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FX BANK FORECAST · COVERAGE
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Aggregated year-end forecasts, scenario shifts, and curated analyst notes from 38 institutional desks. No promotion.
FX BANK FORECAST · COVERAGE
Aggregated year-end forecasts, scenario shifts, and curated analyst notes from 38 institutional desks. No promotion.
Treasury and Eurozone bond yields have fallen to multiweek lows as the market digests the implications of the latest U.S. inflation data. The unexpected inflation figures have prompted a reassessment of future Fed policy, leading to a bearish sentiment surrounding the USD, as yield compression on the UST/Bund spread signals reduced expectations for tightening. This backdrop intensifies focus on how fluctuations in inflation perception can influence FX dynamics, particularly between the USD and its major counterparts.
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 prevailing sentiment among traders is shifting towards a more bullish view of the EUR given the current yield dynamics. This aligns closely with the positions taken by several key firms in our analysis.
JPMorgan's latest target aligns closely with the headline's view, setting their EUR/USD target at 1.10 for March 2026. On the contrary, BofA is maintaining a lower view at 1.04, suggesting a cautious stance against the backdrop of falling yields. Their divergence illustrates the spectrum of sentiment concerning dollar weakness and euro strength.
Recent revisions indicate a growing consensus towards a weaker USD as inflationary pressures ease, impacting bond yields. Insights from our research point towards a potential shift in investor positioning in light of these developments, especially in relation to U.S. monetary policy expectations.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
Market implications
Traders should watch for significant resistance around the 1.075 level in EUR/USD. Upcoming U.S. inflation reports could further influence sentiment and yield trajectories. Positioning ahead of these reports will be critical for directional traders.
Risks to this view
Should subsequent inflation data surprise to the upside, it could lead to a swift reversal in current expectations regarding Fed policy, ultimately strengthening the USD and challenging the bearish outlook. A major catalyst like a surprising jobs report could serve to quickly realign market sentiment.
Sentiment by currency
USD EUR+JPY+GBP~Composite USD score: -0.65
How we cover this story