UBS analysts see EUR/USD risks balanced around the 1.20 level after the pair's strong 2026 rally. The currency pair, trading at 1.1804 as of February 27, 2026, has been range-bound since reaching UBS's previous forecast of 1.20. The Swiss bank notes the pair is up 14% over 12 months and 0.5% year-to-date, with valuation gaps largely closed after last year's climb from 1.02 to 1.20.

UBS has shifted both USD and EUR to Neutral positioning while maintaining an Attractive view on high-yielding currencies like AUD, NOK, NZD, and CNY. The bank favors selective long positions in high-yielding currencies over low-yielders across both G10 and emerging markets. Analysts point to second-tier currencies including AUD, NOK, BRL, MXN, and ZAR gaining focus since the year's start, as the EUR/USD range-trading environment persists.

The pair faces two-sided risks according to UBS. While recent USD softness may be underestimating cyclical U.S. economic improvement, structural headwinds including the U.S. twin deficit and transition to new Fed leadership continue weighing on the dollar's longer-term outlook. The bank expects EUR/USD to trade sideways with risks balanced around 1.20, though unexpected global slowdowns or robust U.S. recoveries could challenge current positioning.