Euro to Dollar Week Ahead Forecast: Momentum Modestly Bullish

June 1, 2025 - Written by Frank Davies

STORY LINK Euro to Dollar Week Ahead Forecast: Momentum Modestly Bullish

Wells Fargo forecasts that the Euro to Dollar (EUR/USD) exchange rate will weaken to 1.11 by the end of 2025 with a further retreat to 1.08 by the third quarter of 2026.

In contrast, Nomura forecasts that EUR/USD will strengthen to 1.20 by the end of 2025 with no net change in 2026.

EUR/USD Found solid support on dips during the week and settled with marginal losses close to 1.1350.

Trade headlines continued to dominate for much of the week. After withdrawing a threat to impose 50% tariffs on EU exports to the US from June 1st, the Administration’s trade strategy was damaged by a Trade court ruling that reciprocal tariffs could only be imposed through Congress.

An appeals court stated that tariffs could remain in place while the legal process is completed. There is no set timeframe, and uncertainty was inevitably ramped up further.

The uncertainty will curb immediate pressure on the EU to negotiate.

HSBC noted that tariffs could be imposed on sectors and added; “their universal application makes them less useful as a lever in trade negotiations with a given country. So, the FX market has chosen not to view this as a game-changer, but the ruling does complicate matters. It also removes the threat of swift punitive tariffs from the administration’s toolkit.”


According to Credit Agricole; “We conclude that the latest developments could prolong but not necessarily escalate the global trade war.”

Nomura does not expect the Administration will relent; “Trump may end up taking a different path to implementing trade policy, but the push will likely continue, as he remains clearly focused on enticing inbound investment, collecting tariff revenue and reducing US trade deficits.”

US jobless claims increased to 240,000 in the latest week from 226,000 previously while continuing claims hit the highest level since November 2021.

There was, however, a rebound in consumer confidence.

The bank added; “The bottom line is that the US exceptionalism theme continues to fade under Trump’s volatile tariff and non-tariff policies. Combined with structural weaker USD forces (i.e., US twin deficits), substantial USD overvaluation, investor concerns over the stability of the US legal, economic and political environment etc., USD looks set to weaken further.

According to MUFG; “in our view a pending economic slowdown will all ensure any correction lower in EUR/USD is unlikely to be sustained for long.”

Wells Fargo expects the dollar will struggle over the second half of 2025 with weaker growth and Federal Reserve rate cuts from late Summer.


The bank is still bullish on the dollar over the longer term; “In 2026, however, we expect moderate U.S. dollar strength to prevail. By this time, the adjustment to a new tariff regime should be well-advanced, while fiscal stimulus should also contribute to a rebound in U.S. economic growth. That is likely, in our view, to also bring Federal Reserve rate cuts to an end.

There are strong expectations that the ECB will cut interest rates at the June meeting with the deposit rate lowered to 2.00%, but there are important uncertainties over guidance.

Credit Agricole does not expect sustained Euro support; “Given that the EUR trades at a significant premium when compared to its relative rate disadvantage vs the USD, it could struggle to perform in the wake of the ECB meeting.”

According to Wells Fargo; “In terms of performance for select G10 currencies in the context of our overall U.S. dollar outlook, we expect the euro will be something of an underperformer among the G10 currencies.”

It added; “While the euro may be reasonably steady during the second half of this year as the United States faces its own economic challenges, we anticipate renewed euro weakness in 2026.”

Nomura is more positive on the Euro outlook; “We have been arguing for some time that EUR is well-placed to benefit from any shift in sentiment regarding USD, in large part due to its net creditor status and the scope for repatriation from previous investments into the US.”

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TAGS: Currency Predictions Euro Dollar Forecasts