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.