Euro: Vulnerable against US dollar ahead of US CPI – Deutsche Bank
Deutsche Bank warns that EUR/USD is vulnerable ahead of US CPI, as a hotter print could widen the Fed-ECB policy differential and push the pair lower. This aligns with the current bearish sentiment (composite 0.65) and the pair trading well below consensus forecasts. With spot at 1.1500, any upside surprise in inflation would reinforce USD bullish momentum, making the ECB's relatively dovish stance a liability for the euro. The market is already pricing in a policy divergence, and a strong CPI would only exacerbate it, pressuring EUR/USD toward the bottom of the consensus range.
Where it sits in our coverage
Our EUR/USD consensus target for March 2026 is 1.1800 (median across 8 firms), with BofA and Barclays at the lower bound (1.1700) and Morgan Stanley at the upper bound (1.2000). Deutsche Bank's Mar26 target of 1.1800 sits exactly at the median, while its Dec26 target of 1.2500 is among the most bullish. The firm's bearish near-term view ahead of CPI contrasts with its longer-term optimism, suggesting tactical weakness rather than structural change.
How firms align
Deutsche Bank's caution aligns with BofA and Barclays, both of which have Mar26 targets at 1.1700 — the most bearish in our coverage. However, those firms also have more moderate Dec26 targets (1.2200 and 1.2100, respectively), whereas Deutsche Bank expects a stronger recovery next year. JPMorgan and ING are more evenly distributed, while Morgan Stanley's Mar26 target of 1.2000 is the most bullish in the near term, representing a contrarian view.
What the data shows
Our recent research (May 11-7, 2026) highlights that EUR/USD trades 3.7-3.87% below the consensus Dec26 target of 1.2200, a notable divergence that may present opportunities if the CPI miss materializes. Forecast revisions over the past 14 days show no major shifts; all firms reaffirmed their existing targets, suggesting the consensus has held steady despite the recent spot weakness.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01EUR/USD vulnerable around 1.1500 ahead of US CPI; a hot print could push toward 1.1400.
- 02Deutsche Bank aligns with BofA/Barclays (Mar26 1.1700) in near-term bearish view.
- 03Consensus Dec26 target at 1.2200 implies 4.8% upside from spot if ECB pivots hawkish.
- 04US CPI as the immediate catalyst; any dovish surprise could short-cover to 1.1700.
Market implications
Watch for a break below 1.1500 on a hotter CPI; a move to 1.1400 would test the lower end of the Mar26 consensus range (1.1700-1.2000). If CPI disappoints, expect a bounce toward 1.1700, aligning with the most bearish firm targets. Next key event: Fed and ECB policy decisions.
Risks to this view
A softer-than-expected CPI would invalidate the bearish view, prompting short covering back to 1.1700+. Additionally, any hawkish ECB commentary could narrow the policy differential and support EUR/USD despite a strong US CPI print.
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: 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
Deutsche Bank US Dollar To Yen Forecast: USD/JPY Seen Falling To 150 By End-2026 - Exchange Rates Org UK
Deutsche Bank US Dollar To Yen Forecast: USD/JPY Seen Falling To 150 By End-2026 Exchange Rates Org UK
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
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.