Wall Street is collectively bearish on the euro, with major banks including JPMorgan Chase forecasting the common currency will drop more than 3% over the next year.

Multiple major Wall Street banks have sharply cut their EUR/USD forecasts. JPMorgan, Morgan Stanley, and BNY Mellon all project the euro will fall more than 3% to around 1.10 over the next year. The single currency has hit a one-year low this month, a stark contrast to its five-year high above 1.20 reached earlier this year. Policy divergence is the core driving factor. New Federal Reserve Chair Waller has signaled a hawkish stance on fighting inflation, leading markets to reprice in rate hikes this year; ECB President Christine Lagarde, meanwhile, has said no aggressive policy response is needed to the Middle East conflict, keeping the central bank’s path relatively dovish. Escalating tensions with Iran have pushed up oil prices and boosted demand for the U.S. dollar, further eroding the euro’s support. Options market signals have also weakened, with the one-year risk reversal indicator falling to its most bearish level since March 2025. Societe Generale’s chief FX strategist bluntly noted that “the euro’s rally is essentially over,” and compared the current energy shock to the severe blow Europe’s economy suffered after the 2022 Russia-Ukraine conflict. Bank of America, while cutting its year-end forecast from 1.20 to 1.15, still maintains a “neutral” view, making it one of the few relatively dovish voices.