Euro to Dollar Forecast 2025: RAISED to 1.20, 1.22 by End 2026

June 30, 2025 - Written by Frank Davies

STORY LINK Euro to Dollar Forecast 2025: RAISED to 1.20, 1.22 by End 2026

Nordea has raised its end-2025 Euro to Dollar exchange rate (EUR/USD) forecast to 1.20 from 1.14 previously and expects a further net gain to 1.22 at the end of 2026.

Wells Fargo, however, expects EUR/USD will stall close to current levels and retreat to 1.12 by the third quarter of 2026.

After gaining support early in the week from the US military strike on Iran’s nuclear facilities, the dollar faded rapidly as tensions eased just as quickly.

A ceasefire agreement between Israel and Iran triggered notable relief for risk appetite with gains for equities and the dollar also lost defensive support.

EUR/USD surged to 45-month highs above 1.1750 before a limited correction.

Another important market theme has been increased speculation that President Trump will announce a successor to Fed Chair Powell during the Summer.

Trump has again criticised Powell strongly for his stance on interest rates and any nomination of a replacement would tend to push rate expectations lower.


Markets also fear that Fed independence will be compromised with a potentially serious negative impact on the dollar.

There was mixed rhetoric from Fed speakers during the week. Waller and Bowman, both appointed by Trump, were notably dovish and called for a rate cut in July while other members, including Powell, considered that further patience was needed.

US yields declined during the week while markets now see at least a 20% chance of a July rate cut while the chances of a September move are now seen at above 90%.

ING sees scope for limited EUR/USD gains; “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.”

Nordea sees an important shift in sentiment; “We think the drop we have seen both in USD and in long end US bonds lately is the start of investors losing confidence in the US. Changing allocations away from a high performing asset could take time, but we see this process accelerating.”

It added; “The dollar is going to weaken faster.”


Wells Fargo expects slight dollar losses over the second half of 2025 amid weaker growth and Fed rate cuts.

The bank, however, is not buying into the structural dollar weakness argument.

It added; “to be crystal clear, our dollar depreciation view is not tantamount to the dollar losing global reserve currency status or permanently losing its safe haven status.”

Wells Fargo also expects dollar gains next year; “The same growth and interest rate differentials that should contribute to near-term dollar depreciation should flip next year, and the U.S. economy will likely outperform in 2026 on the back of tax cuts and a transition to the post-tariff world.

It also expects the Federal Reserve will call a halt to interest rate cuts and added; “In that sense, we forecast dollar strength against many of the world's advanced and emerging market currencies, with only select exceptions.”

Rabobank considers the potential limit to Euro gains; “CFTC speculators’ data are beginning to hint that positioning may be becoming stretched. Thus, while we have brought forward our EUR/USD1.20 forecast from an 18-month view to 12 months, we do not expect the move to be a straight line. We continue to see scope for pullbacks in favour of the USD on a 3-month view."

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TAGS: Euro Dollar Forecasts