Synopsis:
Barclays sees limited upside for EUR/USD despite Germany’s ambitious fiscal plans, as looming US trade measures are expected to weigh more heavily on the euro in the near term. The bank targets a retreat toward 1.06.
Key Points:
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Germany’s fiscal expansion reduces downside risks for the euro, but isn't enough to drive a breakout from the 1.02–1.09 two-year range.
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Tariff risks remain underpriced, and their economic impact could outweigh fiscal stimulus in the short term.
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Execution risks around European spending plans add further uncertainty.
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Barclays expects EUR/USD to drift back toward 1.06 as the impact of trade tensions materializes.
Conclusion:
Despite some optimism around European fiscal policy, Barclays believes trade headwinds—especially from the US—pose a more immediate risk. They expect EUR/USD to remain range-bound and retreat toward the midpoint of its multi-year range.
