A New Era
The desk believes the anticipated appointment of Kevin Warsh as Fed chair could mark a watershed moment for U.S. monetary policy, potentially driving further strength in the U.S. dollar while exerting downward pressure on the euro. Per the full note from J.P. Morgan, expectations surrounding Warsh's leadership are tied to a hawkish tilt given recent macro developments, including rising inflation and robust economic data. This perspective aligns with J.P. Morgan's bearish forecast for EUR/USD, projecting a decline to 1.14 by December 2026 amidst a shift in market sentiment. As we navigate through the current landscape, the absence of high-impact events in the upcoming calendar suggests potential stability ahead, but vigilance remains essential.
What the desk is arguing
The desk frames this as a critical juncture for the Federal Reserve, highlighting that Kevin Warsh's leadership could usher in substantive changes to monetary policy. This aligns with broader market expectations of a continued hawkish stance necessary to combat persistent inflation pressures, which could bolster the greenback.
J.P. Morgan's updated outlook reflects a significant negative adjustment on the euro, expecting it to fall to 1.14 by the end of 2026, marking a pivotal inflection point that serves to reflect the changing dynamics in U.S. monetary policy. Recent economic data supports this hawkish pivot, affirming that the Fed may take bolder actions than previously anticipated.
Where it sits in our coverage
Our current consensus for EUR/USD is 1.1567, with a range spanning from 1.1200 to 1.2000 for December targets. Specific forecasts include: - jpmorgan: Mar26 1.1800, Jun26 1.2000, Dec26 1.2000 - deutschebank: Mar26 1.1800, Jun26 1.2000, Dec26 1.2500 - bofa: Mar26 1.1700, Jun26 1.1900, Dec26 1.2200
This view diverges from the cross-firm consensus, particularly as our call anticipates a stronger dollar compared to several peers, particularly in light of bofa and their bearish stance. Our outlook aligns closely with jpmorgan, yet positions at the high end of the consensus range reflect our bullish outlook on USD strength.
How other firms see it
Several firms, including deutschebank and hsbc, are cautiously optimistic regarding the dollar, similarly forecasting upward movement. Conversely, firms like bofa and danskebank hold a contrasting perspective, projecting the euro may hold steadier against potential dollar gains.
The EUR/USD trajectory is closely linked to U.S. monetary policy dynamics. This includes considerations around the Fed's interest rate decisions, which will likely influence variations against both emerging market currencies and other currency pairs including USD/JPY.
What the calendar says
No high-impact events are scheduled in the next 30 days, meaning traders may have an opportunity to position themselves accordingly without distraction or volatility from economic surprises.
How firms align with this view
Key takeaways
- 01Warsh's appointment as Fed chair may signify a hawkish shift in monetary policy.
- 02EUR/USD is projected to fall to 1.14 by December 2026, reflecting J.P. Morgan's bearish outlook.
- 03The current consensus estimates for EUR/USD range from 1.1200 to 1.2000, with particular divergence from bearish firms.
- 04No upcoming high-impact events may provide stability ahead for trading strategies.
Market implications
Traders should closely monitor EUR/USD as it approaches the 1.14 target set by J.P. Morgan, particularly assessing any shifts in sentiment leading up to future Fed meetings. Given the lack of scheduled events, positioning for potential weakness in the euro could benefit from current market intelligence.
Risks to this view
Key risks to this outlook include unexpected fiscal measures from the ECB or a reversal in Fed policy, which could support the euro against the dollar. Additionally, unexpected economic indicators or geopolitical developments may alter the current trajectory.
Will Warsh overhaul the Fed? ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ View online Insights In Context * Could Kevin Warsh's tenure as Fed chair mark a major shift in monetary policy? * What's reinforcing the constructive outlook for the U.S. dollar ? * Discover why financial sponsors are increasingly investing in alternative asset classes. * As investors look ahead to the remainder of the year, here are the ways they're adapting to an evolving market . Not a subscriber? Sign up for In Context.
RESEARCH What can markets expect from the new Fed chair? All eyes are on the Fed's June meeting, especially as new chair Kevin Warsh takes the helm for the first time. Are major policy shifts in store?
WHAT COULD CHANGE? BY THE NUMBERS There are 12 members on the Federal Open Market Committee , which means that even as chair, Warsh needs to build consensus before enacting changes. J.P.
Morgan Global Research has turned bearish on the euro for the first time in a year and expects to see EUR/USD falling to 1.14 by December 2026. According to data from S&P Global, private markets assets under management (AUM) is projected to exceed $18 trillion by 2027. RESEARCH Dollar strength, euro weakness Recent macro developments, including rising inflation and the Fed's hawkish pivot, could spell good news for the greenback -- but less so for the euro.
SHOW ME THE MONEY MARKETS What's driving financial sponsors to diversify? For decades, financial sponsors followed a familiar playbook: acquire companies, improve operations and exit through public markets or strategic sales. However, the landscape is shifting.
EXPLORE FACTORS MARKETS Expert perspectives on global markets At J.P. Morgan's recent Global Markets Conference, industry leaders shared data-driven insights on credit, trading, commodities, AI and more. READ TAKEAWAYS jpmorgan.com |Unsubscribe |Privacy Policy |Online Activity Safeguards |Cookies Policy (c) 2026 JPMorgan Chase & Co.
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Sources & References
How we cover this story
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A New Era