Euro to Dollar Forecast: "Four EUR-Centric Factors" Needed for 1.20 Target

July 14, 2025 - Written by Tim Boyer

STORY LINK Euro to Dollar Forecast: "Four EUR-Centric Factors" Needed for 1.20 Target

Currency exchange strategists at SocGen see scope for a near-term Euro to Dollar exchange rate (EUR/USD) correction and will peak around 1.25 amid renewed dollar losses.

After initial stability, however, Credit Agricole expects EUR/USD will retreat to 1.10 at the end of 2026.

During the week, EUR/USD was unable to make headway and settled just below the 1.17 level as the secured net gains.

President Trump threatened to impose 35% tariffs on Canadian exports from August 1st, but the dollar was resilient.

Trade developments will be watched closely with the latest inflation data also potentially important for Federal Reserve interest rate expectations.

Markets are now less confident that the Fed will cut interest rates at the September meeting.

According to ING; “The Fed will likely delay rate cuts until the end of the year, despite escalating pressure from the president, but may move in larger steps when it does cut.”


SocGen still expects vulnerability on trade grounds; “It isn’t easy to build a fundamental theory of FX that has the imposition of import tariffs being good for the currency of the economy on the receiving end of them.”

The bank added; “Given that the dollar remains at a high level in historical terms, and that foreign investors still hold vast quantities of US Dollar assets, an Administration actively talking the currency down has a fair chance of getting its way, in spite of the economy doing better than its peers, and better than expected.”

Treasury Secretary Bessent indicated that Euro gains were likely given the Administration policies.

SocGen’s Juckes commented; “As for Mr Bessent’s EUR/USD view, I hope we continue to pause here for a while but I am confident the pair will head towards 1.20 later this year, suspect the peak will be around 1.25, in line with the 2018 and 2021 peaks, and I doubt we will see 1.30 for the foreseeable future.”

RBC Capital Markets remains bearish on the US currency; “We believe much more dollar weakness lies in store, both this year and over the next several years. The currency in our view will continue depreciating for several years until it finally reaches a point where overvaluation is corrected.”

It added; “A myriad of other long-term structural negatives were overlooked until this year by investors who had focused on shorter-term cyclical positives.”

It forecasts EUR/USD at 1.24 at the end of 2026.


Credit Agricole sees scope for a Euro correction; “The EUR remains the most overbought G10 currency according to our positioning indicator and could remain vulnerable to bouts of profit taking on the back of potential data disappointments or more dovish ECB commentary in the coming weeks.”

The bank also sees scope for the dollar to regain support amid a lack of credible alternatives while , attractive yields and liquidity will keep foreign investors interested in the US currency.

It also considers that a recovering US economy could attract renewed portfolio inflows in 2026 while trade policy-related FDI inflows could also support the USD in 2026.

HSBC sees limits to Euro gains; “for EUR-USD to sustain its rally beyond our 1.20 target, we think it needs four EUR-centric factors to work in its favour. These are an acceleration in private sector credit, positive and rising real wage growth, a recovery in the inventory cycle, and policy intervention by the ECB and EU. For now, these elements may not be sufficiently compelling to push the EUR higher from lofty levels.”

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TAGS: Currency Predictions Euro Dollar Forecasts