Euro to Dollar Forecast: EUR/USD Aiming for 1.15+

June 2, 2025 - Written by Frank Davies

STORY LINK Euro to Dollar Forecast: EUR/USD Aiming for 1.15+

The Euro has gained support from underlying capital inflows with the Euro to Dollar exchange rate (EUR/USD) jumping to 5-week highs near 1.1440 before settling around 1.1410.

The U.S. dollar has again been undermined by trade fears following President Trump’s move to increase tariffs on steel and aluminium, while underlying confidence in the US economy and dollar remains fragile.

According to ING; “EUR/USD has some intra-day resistance at 1.1425, above which a short-term run-up to 1.1500 beckons.”

Scotiabank commented; “The latest extension of gains above 1.14 has delivered a fresh local high reaching levels last briefly seen in late April. The RSI is bullish at 60 but well short of the overbought threshold at 70. Recent support has been observed around the 50 day MA (1.1209) and resistance appears limited ahead of the late April high at 1.1573."

Late on Friday President Trump stated that tariffs on steel and aluminium imports would be doubled to 50% from 25%.

The move triggered fresh unease surrounding the US economic outlook and increased speculation that the Administration would look to target tariffs on individual sectors if the reciprocal tariffs are eventually blocked by the courts.

MUFG commented; “The flip-flopping on trade policy looks set to continue and it appears the uncertainty this creates does not bother President Trump at all. That is likely to give investors the reason to renew selling of the US dollar.


There are also important wider tensions between the US and China with both sides accusing the other of not violating the trade truce.

There will be fears that Trump will decide to raise the level of tariffs once again and that the economy will be undermined by uncertainty.

The ISM manufacturing business confidence index edged lower to a 6-month low of 48.5 for May from 48.7 previously and below expectations of 49.3.

Markets are also uneasy over the US Budget Bill which will be debated in the Senate this month.

The House version, approved last week, would give powers under Section 899 to the US Treasury to impose a retaliatory tax of up to 20% on any country's residents employing 'discriminatory' taxes.

According to Barclays "S899 could be seen as a tax on the U.S. capital account at a time when investor nervousness towards U.S. assets has grown.”

It added; "Actively reducing foreigners' total return on their U.S. investments would dent inflows and weigh on the dollar, all else equal."


MUFG noted that the dollar index is within 1% of the lows recorded on April 21st.

It added; “Certainly if the Trump-Xi meeting goes badly or if it doesn’t take place at all, that low-point for the dollar could well be breached this week, taking us to levels not seen since March 2022.”

There are strong expectations that the ECB will lower interest rates this week with a 25 basis-point reduction in the deposit rate to 2.00%.

According to Scotiabank; “In terms of event risk, Thursday’s ECB meeting will be critical as policymakers deliver a fresh set of forecasts and offer some insight into their expectations for rates.”

It added; “With markets pricing at least one more 25bpt cut by December, the risk lies with a neutral or hawkish cut with messaging the signals a possible end to the easing cycle."

Danske Bank still expects rates will be slashed to 1.50% this year, but with risks tilted towards smaller cuts.

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TAGS: Euro Dollar Forecasts