For most of the past year or so, investors and analysts were mostly focused on guessing the timing and size of the Federal Reserve's cutting cycle, identifying that as the main driver for a broad-based dollar decline. Since the end of 2024 it became clear that no further rate cuts would follow by the Fed and instead the Central Bank would continue with their wait and see approach. A rather hawkish approach should hence continue and support the Greenback. Political factors are constantly being declined by Fed chair Jerome Powell, yet subtle statements remain in place.
Experts think foreign exchange traders must consider more. And it's not just about politics in the US and the Eurozone. It's also about the underlying central bank and economic fundamental stories that can make or break FX rallies in the many risk-on/dollar-off windows they expect to see in the coming months.
In the end, a lot will depend on how the economic data changes. This will furthermore depend on the new policies implemented by US President Trump. Should fresh tariffs be implemented, this might act as a catalyst for rising prices in the US. It will also depend on how the central bankers in question behave, but the latest Euro to Dollar forecasts focus more on interest rate cuts from the ECB than the Fed. Along with updated EUR/USD price predictions and speculations of the pairs recent trend to rise again, the old question how the European Central Bank should react to exchange rate movements returns.
Key Euro to Dollar (Eur/Usd) Forecast & Price Predictions
- Euro to Dollar forecast Q1 2025: Analysts believe any US-macro-driven rally close to 1.10 (MA 200) – a point that repeatedly blocked advances in 2024, will offer opportunities for strategic EUR/USD selling in the months ahead.
- Euro to Dollar forecast 2025: Political developments in the Eurozone and in the US, as well as easing cycles from other central banks, should get in the way of a broad-based dollar decline. If a central bank cuts their interest rate this typically causes less demand for a currency. Specifically, experts forecast the euro to dollar rate may remain trapped around 1.08 by the end of the year.
- EUR/USD price prediction for the next 5 years: the pair is undervalued in real terms according to ING and based on the interest rate projections, EUR/USD should trade above 1.20 in the next years.
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Euro to Dollar (EurUsd) Forecast 2025 – Fundamental
While the U.S. Federal Reserve is remaining on hold for now, the European Central Bank (ECB) lowered rates by 25 basis points again on the on January 30.
Euro forecast
According to the latest forex forecasts for Q4 2024, if you are searching for a star performer, look elsewhere than the euro. Aside from political uncertainty, eurozone activity surveys have continuously underperformed; on another note, recent rate cuts by the ECB continue to weigh on the common currency. Falling inflation data enables the central bank to do so, yet economic data remains negative. Further rate cuts might continue to cause pressure on the EUR as well.
March rate cut not a done deal
One might have thought the EUR/USD could have done a little better - but despite the recent rate cut by the ECB in January the EUR has been able to gear up some momentum. As discussed in our previous Euro to Dollar forecast update in June, the ECB has made it clear that there is no strict forward guidance and sticky services inflation now casts doubt on whether the ECB can indeed cut interest rates both in March and April.
Yet EUR/USD has strengthened a little. Perhaps this is a function of a slightly rise in optimism for world growth, where the ECB has now raised its short-term activity assessment to the upside. The recent election outcome in Germany might also favor positive momentum ahead rather being in an economic friendly environment.
It is important to remember that typical rate-cutting cycle in the Eurozone continues to be underway. In the past, easing cycles had always been triggered by recessions or crises. Fortunately, neither of these is currently the case but there might be fresh signs on the horizon. Therefore, any further rate cuts will not be on autopilot. In fact, the ECB must find a balance between potential reputational damage and rising concerns about an overly optimistic inflation forecast.
Lower energy prices have enabled the eurozone economy to return to growth and the European Central Bank (ECB) to cut rates. In particular a potential end of the war in the Ukraine might support positive sentiment in this case. We expect a return to potential growth by mid 2025, with inflation at 2% latest by Q3 2025.
ECB forecasted to cut until 2.5%
S&P Global Ratings expects GDP growth to accelerate from 0.7% in 2024 to 1.2% this year, as lower commodities prices, especially energy prices, allow terms of trade to rebalance, disinflation to continue, and real incomes to recover.
Barring any significant new shock, the 2% inflation target seems to be in reach and likely to occur by mid-2025, as a rebound in productivity, moderation in profit margins, and slower wage growth will bring core inflation down further.
They expect a return to potential growth in 2025, with inflation at 2% by mid-year. This would permit the ECB to cut rates by 25 basis points again during Q2 2025 until the deposit rate bottoms out at 2.5% in the third quarter of 2025.
German election to support the euro
The results of the most recent election are reflected in the most recent developments in German politics. In parliament, no party can get a majority in itself, however the win of close to 30% by the Christian Democratic party will offer positive momentum moving forward. CDU’s Friedrich Merz will likely be elected as the chancellor of Germany but needs to form a coalition with one other party. The likelihood that Merz as the party leader will form the government together with the Social Democratic party is very high. He previously denied talks with the Alternative for Deutschland, the right-wing party, which was able to achieve more than 20% of votes this time.
Problems might now resume, though, as the SPD was also part of the most recent government, with chancellor Olaf Scholz having not been able to lead the country until the end of the term. Hence, he called for a new election, where his party subsequently lost substantial votes. Previous problems and different views might now be also taken over to the new government, should the coalition between the CDP and SPD, also referred to as the “Grosse Koalition” (grand coalition) be formed.
In general, the Merz led government might indeed add new reforms, which are rather supposed to support the economy also helping the economy to potentially grow.
USD Forecast
Amid many crosscurrents, the dollar has softened since the beginning of 2025. The outlook of the dollar might also show mixed signs with potential to head into either direction. The potential hawkish stance of the Federal Reserver from the US might be one reason that the Greenback could strengthen further. Yet the recent strength had taken a breather, and other currencies were able to capitalize against the dollar.
The question might be answered by US inflation data. Will the price pressure remain sticky, the Fed will be in no rush to cut rates. Also comments by President Trump might not cause the situation to change. Instead, the implementation of new tariffs could even be a reason that inflation data gear up momentum again.
The US dollar is likely to drift lower, driven by softer economic data which appears to be paving the way for a rate cut later this year. However, a strong economy means the US public may have to wait longer than other developed countries before it can start to lower interest rates. Over the next three months, the dollar is forecasted to ease, but the journey is likely to be choppy due to a robust inflation outlook from the Fed whereby it anticipates only reaching the 2% target in 2026.
Fiscal policy, a looser under a Trump administration
Perhaps the biggest story this quarter, however, is what Donald Trump presidency will mean for EUR/USD. It can be seen that Trump government will likely continue to implement a looser fiscal policy and a steeper US yield curve. The foreign exchange aspect remains uncertain and has been further complicated by several factors, which still remain unknown. The absence of tariffs on goods from Australia could make that currency pair an interesting one to observe.
Recent statements of Trump alongside Elon Musk together from the White House were causing the press to react wild. Both presented their action plan to cut government spending. Seemingly thousands of members of staff of various departments will be offloaded. In some cases, like USAID, entire departments might even face a full closure. According to the two, the actions of several agencies remain extremely inefficient and offer no use for the public. Critical comments from the opposition followed suit. Some judges have also started to stop the current process. Trump might indeed favor a weaker dollar moving forward and is likely going to try to find ways to make it happen.
Growth, Inflation, and the Labour Market – A Real Mixed Bag
Economic growth is moderating but still robust, disinflation is back on track, and the job market remains solid as recent data suggests. The Fed is hopeful that the strong labor market will usher in a soft landing when they potentially start to cut rates in Q2- 2025. Currently two rate cuts have been priced into markets, whereas also only one rate decrease might be likely. Should growth deteriorate alongside the continued progress in inflation, US shorter-term yields have room to fall further and could weigh on the dollar. This has recently even been the case, as the slight demand in US bonds resumes some momentum.
At the center of the data will be inflation which had resurfaced during the October 2024 – January 2025 timeframe. However, current PCE price data shows that figures remain soft again, which could cause the Fed to act rather soon. The Central Bank is more focused on the development of the personal spending price index than compared to the development of consumer prices in general. The 2% goal might hence come into proximity in the next months. Thanks to improved data in January and February, the Fed will likely look for more encouraging signs in the coming months in the hope to build the necessary confidence to finally cut interest rates once or even twice this year.
Fed to cut rates twice this year
The Federal Reserve will cut interest rates just twice this year, in Q2 and Q3, as resilient U.S. consumer demand warrants a cautious approach despite easing inflation, according to a growing majority of economists in a Reuters poll.
Declining price pressures over the past few months and recent signs of labor market weakness gave several members of the policy-setting Federal Open Market Committee (FOMC) "greater confidence" inflation will return to the U.S. central bank's 2% goal without a significant economic slowdown.
Markets grabbed that opportunity to price in one to two rate cuts this year. According to a recent Reuters poll the cutting cycle in 2025 will recommence in June. Two potential rate cuts might bring the federal funds rate closer to a neutral rate, which would be at 4.25%. A second-rate cut might then follow in September, which would depend on the momentum of the price development. Whether the rate will be cut to below the 4.00% level might remain in question.
Impact of Fed Rate Cuts on EUR/USD
EUR/USD has seen broadly divergent returns both in the year before and year after the first Fed rate cut of a new easing cycle:
The 1980s cycles (1982, 1984, 1989) featured big EUR/USD drops (7%+) in the year before the Fed cut interest rates.
Returns heading into the first Fed rate cut of an easing cycle have generally been strong over the past quarter-century, varying from -2% (2019) to +12% (2001)
EUR/USD returns in the year after the Fed starts cutting rates have varied from +17% (1989) to -4% (1995 and 2001)
On average, EUR/USD has fallen -1% in the year before the Fed starts cutting interest rates and risen 3% in the year after.
Perhaps contrary to popular opinion, the start of a new Fed rate cut cycle has NOT been a consistent bearish catalyst for the US dollar; if anything, the historical track record shows a modest bullish trend in the greenback, especially in the six months before and six months after the Fed starts easing policy.
How likely is the Euro to Dollar parity forecast?
What would then be required to restore parity between EUR and USD? ING believe that more divergence in Fed-ECB policy can be sufficient, but euro is no longer under the kind of fundamental pressure that the energy crisis placed on its longer-term fair value, we may need to see the 2-year EUR/USD swap rate widening to more than the -175bp low.
To get the EUR/USD close to 1.00, markets would have to cause the Fed to even remain more hawkish in the coming months. Another point apart from the Central Bank action can be seen with geopolitical tensions. Should the war in the Ukraine might come to an end, the Eurozone might get back on its feet. Furthermore, the more economic friendly German government could cause the economy to strengthen, which would be positive for the Euro. The ECB is expected to cut rates further towards the 2.0% target towards mid 2025 according to a Reuters poll, answered by 82 economists.
Professional forecasters have a slightly more hawkish view and expect that this will only take place in 2026 with the ECB rather remaining hawkish for now. One thing is for sure, that the European Central Bank will remain more dovish and rather ready to cut rates sooner as compared with the Fed in the US. Should the recovery of the economy remain weak, the EUR might weaken soon again, increasing the odds that parity in the EURUSD currency pair can be reached.
EurUsd Forecast – Technical Analysis
EUR/USD has exhibited a broad, choppy downtrend in 2024, moving back and forth in a reactive fashion as rate cut projections were clawed back significantly in the US and to a lesser degree for the ECB, hence the pair favoring the downside.
Since January 2025 the market saw an increase again. Positive momentum in the EUR was mainly driven by some weakness in the USD. This was also seen across the board against other currencies. The current recovery of the EUR against the Dollar, however, might face some tough days ahead. Economic weakness in general might cause the Greenback to gear up steam again. The psychological resistance level at 1.0500 still remains in place and might cause the currency pair to fall back to lower levels.
EUR/USD Forecast - Weekly Chart
The weekly chart of the pair shows a broad-based sideways price pattern, with the technical support level being market at 1.0200 and the resistance zone at 1.0500. A major breakout of that trend seems likely but might take time to unfold. A significant upward move from here would be challenging and would likely require an improved outlook of the European economy.
For EUR/USD, a key resistance level lies just below the psychological 1.0500 mark, at 1.0470 – a point that repeatedly blocked advances early 2025. In extreme scenarios, 1.0660 could come into play, having capped weekly gains more recently. On the downside, 1.02200 is crucial if periphery bond spreads widen dramatically, with parity potentially becoming relevant thereafter.
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How do analysts see the market moving in the coming months and years? Below, we look at some of the latest projections.
Euro to Dollar Price Predictions 2025
Here we look at the Euro to Dollar (EUR/USD) forecast for 2025, including comments from highly rated FX strategists.
Euro To Dollar Forecast End-2025: 1.15 at BNP Paribas
Contrary to traditional views, BNP Paribas suggests that the euro could appreciate to 1.15 by the end of 2025, even in the event of a global recession. This outlook is attributed to the dollar's current status as a high-yielding currency, which may lead to depreciation as U.S. interest rates decrease.
Additionally, the Federal Reserve's aggressive rate hikes, surpassing those of other central banks, and the euro's reduced sensitivity to market downturns support this perspective.
Bearish Euro to Dollar price prediction 2025 from Credit Agricole
Credit Agricole anticipates gradual euro gains, projecting the EUR/USD exchange rate to reach 1.15 by late 2025. This outlook is based on expectations of Federal Reserve rate cuts during this period, though slow growth outside the U.S. and easing cycles by other major central banks may limit the dollar's decline.
Bearish Euro to Dollar price prediction 2025 from Goldman Sachs
Goldman Sachs expresses skepticism regarding further declines in U.S. yields in the short term and suggests that the dollar's appeal may remain strong. The firm highlights the resilience of the U.S. economy and considers that European economies might be more sensitive to higher interest rates, potentially leading to euro depreciation.
Bullish Euro to Dollar Price Prediction 2025 from Scotiabank
Scotiabank analysts suggest that while the euro's rally may face challenges above the 1.10 level, underlying bullish trends could support further gains. They forecast the EUR/USD pair reaching 1.11 to 1.12 in the coming weeks, contingent on favorable economic indicators and market sentiment.
Bullish Euro to Dollar price prediction from UBS
UBS has adjusted its forecasts slightly, maintaining an expectation for the EUR/USD to recover to 1.10 by the end of 2025. This projection considers potential shifts in economic conditions and monetary policies that may favor euro appreciation over time.
Bearish Euro to Dollar Forecast 2025 from Wells Fargo
Analysts at Wells Fargo project that the EUR/USD exchange rate could decline to 0.9800 by the end of 2025. This forecast is influenced by expectations of U.S. economic resilience and potential policy measures that may strengthen the dollar.
Bullish Euro to Dollar Forecast 2025 from Commerzbank
Analysts at Commerzbank anticipated the euro strengthening to 1.12 against the dollar by June 2024, followed by a decline to 1.08 by March 2025. This projection is based on expectations of a U.S. economic recession in 2024, prompting the Federal Reserve to reduce its key interest rate by a total of 150 basis points. However, market confidence in a 'soft landing' for the U.S. economy may support the euro in the near term.
Bearish Euro to Dollar Forecast from SocGen
Societe Generale notes that if capital inflows into the U.S. persist and the U.S. economy demonstrates resilience, the dollar is likely to remain strong. This could result in the EUR/USD exchange rate approaching parity, especially if eurozone economic performance lags behind that of the U.S.
Bearish rate forecast from Rabobank
Rabobank analysts foresee the EUR/USD exchange rate reaching parity (1.00) in the medium term, particularly if capital continues to flow into the United States and the U.S. economy remains resilient. This perspective is shared by other institutions, reflecting concerns over eurozone economic performance relative to the U.S.
EurUsd price predictions based on AI
Here are the August 2025 EURUSD price predictions from the most popular AI-based sources.
Wallet Investor
According to Wallet Investor's AI-driven analysis, the EUR/USD rate is expected to decline from 1.0380 to 1.0200, indicating a potential decrease of approximately 1.742%. Their projections for April 2025 suggest an opening rate of 1.0540 and a closing rate of 1.0560, with minimal fluctuations.
Stockinvest.us
This platform's analysis indicates that the EUR/USD pair holds sell signals from both short and long-term moving averages, suggesting a more negative forecast. Resistance is anticipated at 1.0400 and 1.0500, with a break above these levels potentially issuing buy signals.
Longforecast.com
According to Long Forecast, the EUR/USD exchange rate is projected to experience fluctuations throughout 2025. The forecast suggests the pair may reach a high near 1.1510 in February, followed by a downward correction to approximately 1.1130 in June. Later in the year, the exchange rate is expected to climb again, approaching 1.1700 in the autumn, before ending the year around 1.1260.
What Drives the Euro / US Dollar Currency Pair
The EUR/USD trend depends on what stage of the cycle the global economy is at. During a recession, the demand for safe-haven assets, including the US dollar, increases. As a result, the Eurodollar goes down.
During a recovery from a recession, investors are not that focused on preserving money. Retail investors search for ways to multiply the deposit. At this stage, the fundamentals driving the EUR/USD currency pair are the GDP growth rates and the monetary policy of central banks.
A strong economy means a strong currency. The rapid rebound of GDP after the recession is a reason to buy securities of the country. In particular, the belief that the US economy will fully recover from the 2020 recession in the second quarter of 2021 and exceed its potential level in 2022 contributed to the S&P 500 rally by 18% from January to early August. As a result of the capital inflow into the US stock market, the US dollar was strengthened.
The GDP rate is a reliable indicator but, unfortunately, lagging. The GDP report is published a month or month and a half after the end of the quarter. Therefore, it is very difficult to determine whose economy is growing faster at a particular time, which doesn’t provide a clear picture of the current economic situation to investors. That is why forex traders have to monitor some leading macroeconomic indicators, such as the US and Eurozone PMIs.
The more the economy heats up, the more likely the central bank to phase out the quantitative easing program and hike the interest rates. As a result, the assets denominated in the local currency grow more attractively. That is why the US dollar is currently strengthening against a basket of major currencies.
To understand the Fed’s intentions, one should track such indicators as inflation and unemployment rate. When these indicators reach the thresholds set by the Fed, the central bank starts scaling back monetary stimulus. In this case, the greenback will grow in value.
Speeches of central bank representatives are important in forecasting the EUR/USD exchange rate. The officials’ comments give a clue on how the central banks’ policies could change, and investors could develop trading strategies based on this.
EUR/USD Trading Tips
- A necessary condition to look for buy opportunities in the long term is the sync trends in the global economy. If the US GDP features robust growth, but China and the euro area face problems, look for sell opportunities.
- Monitor the global financial markets. If the S&P 500 and oil are rallying up simultaneously, it may be a reason to buy the Euro versus US Dollar. If the stock index is growing and the oil is falling in value, or both financial assets are depreciating, it is relevant to sell the EURUSD.
- Study the history of the financial asset’s quotes. An example that took place in the past may emerge in the future as a potential EUR/USD price movement.
- Use technical indicators in trading the EUR/USD to determine the current market state and key support/resistance levels. If the Moving Averages often cross the EURUSD chart, the market is trading flat. If the price chart is above the EMA, the trend is bullish; if the price is below the indicator, the underlying trend is bearish.
- Use Japanese chart patterns and western chart patterns like head and shoulders, double top and bottom, or triangles to identify entry and exit points.
- Do not try to use all popular trading strategies; you’d better find the one that suits you best.
- Always observe the rules of your online trading system.
EUR/USD price history
In the beginning, the EUR/USD currency pair was trading below parity. However, starting from 2002, the euro has never been below $1. The euro-dollar all-time low is 0.82; the record high is close to 1.604.
In 2020, the global economy faced a recession, which lasted for only two months. Because of the panic in financial markets, the demand for the Greenback sharply increased. As a result, the EURUSD dropped to a level of 1.064, the lowest since April 2017.
Central banks launched colossal monetary incentives of trillions of dollars to support their economies. The Fed acted very extreme and had cut their rate down from 1.75% to 0.00% and started the Quantitative Easing at a monthly pace of $120 billion. The Federal Reserve balance sheet was growing rapidly, approaching $9 trillion, and the US dollar weakened against a basket of major currencies. In particular, the euro, from January to March that year, was up by almost 16% and reached $1.2340.
In late 2020, the euro was expected to rise further. Many banks suggested the EURUSD should have exceeded 1.2500 in 2021. Some aggressive bulls expected the euro to trade around $1.300. In the end, things turned out differently. Extended lockdowns in the EU, due to rising infections had caused a double recession, the euro collapsed lost sharp momentum again towards 1.1705.
Eventually, as infections on a global scale turned less severe also the economy was able to rise again. Governments had turned their focus away from the Covid- 19 pandemic. Furthermore, the EURUSD buyers were again encouraged to invest in the Euro as economic data had started to improve. Fed’s unwillingness to recognize a surge in US inflation also helped the common currency back then. The pair moved towards the 1.2260 level in late May. Bulls again were aiming at 1.2500, but the FOMC June projection broke the uptrend again. The Fed started talking about a potential rate hike in 2022, which encouraged investors to buy the US dollar.
After falling from 1.2275 at the start of 2021, EUR/USD started 2022 at 1.1375. The price rose to a high of 1.1495 in early February before steadily dropping to a low of 1.0380 on May 13 – a level last seen in January 2017.
The pair briefly breached parity on 13 July, as markets reacted to US inflation figures. That was followed by an immediate rebound that sent EUR/USD back above 1.0100.
As of 15 July 2022, the pair has fallen over 12% year-to-date to trade around the 1.0000 level.
EUR/USD began 2022 at $1.1375, down from $1.2275 at the beginning of 2021. Early in February, the price of the pair reached a high of $1.1495 before progressively declining to a low of $1.0380 on May 13 - a level last reached in January 2017.
The pair fell below $0.99 on September 5 for the first time in 20 years as a result of Russia shutting down its main gas pipeline to the EU, severely jeopardizing the euro zone's economic prospects.
Midway through December, the EUR/USD traded back up to around the $1.06 level due to a weaker dollar and declining US Treasury yields. The ECB increased interest rates by 50 basis points (bps) as anticipated on December 15, reiterating that more hikes will follow, and outlining plans for quantitative tightening. However, the pair benefited from a general decline in the value of the US dollar as inflationary pressures in the country continued to subside.
The euro-to-dollar exchange rate started in 2023 at $1.0703 and increased during the month of January, topping $1.08 for a brief while. During the year, the pair traded sideways, with the trading range 10.05-1.10 violated only once in July, toward 1.1280, for a short period of time.
The recent trading range which traders had expected in 2023 and 2024 might soon come to an end. After such a small range the market could be expected to break out of such a trend. Since a vacuum had built up, a sudden breakout should be on the cards.
Final words
It’s important to remember that any long-term forecasts, even the EUR/USD forecast, or any other currency pair, are too unreliable to believe in. Too many factors may affect the rate of the currency pair, and it’s best to be up to date with what’s happening in the global arena in order to make realistic and reliable predictions.
If you do decide that trading this currency pair is something for you, and you believe in the future of the Euro vs. US Dollar pair, first, you need to decide on a suitable trading strategy for you and work it out first on a demo account, and then on a real account.
You can start in minutes by opening a trading account with NAGA.com! We provide a user-friendly trading app with an outlook for novices as well as experienced traders and investors.
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Sources:
- https://www.spglobal.com/ratings/en/research/articles/240624-economic-outlook-eurozone-q3-2024-growth-returns-rates-fall-13155488
- https://www.jpmorgan.com/insights/global-research/outlook/mid-year-outlook#section-header#1
- https://www.federalreserve.gov/monetarypolicy/files/fomcminutes20240612.pdf
- https://www.ecb.europa.eu/press/accounts/2024/html/ecb.mg240704~fbde4f46aa.en.html
