suggesting firms are holding their positions. Our research series on the consensus divergence (e.g., /research/eurusd-divergence-consensus-gap-may-2026-20260513-1605) highlights that spot at 1.1500 trades 3.84% below the December 2026 consensus of 1.2200, a gap that has persisted for days and may reflect skepticism about the euro's recovery narrative.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01EUR/USD at 1.1500, 4% below Dec-26 consensus of 1.2200 – rare divergence warrants attention.
- 02No fresh catalyst suggests the move is positioning-driven; watch for 1.1450 support break.
- 03Consensus heavily bullish (median 1.18 for Mar26), but spot weakness may signal a near-term realignment.
- 04BofA and Barclays are the most bearish firms, aligning with Scotiabank's view.
Market implications
Watch for a break below 1.1450, which could accelerate selling toward the 1.13 handle. The next key event is the ECB meeting minutes and US CPI data; a stronger USD print would reinforce the bearish divergence. Our consensus at 1.1800 for March 2026 acts as a magnet if the euro stages a recovery, but for now, momentum is on the dollar's side.
Risks to this view
A dovish Fed surprise or a sudden improvement in eurozone growth data could reverse the current bearish sentiment, pushing EUR/USD back toward the 1.17-1.18 consensus zone. Failure to break lower and a close above 1.1550 would invalidate the breakdown signal. The consensus gap alone does not guarantee a bearish outcome; a catalyst is needed for conviction.
Sentiment by currency
USD+EUR-JPY~GBP~Composite USD score: +0.30
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.