Euro to Dollar Rate Week Ahead Forecast: "1.15-1.20 Range Soon"

June 8, 2025 - Written by Tim Boyer

STORY LINK Euro to Dollar Rate Week Ahead Forecast: "1.15-1.20 Range Soon"

Currency analysts at Deutsche Bank forecast that the Euro to US Dollar exchange rate (EUR/USD) will strengthen to 1.20 at the end of 2025, with further gains to 1.25 at the end of next year.

According to UBS; “We expect EURUSD to move into the 1.15-1.20 range soon and think a move toward 1.10 is far less likely and would only be temporary.”

The dollar posted slight losses during the week, but held above April lows and recovered on Friday. Elon Musk’s savaging of the Budget Bill created fresh uncertainty and helped trigger a huge row with Trump.

EUR/USD hit 1.15 after the ECB policy decision before a retreat to near 1.14.

The ECB cut interest rates by 25 basis points with the discount rate lowered to 2.00%. Bank President Lagarde suggested that a July cut was unlikely and there was increased market speculation that there would be no further cuts.

Standard Chartered, however, noted the downgrading of inflation forecasts; “Against this disinflationary backdrop, we see risks of further policy easing in H2, especially if the US reinstates reciprocal tariffs after the latest pause.”

It sees scope for EUR/USD to retreat to 1.1250 on a short-term view.


UBS also focussed on fiscal policy; “In addition to the new German government’s initial plans to boost spending by up to EUR 800bn over the coming years, recent proposals for EUR 46bn in corporate tax breaks aim to revive the German economy. These measures are clearly euro-positive, reinforcing Europe’s appeal as a diversification destination for investors looking to reduce USD exposure.”

US data suggested that the labour market was weaker with increased layoffs in May.

The employment report recorded an increase in non-farm payrolls of 139,000 for May compared with expectations of around 125,000, but the April increase was revised down to 147,000 from 177,000.

The unemployment rate held at 4.2%, but this masked a huge decline in the labour force and the number of people employed.

At this stage, markets see less than a 20% chance of a Fed rate cut by the end of July.

UBS considers that the risks are asymmetric; “Even if economic data surprises to the upside, it is unlikely to prompt rate hikes. Conversely, as seen in August 2024, a sudden deterioration in the labor market could trigger faster and deeper rate cuts than currently expected, despite any temporary inflationary effects from tariffs.”

Markets are continuing to monitor trade developments. The US increased tariffs on steel and aluminium imports to 50% from 25%, but there was a call between Trump and Chinese President Xi which increased hopes that some progress could be made.


Credit Agricole commented; “While hopes for de-escalation have helped the USD recover of late, we caution that it would take further considerable abatement of trade tensions to give the currency a more meaningful boost.”

The risks of a structural, global retreat from the dollar remained a key underlying element.

Deutsche Bank commented; “We have demonstrated in earlier research that a sharp slowdown in US inflows appears to be materializing. Combined with the US reaching the 4% current account threshold that has historically proven a headwind to funding the external deficit and a rapidly deteriorating net international investment position our conclusions remain bearish.”

SocGen noted a technical shift in the market; “Over the past two decades, EUR/USD risk reversals have been structurally oriented towards EUR downside most of the time. However, the current bullish pricing has persisted for nearly a full month, something that has not occurred in the past 20 years.”

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TAGS: Currency Predictions Euro Dollar Forecasts