Euro to Dollar FX Forecast: Tipped to "Settle Back Close to 1.13" say Analysts

June 4, 2025 - Written by David Woodsmith

STORY LINK Euro to Dollar FX Forecast: Tipped to "Settle Back Close to 1.13" say Analysts

The Euro to Dollar exchange rate (EUR/USD) found support above 1.1350 on Wednesday and posted a solid advance to 1.1430 after weaker than expected US data.

Traders will be looking for confirmation or rejection of the weaker US economy scenario from Friday’s employment report. Thursday’s ECB interest rate decision will also be potentially important.

Scotiabank maintains a positive outlook; “EURUSD’s recent recovery to fresh one-month highs has delivered an important retracement of the decline from early May.”

It added; “Momentum is moderately bullish and the near-term range is defined by support below 1.1350 and resistance above 1.1450.”

A break above 1.1450 would lead to the key level of 1.1500.

According to ING; “Our view on EUR/USD is unchanged: we think the pair can settle back close to 1.13 over the coming weeks, and that short-term rallies may still lose steam as they approach 1.150.”

Markets are also continuing to monitor trade headlines, especially given the impact on economic confidence.


ING commented on the potential call between Trump and Chinese President Xi this week.

It added; “Recently, such direct talks have eased trade pressures, and in our view, there is potential for a temporary uptick in the dollar after the event. Still, this may not trigger a sustained rally.”

Tariffs and the economic outlook will be closely entwined and the risk of renewed dollar selling will increase if the economy deteriorates.

ADP data recorded an increase in private-sector payrolls of 37,000 for May compared with consensus forecasts of around 110,000.

The ISM non-manufacturing business confidence index posted a sharp decline to an 11-month low of 49.9 for May from 51.6 in April and well below expectations of 52.0.

Orders posted a sharp decline on the month, but employment edged higher.

Prices increased at the fastest rate since December 2022, increasing stagflation fears.


According to Danske Bank; “With policy risk elevated, economic momentum slowing, and investor confidence still fragile, the USD may require a clean, data-driven narrative shift to regain support. Until then, we expect EUR/USD to trade with a topside bias.”

At this stage, markets still see just under a 30% chance of a Fed rate cut by July, but two cuts by the end of 2025.

MUFG commented; “We continue to expect the Fed to cut in the 2H of this year as evidence of the negative economic impact from trade disruption and heightened policy uncertainty continues to build.”

The dollar will be vulnerable if the Fed hints at a near-term to cut rates.

UBS commented on the wider dollar struggle; “the situation could become much trickier once the US economy softens and shorter-term rate differentials start to converge.”

There are strong expectations that the ECB will cut interest rates by a further 25 basis points on Wednesday with the deposit rate lowered to 2.00%.

Scotiabank commented; “The risk for Thursday’s ECB would be a neutral cut and a shift away from the easing bias that has dominated ECB communication over the past year or so.”

That would tend to boost the Euro.

HSBC sees the potential for dovish comments; “The deceleration in inflation may also help prompt a bigger downward revision in the ECB’s inflation forecast when it reveals its new projections at the upcoming meeting. This could boost the case of those arguing that the policy rate should move below neutral.”

It added; “But the real key for EUR-USD is whether rate differentials can get traction again, because if they do, the EUR is looking decidedly expensive.”

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TAGS: Euro Dollar Forecasts