What the desk is arguing
The desk frames this as a period of consolidation for EUR/USD, with geopolitical developments and central bank signals keeping the pair in a tight range. The recent rejection of war-ending proposals by both the US and Iran has left traders in a wait-and-see mode, as they look for clearer direction from upcoming economic data.
The Fed's gradual pivot away from an easing stance is evident, with elevated energy prices and strong US data suggesting that inflation could remain above the 2% target for longer. This backdrop supports the dollar, particularly if the Strait of Hormuz remains closed, which could keep oil prices high and bolster hawkish Fed sentiment.
Where it sits in our coverage
Our consensus target for EUR/USD is 1.075, with a range between 1.04 and 1.12. Notable firm targets include: - jpmorgan: 1.10 (Mar26) - bofa: 1.04 (Mar26) - citi: 1.08 (Mar26)
This view aligns with jpmorgan, which anticipates a stronger dollar, while diverging from bofa, which sees potential for a weaker euro. The desk's target sits at the lower end of the consensus range, reflecting a cautious stance amid current uncertainties.
How other firms see it
Firms like jpmorgan and citi are aligned in their bullish outlook on the dollar, suggesting that the Fed's tightening cycle could continue to support USD strength. Conversely, bofa holds a contrary view, expecting the euro to outperform in the near term.
The EUR/USD trajectory is closely linked to the upcoming US CPI and PPI reports, which will provide insight into inflation trends and potential Fed actions. Additionally, the ECB's rate decisions will be critical in shaping the euro's performance against the dollar.
What the calendar says
With the US CPI report scheduled for tomorrow, traders should be prepared for potential volatility in EUR/USD. This will be followed by PPI data on Wednesday, which could further influence market expectations around Fed policy.