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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.
Recent inflation concerns have thrust Fed rate hikes back into focus, posing a potential threat to the stock market's recent AI-driven rally. This backdrop is pivotal for FX trading, as heightened expectations for sustained rates strengthen the USD and support carry trades. The evolving market sentiment emphasizes the need for traders to carefully assess the interplay between inflation data and Fed policy signals.
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). This aligns closely with views from JPMorgan, suggesting a defensive strategy should inflation persist in worrying markets.
Goldman maintains a bullish stance on the USD, targeting 1.12 reflecting a stronger USD amid inflation worries. In contrast, BofA's more cautious approach suggests potential weakness in the pair, with a target of 1.04 noted in our /reports/bofa.
Recent forecasts have highlighted a shift in sentiment towards sustained Fed rates, aligning with our comprehensive view on inflation trends impacting FX dynamics. For more on this, refer to /research/inflation-effects-on-fx.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
Market implications
Watch for upcoming inflation data as a catalyst for potential USD movements. Our consensus target suggests a key level at 1.075 for EUR/USD, which traders may use as a pivot point for positioning ahead of Fed commentary.
Risks to this view
Should inflation data defy expectations and suggest easing, a strong reversal in USD strength could occur. Additionally, any indication from the Fed of a potential pivot towards rate cuts may challenge current bullish USD sentiment.
Sentiment by currency
USD+EUR JPY GBPComposite USD score: +0.65
How we cover this story