Euro: Weak EU trade and sentiment weigh against US Dollar – BNY
Weak EU trade data and deteriorating sentiment are shifting the dynamics for the euro against the US dollar. As highlighted by BNY, the growing concerns over Europe’s economic outlook are beginning to dominate the FX landscape, leading to a fresh downside bias for EUR/USD. This bearish sentiment aligns with our analysis and suggests that the current spot level of 1.1500 may not hold as downward pressures mount. Traders should closely monitor how these developments evolve as they impact market positions.
Where it sits in our coverage
Our consensus EUR/USD target sits at 1.1700 for March 2026 (median across 12 firms), with UBS at the upper bound (1.2000) and Citi at the lower (1.1300). BNY's perspective aligns closely with the broader bearish sentiment, particularly given the deteriorating trade data.
How firms align
Aligned firms such as JPMorgan and Morgan Stanley maintain a bullish stance with targets of 1.1800 and 1.2000, respectively for March 2026, which contrasts the prevailing negative sentiment. Conversely, BofA’s more conservative target of 1.1700 reflects skepticism towards the euro's strength against the dollar.
What the data shows
Recent revisions from firms indicate increasing bearishness, with ING adjusting its March target to 1.1700 amidst fading optimism in the eurozone. Notably, our prior research indicated that EUR/USD trades significantly below the consensus at approximately 1.1500, underscoring potential pressure moving forward.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01EUR/USD faces fresh downside bias as sentiment deteriorates.
- 021.1500 is a critical level; a break could accelerate losses.
- 03Keep an eye on upcoming EU economic data releases for further direction.
Market implications
Watch for key support at the 1.1400 level; a break below could suggest further downside towards our consensus target of 1.1700. Additionally, upcoming EU trade data releases will be crucial in shaping market sentiment and traders' positions.
Risks to this view
Unexpected improvement in EU trade data or sentiment could reverse the current bearish outlook for the euro. A shift in the economic narrative, particularly with robust growth indicators from the Eurozone, would invalidate the prevailing downside bias.
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: Risk-off pressure persists against US Dollar – Danske Bank
Risk-off environment continues to favor USD strength as safe-haven demand outweighs fundamentals, pressuring EUR/USD lower.
Euro: Mild downside bias within range against US Dollar – UOB
EUR/USD positioned for mild downside within established range; suggests near-term consolidation with USD resilience at current levels.
Euro slumps below 1.1600 against US Dollar amid fears of US-Iran war resumption
Geopolitical escalation in Middle East typically triggers safe-haven demand for USD and JPY, supporting dollar strength and pressure on risk-sensitive assets like EUR.
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.
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.