Euro: Upside limited above fair value against US Dollar – Scotiabank
Scotiabank's latest assessment indicates that the euro's potential upside against the US dollar appears limited when it trades above its fair value. This view aligns with a prevailing USD strength narrative as market dynamics continue to favor the dollar in the short term. With the consensus median target for EUR/USD sitting around 1.1700, it's crucial to monitor how these valuations adjust in response to upcoming economic indicators.
Where it sits in our coverage
Our consensus EUR/USD target is currently at 1.1700 (median across 11 firms), with a range from 1.1200 at Danske Bank to 1.2300 at Morgan Stanley. Scotiabank's perspective aligns with the broader sentiment, indicating limited upside for the euro in light of current valuations.
How firms align
While Scotiabank expresses a cautious outlook, firms like Investec and RBC project targets near or above the consensus, with Investec at 1.1455 and RBC at 1.1600 for March 2026. Conversely, Danske Bank holds a more pessimistic view with a forecast of 1.1866 for March 2026, suggesting a divergence in outlook among institutions.
What the data shows
Recent forecast revisions have notably trended upward, with ING raising its March 2026 target to 1.1700. Related insights can be found in our coverage of EUR/USD divergence, particularly in /research/eurusd-ecb-rate-path where we highlight the current trading dynamics.
How firms align with this view
Key takeaways
- 01Scotiabank sees euro upside constrained above fair value against the dollar.
- 02Watch EUR/USD technical resistance near 1.1700; sentiment remains bullish on the dollar.
- 03Recent upward revisions indicate a shift, but risks to this view remain present.
- 04Key economic data ahead will likely influence market positioning.
Market implications
Traders should keep an eye on resistance levels around 1.1700 for EUR/USD, especially with upcoming US economic data releases. The consensus number remains a focal point as market sentiment evolves amid these developments.
Risks to this view
A reversal in the current USD strength narrative could emerge from robust economic indicators from the Eurozone or a shift in monetary policy from the ECB. Such catalysts would challenge the bearish sentiment expressed by firms like Scotiabank.
Sentiment by currency
USD+EUR JPY~GBP~Composite USD score: +0.60
Firms mentioned
Sources & References
How we cover this story
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