Bank Of America Euro To Dollar Forecast: EUR/USD To Target 1.20 By End 2026 - Exchange Rates UK
Bank of America projects the EUR/USD to reach 1.20 by the end of 2026, reflecting a positive outlook on the euro against the dollar. With current trading around 1.1500, BofA's forecast suggests a gradual appreciation that aligns with broader market expectations, albeit at a slightly slower pace than some competitors.
What the desk is arguing
The desk supports the notion that the euro may strengthen against the dollar, forecasting a stabilization around higher levels as economic conditions evolve. While Bank of America's 2026 target aligns with a bullish outlook, it admits that the pace of appreciation may not meet the more aggressive targets set by other firms, indicating potential for convergence in views over time.
However, the desk implicitly dismisses the notion that current levels will remain stable for the duration of the forecast, instead arguing that macroeconomic factors such as inflation and interest rates will drive the euro higher by 2026 despite the uncertain global landscape.
Where it sits in our coverage
Our current consensus target for EUR/USD by December 2026 stands at 1.2200, with projections ranging from 1.1700 to 1.2500, suggesting that the market broadly expects continued euro appreciation. Bank of America's target of 1.2200 for the same period places it within the upper range of our consensus, indicating a shared optimism despite slightly conservative immediate forecasts.
Key targets from some prominent firms include:
- JPMorgan: 1.2000
- Goldman: 1.2500
- Morgan Stanley: 1.1600
How other firms see it
Several firms align closely with the overall optimistic outlook for the euro, positioning themselves around similar targets for December 2026. Notably, Deutsche Bank and Goldman maintain higher targets, suggesting a more robust optimism about the euro's trajectory.
- Key aligned firms:
- Deutsche Bank: 1.2500
- Goldman: 1.2500
- Barclays: 1.2100
In contrast, BofA’s own targets, while still optimistic, reflect a more cautious stance, especially in the short term, as they focus on slower initial gains before any significant bull run materializes.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01Bank of America anticipates EUR/USD reaching 1.20 by end-2026, indicating cautious optimism.
- 02Current consensus targets are significantly higher, with a median of 1.2200 by December 2026.
- 03Several key firms project even stronger targets, reflecting robust support for euro appreciation.
Market implications
If the euro indeed appreciates towards BofA's target of 1.20, we could witness increased competitiveness in the Eurozone, subsequently affecting global trade dynamics. This expected strength could also influence European Central Bank policy, creating ripple effects in currency markets as investors recalibrate their strategies based on shifting monetary landscapes.
Risks to this view
The primary risks to the bullish outlook center around global economic uncertainties, including potential recessions or shifts in Fed policy that could strengthen the dollar unexpectedly. Additionally, geopolitical tensions or unexpected shifts in inflation could derail the current growth trajectory for the euro.
EUR/USD — All Desk Targets
| Firm | Stance | YE 2026 |
|---|---|---|
Bank of America | Bearish | 1.1200 |
ANZ | Bearish | 1.1400 |
UOB | Bullish | 1.1565 |
Sources & References
How we cover this story
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