Euro to Dollar Forecast: Danske Hold 12 Month Target of 1.20

May 21, 2025 - Written by Ben Hughes

STORY LINK Euro to Dollar Forecast: Danske Hold 12 Month Target of 1.20

The US Dollar has come under renewed pressure on Wednesday and the Euro to Dollar (EUR/USD exchange rate has secured a further strong gain to 2-week highs around 1.1350.

A sustained break above 1.1350 could lead to a challenge on 1.15 while failure could trigger a sharp correction.

MUFG commented; “Any sign of pushing trading partners in Asia (Japan this week) to conducting less or stopping US dollar buying intervention would likely trigger further big moves weaker for the dollar.”

ING sees scope for a dollar recovery; “We think some USD-positive headlines on trade coming from the G7 summit in Canada can put a lid on EUR/USD before the end of the week.” It does not see a near-term move to 1.1500.

Danske Bank maintains a 12-month target of 1.20.

The dollar has been undermined by unease over US fiscal trends and speculation that the US Administration will look for key trading partners to accept stronger currencies which would put wider downward pressure on the US currency.

The Euro has also gained support from evidence of further net capital flows into the Euro area.


G7 Finance Ministers will meet in Banff Canada on Wednesday and Thursday with rumours reverberating across markets.

ING commented; “US Treasury Secretary Scott Bessent is set to hold several bilateral meetings in the coming days. If current speculation proves accurate – and the US is pushing for stronger trading partner currencies – it could not only prompt sharp appreciation in those currencies but also weigh on the dollar more broadly.”

HSBC considers that speculation of currency talk is overblown; “The reports have tried to spin this into a possible precursor to some kind of deal to strengthen the JPY as part of a trade deal with the US. Nothing the finance minister has said would support this thesis.”

Credit Agricole added; “We continue to believe that the US would not explicitly abandon its “strong USD” policy and further think that the US Treasury Secretary Bessent could reiterate that a stable and strong currency is in the US best interest.”

The dollar could also gain net support if trade talks make progress.

ING added; “Incidentally, recent developments suggest that the US administration tends to dial down trade tensions after direct talks with other leaders, and any signs of de-escalation should provide some support for the dollar.”

Markets are also monitoring wider US fundamentals with the US Administration looking to get the Budget Bill passed in the House of Representatives.


MUFG commented; “There are other factors at play too that are reinforcing dollar selling pressure. Investors remain concerned over the fiscal outlook in the US with the Wall Street Journal reporting that a deal on the SALT cap to unify the Republicans has been reached to get the tax cutting bill moving through Congress.”

According to Goldman Sachs; "The U.S. still faces the worst growth-inflation mix of the major economies, and as the fiscal bill makes its way through Congress, eroding U.S. exceptionalism is proving – literally – costly at a time of large funding needs."

The dollar will struggle if there is evidence of a sustained net asset flows away from the US.

SocGen noted that previous credit-rating downgrades have not had a sustained impact but commented; “the big driver of FX moves at the moment is a loss of attraction in US assets in general. Or, more particularly, a realization that everyone is very overweight something that might be a little riskier than they thought.”

The Euro area recorded the second-largest current account surplus on record for March and there were further net inflows into Euro-Zone capital markets.

MUFG commented; What has also become clear from the flow data on the financial account side of the balance of payments is that the end of negative rates in core Europe has helped to draw in demand for euro-zone fixed income from abroad.

These flows will provide structural Euro support.

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TAGS: Euro Dollar Forecasts