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FX BANK FORECAST · COVERAGE
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Aggregated year-end forecasts, scenario shifts, and curated analyst notes from 37 institutional desks. No promotion.
FX BANK FORECAST · COVERAGE
Aggregated year-end forecasts, scenario shifts, and curated analyst notes from 37 institutional desks. No promotion.
Recent findings from the New York Fed's Survey of Consumer Expectations reveal a sharp uptick in one-year inflation outlook to 3.9%, the highest since May 2023. This rise coincides with household spending expectations also nearing a peak, suggesting growing inflation fears among consumers. For the FX market, these developments add pressure on the U.S. dollar as they imply potential shifts in Fed monetary policy in response to inflationary trends.
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). The rising inflation expectations are likely to influence market positioning ahead of upcoming Fed meetings, aligning with concerns highlighted by our analyst network.
JPMorgan is currently aligned with this inflation sentiment, projecting a target at 1.10 for March 2026, reflecting a belief in potential dollar weakness if inflation continues to rise. BofA, on the other hand, takes a contrary stance with a more cautious target of 1.04, possibly indicating skepticism about the longevity of these inflation expectations.
As inflation forecasts rise, forecasts might be revised upward, impacting Fed actions and market sentiment. Further insights can be explored in our research on related inflation trends and their potential impact on monetary policy, noted at /research/inflationinsights.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
Market implications
Upcoming Fed meetings will be critical to monitor as inflationary pressures build. Current positioning indicates that 1.075 on EUR/USD could be pivotal, with a potential break above this level signaling a more pronounced dollar sell-off.
Risks to this view
Any unexpected consolidation in inflation data or a clear signal of Fed hesitation to increase rates could invalidate the bullish stance on EUR/USD. A shift back under 1.075 could also trigger a more bearish market sentiment.
Sentiment by currency
USD+EUR JPY GBPComposite USD score: +0.65
How we cover this story