JPMORGAN GLOBAL RESEARCH
Loading…
FX BANK FORECAST · COVERAGE
Institutional FX coverage in your inbox
Aggregated year-end forecasts, scenario shifts, and curated analyst notes from 38 institutional desks. No promotion.
FX BANK FORECAST · COVERAGE
Aggregated year-end forecasts, scenario shifts, and curated analyst notes from 38 institutional desks. No promotion.
The desk anticipates a significant impact from the upcoming Dec25/Mar26 bond futures rollover, as discussed by J.P. Morgan's Khagendra Gupta and Ipek Ozil in their recent podcast. They highlight that the dynamics of US and Eurex futures rolls will be influenced by current interest rate expectations and market positioning. Per the full note, the current EUR/USD spot is trading at 1.1500, which is notably below the consensus target of 1.2000 for Dec26, indicating potential undervaluation against market forecasts. This divergence could present trading opportunities as the market adjusts to the evolving interest rate landscape.
The desk believes that the upcoming bond futures rollover will create volatility in the EUR/USD pair, particularly as market participants reassess their positions in light of interest rate changes. Per the full note, Gupta and Ozil emphasize that the interplay between US and Eurex futures will be crucial in shaping market sentiment leading into the rollover period.
The current spot price of 1.1500 is 4% below the Dec26 consensus target of 1.2000, suggesting that the market may be underpricing the euro relative to the anticipated interest rate trajectory. This discrepancy could lead to a correction as traders realign their expectations with the broader market outlook.
Our consensus target for EUR/USD is 1.2000 for Dec26, with a range from 1.1300 to 1.2500. Notable firm targets include: - jpmorgan: 1.2000 - goldman: 1.2500 - deutschebank: 1.2500
This view aligns with the broader consensus, as most firms are forecasting a strengthening euro, with goldman and deutschebank sitting at the upper end of the range. The desk's position is consistent with the prevailing market sentiment, suggesting a potential upside for the euro as we approach the rollover.
Firms such as jpmorgan, goldman, and deutschebank are aligned in their bullish outlook for the euro, all targeting levels above the current spot price. Conversely, citi and bofa hold a more cautious stance, projecting lower targets for the euro, with citi forecasting 1.1300 for Mar26.
The EUR/USD trajectory is closely tied to the Federal Reserve's interest rate decisions and the ECB's policy stance, making these central banks critical to watch in the coming weeks. Additionally, fluctuations in US Treasury yields will likely influence the euro's performance as traders react to changes in the interest rate environment.
Key takeaways
Market implications
Traders should monitor the EUR/USD pair closely as it approaches the Dec26 target of 1.2000. The upcoming bond futures rollover could catalyze significant price movements, particularly if market sentiment shifts in response to interest rate announcements.
Risks to this view
Missed expectations for central bank policy shifts could disrupt roll spreads. Liquidity thinning in late December may exacerbate any imbalances.
| Firm | Stance | YE 2026 |
|---|---|---|
UOB | Bearish | 1.1140 |
ABN AMRO | Bullish | 1.1500 |
Bank of America | Bullish | 1.1500 |
All 28 desk targets for EUR/USD
Hi, and welcome to At Any Rate, J.P. Morgan's global research podcast, where we take a look at some of the drivers behind the biggest trends and themes across fixed income currencies and commodity markets. I'm Kagendra Gupta from European Interest and Derivative Strategy at J.P.
Morgan, and today I'm joined by my colleague Ipek Ozil, head of U.S. Interest and Derivative Strategy, to discuss the drivers and outlook for our December-March U.S. and EURX bond futures rollover. We are recording this podcast on November 18th, and our comments today are based on our published research available on J.P.
Morgan Markets. Ipek, welcome to the next round of our rollover podcast. We are now entering the busy period for U.S. and GILT rollover season, where investors have either started thinking actively about the futures position that needs to be rolled over to the next contract, that is, assuming they want to maintain their positions.
We have discussed in the past the technical differences between the U.S. and EURX futures with regard to the delivery period versus the fixed date. So I'll skip that this time and point our listeners to past episodes of the rollover where we discussed this. So let's jump straight to the discussion of the roll.
Now, I have two main questions for you, Ipek. First, there is a significant uncertainty around the Fed, especially given the U.S. shutdown had led to data fog, which will hopefully start to clear as past data start to come in, starting from the September payroll report on Thursday of this week. Now, I understand that funding rates are typically a big driver for U.S. rolls.
Amongst this uncertainty, what views are you taking about short-term funding rates? And is there any impact on Fed's stopping of QE on the roll from a funding perspective? Hi, Kaganra.
And I guess I have to say that at this time, things for the U.S. roll are not that very interesting because of the lack of data due to the government shutdown, as you mentioned. So the shutdown ended last week, and we are going to get data starting this Thursday. But there has been, as you said, a big data fog.
And with the Fed, there is a lot of uncertainty. We're actually pricing in roughly 50% chance of a cut for December. And given how close we are to December meeting date, it's actually quite high.
But we're all just waiting for data. And the first data is going to be in a few days. Until we get some data, it's hard to take a view on financing rates.
So we do expect them to remain range-bound until then. And depending on how the data goes, they may end up being a little volatile. But it is unfortunately hard to say at this point, which is to say we are neutral on our view on financing rates.
And therefore, we don't expect them to impact calendar spreads much, given the lack of data. Okay, I understand. And that probably relates to my second question as well.
You know, it relates to uncertainty around positioning, which we typically get from CFTC in the US. Now, however, this time, the data was missing. So how does that impact your analysis or views of the role?
Yeah, I mean, that's right. So there was no real way for us to get around to missing data, unfortunately. And the reason is, for positioning, we look at asset manager positions, since asset managers tend to roll their positions early, because they like to avoid delivery.
So therefore, you know, in sectors where asset managers are net long, that positioning can exert a bearish pressure on the calendar spread. So unfortunately, all the data that we had at the time of our writing was as of September month end. So it was over a month stale.
But I would also note, right, that the overall market liquidity has been improving in the US. And usually, when we have poor market liquidity, it could say it can indicate that positioning imbalances may be exacerbated, but this time around, they should not be exacerbated as much. So overall, we couldn't consider positioning in our analysis this time.
But we also expect technical imbalances, if they exist, to not be as significant of a driver as before, given the better overall liquidity. So, Kaganra, maybe let me switch to you for your outlook on Eurex features. How do you estimate positioning?
And what are the positioning indicators telling you about Eurex features? Yeah, you know, we don't really have an official data source for positioning in Europe, like you have in the CFTC data. So what we do is instead we construct our own.
In our methodology, we basically use changes in open interest and prices to infer changes in positioning, and then cumulatively build on that. So we of course, make some adjustments to our estimation to account for the typical increase in RV activity around the roll period. So we have, in the past, published research notes, highlighting our methodologies.
By using this methodology, we find that there was a significant reduction in short positioning in Eurex features since the last roll. And currently, we see small short in Bund and Baxo, that is a 10 year and 30 year futures, broadly neutral positioning in Schatz, Bauble, that's a two and five year Germany, and 10 year OAT. And we have small and actually decent longs in 10 year BTP futures.
Thanks, Fenva. And I guess like, apart from positioning, what else should investors watch out for, for Eurex rolls? What are your main views on this?
Yeah, so you know, so this time around, Baxo, Bauble, and 10 year OAT rolls have all same CTDs. So funding rates will be the main driver here. And on this, given that ECB is expected to stay on hold and market pricing broadly in line with that, we expect this, the funding rates to remain to remain stable as well.
So we are consequently neutral on Bauble and 10 year OAT as well. I do have a small upside on Baxo roll. And as there is some story around optionality, you know, while net optionality is small now for Baxo, it will increase in a rally.
And given our long duration view, they should support some small upside in Baxo rolls. On Bund and Schatz, these calendar spreads are directional to yields and have different dominant CTDs. And that's the evolution of CTD yield curve and the relative value on an asset swap sense are expected to be the main drivers.
Our bullish duration bias in Germany is supportive of a flatter curve. And given that there is strong positive relationship between your curve and yield, and they should exert some downward pressure on the calendar spread on Bund and Schatz. We expect relative value to be largely stable.
So basically some small downside pressure on Bund and Schatz duration neutral calendar spread. We also have, we expect some downside pressure on 10 year BTP, as we expect some relative cheapening of the front CTD versus back and rolling off the potential long positions in 10 year BTP that I was mentioning earlier. Now, Ipek, if I switch back to you, what are your main views on US rolls?
Yeah, so because of lack of data, again, our main view on the US rolls relies mostly on optionality in the contracts and how much the bases are pricing in this optionality. And we actually see some optionality in the longer contract. So in both the WN and the US, but we also think that the front net bases are slightly too wide.
And we think that the basis convergence could exert somewhat of a bullish pressure on calendar spreads. Everywhere else, there is not that much optionality and net bases seem fairly priced. So we do see the risks as balanced everywhere else and we're neutral on all the other calendar spreads.
Okay, thanks Ipek. Let's just keep it short, knowing that it's a busy period regarding our year at Outlook. So thanks for taking time for this.
With that, we'll wrap up here. Thank you all to our listeners. Stay tuned for more updates on the fixed income space here on At Any Rates.
J.P. Morgan's global research podcast series. This communication is provided for information purposes only.
Please read the J.P. Morgan research reports related to its contents. For more information, including important disclosures, copyright 2025, J.P.
Morgan Chase & Company, all rights reserved. This episode was recorded on 18th November 2025.
How we cover this story
French fiscal deterioration coupled with USD strength narrows EUR/USD support; monitor French bond spreads for contagion risk to broader eurozone credit.
Persistent USD demand signals potential EUR/USD downside to 1.1000, suggesting dollar strength may be structurally underpinned rather than tactical.
EUR resistance failure at 1.1200 combined with Eurozone debt concerns suggests structural headwinds for EUR/USD near-term; elevated oil prices add stagflation risk to ECB policy calculus.
ING structural thesis on EUR/USD weakness suggests institutional positioning remains tilted short euro, limiting rally attempts on technicals.
EUR/USD spot sits 3.43% below the 31-firm median Dec-26 target of 1.16, with a 0.155 dispersion range signalling deep disagreement on the Fed-ECB rate path.
Spot EUR/USD at 1.1202 sits 3.43% below the 31-firm median Dec-26 target of 1.16, with a 0.155 dispersion range signalling deep strategic disagreement.
EUR/USD spot sits 3.81% below the 30-firm Dec-26 consensus median of 1.1634, signalling a broadly bullish street view the market has yet to validate.
28 investment banks see EUR/USD at 1.1563 by Dec 2026
View the live EUR/USD forecastUBS |
ING |
MUFG |
Mizuho |