Market outlook: growing pains
The FX desk is adopting a cautiously optimistic view on the equity markets despite recent sideways trading patterns, attributing this stance to a stable earnings outlook that alleviates concerns over stretched valuations. Per the full note by Johan Larsson at Nordea, global equities have maintained a sideways trajectory since mid-April, which may influence currency pairs negatively correlated with risk appetite. The desk recognizes that while earnings growth is improving, it plays into a complex dynamics of valuation concerns that traders need to navigate thoughtfully.
What the desk is arguing
The desk posits that although there have been indications of a sideways trend in global equities, the strengthening earnings outlook is sufficient to relieve some pressure on valuations. Per the full note source, a continual improvement in corporate earnings could serve as a stabilizing force in the markets.
This implied recovery is underpinned by significant developments from major firms reporting better-than-expected earnings in recent quarters. As per Nordea's projections, while valuations might still lean towards the higher end, the earnings environment appears promising and conducive for maintaining existing risk positions.
Where it sits in our coverage
As per our internal assessments, the FX desk is aware of a consensus target for the EUR/USD pair at 1.075 with a range noted between 1.04 and 1.12. Underlying factors influencing this consensus include: - JPMorgan: target at 1.10 for March 2026 - BofA: target at 1.04 for March 2026
This outlook places our view in line with JPMorgan, suggesting a more optimistic stance relative to BofA's contrarian position.
How other firms see it
Several aligned firms are echoing the sentiment expressed, particularly JPMorgan, which has positioned itself confidently higher towards the targets amidst improving earnings projections. Conversely, BofA remains cautious, positioning on the lower end of the spectrum, potentially indicating divergence in views about the sustainability of current equity trends.
Relatedly, movements in the EUR/USD pair will be closely linked to trends from the U.S. Fed regarding interest rates and inflation indicators that reflect on risk sentiment.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01Equity markets have experienced sideways trends, but earnings outlook is improving.
- 02Nordea highlights ongoing shifts in corporate earnings as a stabilizing factor.
- 03The EUR/USD currency pair is at a consensus target of 1.075.
- 04Divergence in firm opinions illustrates varying responses to economic conditions.
Market implications
Traders should closely monitor the EUR/USD as it interacts with the broader earnings narrative, with key levels to watch around 1.075. A potential surprise in corporate earnings reports or shifts in U.S. economic data could catalyze movements in currency pairs tied to risk sentiment.
Risks to this view
A significant downturn in earnings reports or unexpected negative economic data could reverse the positive outlook, forcing currencies like the EUR/USD to re-evaluate their valuations. Additionally, any sudden pivots from central banks regarding interest rates could pose risks to the current positioning.
Markets and investment Market outlook: growing pains Johan Larsson 31-05-2021 After a strong spring, global equities have traded in a sideways pattern from mid-April. Combined with a continuously improving earnings outlook, this has shaved the worst edge off extended valuations. Chief strategist Johan H Larsson Markets and investment Share this article Share on Facebook Share on Threads Share on Linkedin 30-10-2025 Markets and investment Nordea to offer customers access to an exchange-traded product tracking Bitcoin As the European regulatory environment for cryptocurrencies has matured and the demand for virtual currencies and cryptocurrencies is growing across the Nordics, Nordea has decided to allow customers to trade in a crypto-linked product on its platforms.
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Nordea’s view is that interest rates are likely to remain low, and our experts accordingly expect a pickup in deals. Read more Scroll to top
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Market outlook: growing pains