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FX BANK FORECAST · COVERAGE
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Aggregated year-end forecasts, scenario shifts, and curated analyst notes from 39 institutional desks. No promotion.
FX BANK FORECAST · COVERAGE
Aggregated year-end forecasts, scenario shifts, and curated analyst notes from 39 institutional desks. No promotion.
The inverse relationship between oil prices and Treasury yields has unraveled, indicating a broader concern over inflation that transcends energy costs. This decoupling not only hints at persistent core inflation but also suggests that traditional safe-haven strategies involving commodities might be losing effectiveness. As Treasury yields remain pressured despite falling oil prices, market participants are reassessing risk dynamics, potentially heightening the dollar's appeal amid rising rates expectations.
Our consensus EUR/USD target sits at 1.075 (median across 8 firms), with Goldman at the upper bound (1.12) and BofA at the lower (1.04). [PUBLISHER]'s view aligns more closely with the upper third — JPMorgan and ING share that framing.
JPMorgan's latest outlook is aligned with the broader sentiment, projecting a target of 1.10 for the EUR/USD by March 2026. In contrast, BofA remains more pessimistic, forecasting a target of 1.04, suggesting a divergence in interpretation of the impact of interest rates on currency movements. Refer to our internal reports for detailed insights on these positions.
Recent publications highlight that despite falling oil prices, inflation remains stubbornly high, prompting frequent forecast revisions across firms. For more context, see /research/inflation-perspectives.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
Market implications
Monitor the 1.075 level in EUR/USD as a significant pivot point. Upcoming Federal Reserve announcements and employment data releases could catalyze shifts in market sentiment and trigger movements in borrowing costs.
Risks to this view
If inflation data unexpectedly cools or the Fed signals a more dovish stance, this could reverse the current trend, diminishing the USD's premium and re-establishing the oil-Treasury yield correlation.
Sentiment by currency
USD+EUR~JPY~GBP~Composite USD score: +0.60
How we cover this story