Euro to US Dollar Forecast: Trump EU Threat Derails EURUSD, 1.15 Target

May 23, 2025 - Written by Frank Davies

STORY LINK Euro to US Dollar Forecast: Trump EU Threat Derails EURUSD, 1.15 Target

The Euro to Dollar exchange rate (EUR/USD) posted strong gains early on Friday amid a fresh round of dollar losses and briefly hit 2-week highs at 1.1375.

There was, however, a surge in volatility at New York’s open following another major trade threat from President Trump with a threat of 50% tariffs on the EU. EUR/USD briefly testing 1.1300 as trade overshadowed stronger GDP data.

There is likely to be an intense debate surrounding whether the potential for EUR/USD gains to 1.15 are more or less likely in view of the fresh trade threat.

ING commented; “Just when we thought it was all quiet on the tariff front and we'd all started worrying again about the US deficit, boom! Trump threatens the EU with bucketloads more. Brace yourself!”

According to UBS there is merit in buying EUR/USD dips; “we regard the recent consolidation to 1.12-1.13 as an attractive entry level to position for a higher EURUSD.”

Barclays commented; “Shifts in rhetoric, trade policy mishaps or data softening could all lead EUR/$ higher towards 1.15.”

Nevertheless, it doubts that the level would be sustainable.


After a week dominated for much of the time by budget issues, trade and tariff fears returned with a vengeance on Friday.

Just ahead of the New York open, President Trump threatened to impose 25% tariffs on any Apple iPhones not manufactured in the US.

Trump also stated that the EU has been very difficult to deal with on trade and that talks were going nowhere.

He added that he was recommending imposing 50% tariffs on EU imports from June 1st.

There was a jump in demand for defensive assets with the Yen and Swiss franc posting strong gains with very choppy Euro trading.

This may well be a negotiating tactic from Trump in an attempt to secure concessions from the EU in trade talks, but there was still a sharp reaction and jump in unease.

UBS Head of European Equity Strategy Gerry Fowler commented; "Even the fact that he’s used the phrase “I recommend” suggests this is part of the late stage negotiation tactics. But if they’re even close to being implemented, then obviously Europe’s retaliation would be very significant so quite problematic."


Holger Schmieding, chief economist, at Berenberg commented; "This is a major escalation of trade tensions.

He added; "With Trump you never know but this would be a major escalation. The EU would have to react and it is something that would really hurt the U.S. and European economy."

According to City Index Senior Market Analyst Fiona Cincotta; "The market was in this sense of perhaps there are going to be trade deals and worst case scenario is potentially being avoided after Liberation day and then there was that pause. But this latest threat is worse than the worst case scenario."

UBS’ Fowler added; "The 10% tariff that Europe is currently experiencing was always going to be a best case scenario considering that’s what the UK was able to achieve anyway. So this is much worse but it is also a bit like the China tariffs -probably not a sustainable tariff.”

There was a sharp market reaction with the Eurostoxx 600 index sliding 2.0%.

Markets moved to price in three further interest rate cuts by the ECB following the news.

Earlier, the Euro drew support from stronger than expected German GDP data with a first-quarter increase of 0.4% compared with consensus forecasts of 0.2%.

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TAGS: Euro Dollar Forecasts