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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.
Mortgage rates have surged for the sixth consecutive week, climbing to 7.58%. This uptick indicates a heightened environment of borrowing costs, which is anticipated to dampen both refinancing and home purchase activities. The ongoing rise in financing costs adds pressure on the housing market, potentially slowing economic momentum as higher interest rates correlate with reduced consumer spending. How market participants respond to these dynamics will be crucial in the implications for USD strength in the coming weeks.
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). Given the rising mortgage rates, the overall demand pressure could sway expectations in the currency market, particularly with the USD in focus given its ties to interest rate differentials.
JPMorgan maintains an aligned position with a target of 1.10, emphasizing the potential strength of the USD in light of the ongoing interest rate situation. Conversely, BofA presents a contradictory stance, advocating for a more cautious approach with their target of 1.04, anticipating softer economic indicators from the housing sector affecting USD dynamics. Refer to our internal reports for detailed analyses from /reports/jpmorgan and /reports/bofa.
Recent research highlights revisions in housing market forecasts due to rising mortgage rates, suggesting a cooling effect on homebuilder sentiment. For related insights, see /research/[slug].
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
Market implications
Investors should observe the USD strength, particularly around the support level of 1.0700 in EUR/USD. Calendar events related to housing starts and existing home sales will be key indicators of market sentiment as they unfold over the coming weeks.
Risks to this view
A reversal could be prompted by unexpectedly positive data from the housing sector, signaling resilience that could diminish interest rate hike expectations and weaken the USD. Additionally, shifts in Federal Reserve communications regarding future monetary policy could also pose risks.
Sentiment by currency
USD+EUR JPY GBPComposite USD score: +0.65
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