EUR/USD to reach 1.20 level as UBS forecasts weaker dollar ahead - Investing.com
UBS's recent forecast positions the EUR/USD at 1.20 as the dollar is expected to weaken. This forecast aligns with a general bullish consensus toward the euro, underpinned by recent signals of a dovish shift from the Fed and improvements in Eurozone economic data.
What the desk is arguing
The argument for EUR/USD climbing towards the 1.20 level relies heavily on anticipated dollar weakness in the coming months. UBS highlights that the combination of a more accommodative Federal Reserve policy and positive momentum in the Eurozone could catalyze a shift in the currency pair toward this significant level.
Additionally, the current trading environment shows strong consensus forecasts from major banks which substantiate this bullish narrative. A number of firms, including Morgan Stanley and ING, have recently raised their price targets for EUR/USD, suggesting broader market alignment with UBS's bullish outlook.
Where it sits in our coverage
Currently, our consensus target for EUR/USD stands at 1.1800 for March 2026, with a range observed between 1.1700 and 1.2000. This outlook is closely aligned with UBS’s view for a weaker dollar, underscoring a general consensus among firms that EUR/USD has growth potential.
Specific firm targets for December 2026 illustrate this bullish trend:
- **JPMorgan**: 1.2000 - **Goldman**: 1.2500 - **Deutsche Bank**: 1.2500
How other firms see it
While UBS's optimistic outlook resonates with many in the market, certain firms remain more cautious. For instance, **BofA** has projected the EUR/USD at a lower target in the same timeframe due to ongoing uncertainties in economic recovery dynamics.
Overall, the prevailing trend suggests a consensus leaning toward further euro appreciation, though some notable firms emphasize the potential for dollar resilience in their outlooks.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01UBS forecasts EUR/USD to reach 1.20 as dollar weakness is anticipated.
- 02Strong consensus from banks supports bullish targets for EUR/USD.
- 03Divergent views exist among firms, highlighting a mixed sentiment on dollar dynamics.
Market implications
If the EUR/USD strengthens toward the 1.20 mark, it could lead to shifts in currency trading strategies and influence broader market sentiment toward risk assets in the Eurozone. A sustained euro appreciation may also challenge European exporters and impact monetary policy considerations within the ECB.
Risks to this view
Key risks to this bullish scenario include potential unexpected hawkish signals from the Federal Reserve, economic data misalignments, and geopolitical tensions that could alter market sentiment abruptly. Furthermore, any signs of economic slowdown in the Eurozone may undermine confidence in euro strength.
Sources & References
How we cover this story
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Cross-firm research
EUR/USD Trades 3.87% Below Consensus: What the Gap Reveals
EUR/USD spot at 1.1727 sits 3.87% below the eight-firm median Dec-26 target of 1.22, exposing a structural divergence that demands explanation.
EUR/USD Consensus at 1.22 While Spot Sits 3.87% Below
Eight sell-side firms hold a median Dec-26 target of 1.22 for EUR/USD while spot trades at 1.1727, a gap that demands explanation.