Eurozone flash core HICP rises faster-than-expected: Here what it means for EUR/USD?
The Eurozone's flash core HICP report has exceeded expectations, suggesting persistent inflationary pressures. This development may prompt the ECB to maintain a hawkish stance, influencing the EUR/USD trajectory. Current market pricing reflects a cautious optimism in the euro's outlook, potentially positioning it for gains against the dollar.
Where it sits in our coverage
Our consensus EUR/USD target sits at 1.1700 for March 2026 (median across 11 firms), while the firm-specific spread ranges from a bearish outlook from Citi at 1.1300 to a bullish forecast from UBS at 1.2000.
How firms align
JPMorgan and Deutsche Bank are among the firms projecting 1.1800 for March 2026, aligning with the bullish sentiment following the HICP data. Reports from these firms suggest a focus on ECB policy dynamics and inflation trends that could drive the euro higher. See our internal publications for insights from /research/jpmorgan and /research/deutschebank.
What the data shows
Recent forecasts highlight an adjustment upwards in expectations for EUR/USD, with several firms expecting it to test new highs around 1.1800 by March 2026. Our own research on the EUR/USD rate path (/research/eurusd-ecb-rate-path) indicates that the current spot trades 3% below the December consensus of 1.20.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01EUR/USD may see upward pressure if ECB maintains a hawkish stance.
- 02A key level to watch is 1.1800 as firms align with this bullish outlook.
- 03Inflation data suggests continued strength in the euro vs. USD.
- 04Market participants should stay alert to ECB comments following this data release.
Market implications
Investors should watch for any indications of ECB policy shifts in response to inflation, specifically targeting the 1.1700-1.1800 range for potential breakout scenarios. The upcoming ECB meeting will be crucial.
Risks to this view
A shift to more dovish commentary from the ECB or new economic data suggesting a slowdown in Eurozone growth could invalidate the bullish view on the EUR/USD affecting the current consensus.
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 slips against the US Dollar as upbeat US economic data reinforces hawkish Fed bets
Strong US data firming Fed hawkish repricing widens USD/EUR rate differential, pressuring euro from both policy divergence and growth momentum.
EUR/USD Price Forecast: Tests 1.1600 amid flaring geopolitical tensions, higher Oil prices
Geopolitical risk premium and oil strength typically support EUR/USD upside as energy importer dynamics shift; monitor if Fed policy divergence accelerates the move.
Eurozone and Germany Composite PMIs revised higher: Here's what it means for EUR/USD
Upward PMI revisions signal stronger-than-expected eurozone activity, supporting ECB hawkish bias and EUR/USD upside.
Euro: Downside risks within range against US Dollar – UOB
UOB identifies EUR/USD downside risks; range-bound setup suggests asymmetric short exposure warranted near resistance levels.
Bank desks on this topic
Dollar faces renewed strength if US-Iran talks fail, MUFG warns
MUFG analysts warn the dollar could strengthen further if US-Iran talks collapse, with energy-driven inflation risks potentially pushing Fed officials toward a more hawkish stance and lifting US yields. - The US dollar faces renewed upward pressure if Washington and Tehran fail t
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