Euro to Dollar Forecast: Trader Talk of 1.20 EUR/USD Increases

June 29, 2025 - Written by Ben Hughes

STORY LINK Euro to Dollar Forecast: Trader Talk of 1.20 EUR/USD Increases

The US Dollar has remained firmly on the defensive with further unease over Federal Reserve policy. There has been further speculation that the Administration will move to undermine central bank independence and aim directly or indirectly to force a near-term cut in interest rates.

The Euro to Dollar (EUR/USD) exchange rate is trading just above 1.1700 from 45-month highs just above 1.1740 reached on Thursday.

EUR/USD has posted seven successive daily gains which will potentially expose the pair to a limited correction.

UoB commented, “Further EUR strength still appears likely, but overbought short-term conditions could slow the pace of any further advance. The next level to monitor is 1.1780.”

ING notes that estimates of EUR/USD fair value have increased to around 1.1450 from 1.10 amid a decline in US yields.

According to the bank; “Geopolitical risk has been radically priced out, and most importantly, FOMC divisions have prompted material dovish speculation. This justifies a more bullish view on EUR/USD, but not necessarily a call for 1.20.

It added; “Markets' enthusiasm for an earlier Fed cut may be misplaced, and EUR/USD may settle back around 1.15-1.16, awaiting conclusive information on inflation.”


According to Scotiabank; "This week it's definitely been about the Fed, the prospect of easing sooner and potentially more rate cuts."

Thursday’s US data recorded a decline in initial jobless claims to 236,000 in the latest week from 246,000 previously while there was a further increase in continuing claims to 1.97mn from 1.94mn and the highest figure since late 2021.

There was a downward revision to first-quarter GDP to -0.5% from -0.2%, but durable goods orders posted a stronger-than-expected increase.

Danske Bank noted; “There was a decent decline in US Treasury yields yesterday as well as a steepening of the yield curve on the back of weaker than expected Q1 GDP numbers from the US as well as speeches from various Federal Reserve officials that are indicating forthcoming easing of monetary policy despite the potential impact from Tariffs.”

There have been further rumours of a near-term move to name a successor to Chair Powell and effectively put a “shadow Fed” in play which would undermine official guidance ahead of May 2026 when Powell’s term as Chair is scheduled to end.

Commonwealth Bank of Australia commented; "The sooner a replacement is announced for Powell, the sooner he could be perceived to be a ‘lame duck'."

She added; "For now, expectations President Trump will choose a more dovish chair will keep downward pressure on FOMC pricing and the USD.”


The leading contenders for next Fed chief reportedly include former Fed Gov. Kevin Warsh, National Economic Council head Kevin Hassett, current Fed Gov. Christopher Waller, and Treasury Secretary Scott Bessent.

RBC BlueBay Asset Management senior portfolio manager Kaspar Hense noted the risk of a dovish appointment: "This is not currently 100% in the price, and it would still move markets if someone like Hassett or Bessent would get the job in order to cut rates, ignoring fundamental risk.”

He added; "We are short the dollar in this environment, where there is an erosion of institutions."

SocGen’s Kit Juckes added; "I think the market is pricing in President Trump appointing someone who at least at first sight appears more sympathetic to his cause.”

Scotiabank added; "The result of U.S. asset outperformance over the past decade is you've got a lot of asset managers that are long the U.S. dollar way more than I think they're comfortable.”

International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way, ensuring you get the best exchange rates on your currency requirements.

TAGS: Currency Predictions Euro Dollar Forecasts