Deutsche Bank
FX Blueprint 2026: The Great Rotation
Macro Scenarios
Deutsche Bank EUR/USD scenario analysis and USD macro framework
EUR/USD Fair Value by Scenario
Base case highlighted in red
Rate Spread Sensitivity
Fed-ECB spread vs EUR/USD fair value
Fed vs ECB Rate Assumptions
Central bank rate assumptions across scenarios
Most bearish scenario. German fiscal plan delayed or diluted, ECB forced to cut deeply while Fed holds.
Slow fiscal implementation, gradual Fed easing. EUR gains modest.
Capital rotation + German fiscal delivery. EUR/USD pushes to 1.22 by mid-year.
Capital rotation accelerates, fiscal multipliers exceed expectations. EUR/USD 1.25-1.28.
Bull case. US recession + full fiscal delivery + capital rotation cascade. EUR/USD to 1.35.
USD Macro Scenario Matrix
Growth x Inflation framework for the dollar
US recession turbocharges the Great Rotation. Capital outflows from US assets become a torrent. EUR/USD could overshoot 1.35. JPY rallies sharply to 130s. EM suffers initially but recovers as USD weakens.
Worst-case for US assets. Stagflation undermines both the equity and bond pillars of USD support. Gold, CHF, JPY outperform massively. EM differentiates sharply.
Base case for the Great Rotation. Capital gradually shifts to Europe and Asia as US growth normalizes. EUR/USD reaches 1.25, USD/JPY 143. Scandis and EM outperform.
Fed held higher by inflation but twin deficits still weigh. Rotation continues at slower pace. EUR range 1.18-1.22. JPY still appreciates on BoJ normalization.
Strong US growth partially offsets structural USD bearishness. Rotation slows but doesn't reverse. EUR/USD stabilizes 1.15-1.20. Risk-on supports EM and commodity FX.
Only scenario where USD strength returns. Strong growth + firm inflation keeps Fed hawkish. But structural twin deficit headwinds limit gains to 3-5%.