EUR/USD upside remains more likely amid weaker dollar, analysts say

Here are a couple of views from market analysts on the EUR/USD currency pair, with it hovering around the "sweet spot" for the ECB. As we know, the central bank is viewing it as being "complicated" if price does move towards the 1.20 level. So, keeping as it is now would be somewhat comfortable for policymakers - especially in that 1.16 to 1.18 range.

Goldman Sachs notes that:

"With EUR/USD hovering around our 3m 1.18 forecast, we still see further upside ahead in the coming months. While it is true that there is a much more limited valuation case to expect further euro appreciation, and it is far from a pro-cyclical currency, the euro still stands to benefit from many of the themes we expect to persist in FX markets this year. Most notably, currency markets have been remarkably correlated, and EUR/USD continues to trade tightly with the broad dollar. Rather than leading the way as it did in early 2025, we expect the euro to ride the tailwinds of broad dollar depreciation."

Their argument mostly ties to a continuation in the de-dollarisation narrative. And that seems likely to be the case in the first half of the year at the very least.

Morgan Stanley also chimes in with a similar view on the currency pair in saying that:

"Risks remain asymmetrically skewed toward USD downside. Robust US labour market data may support risk currencies versus USD but may make it more difficult for the DXY to fall as investors prefer other funders. EUR/USD risks remain clearly skewed to the upside, in our view, though we think current levels are less attractive for long positions to enter; a pullback to below 1.1750 would be an attractive entry level."