Euro to Dollar Forecast: EUR/USD at 1.50 Over Next 5 Years

Modified: Monday, 4 August 2025 10:15 BST - Written by David Woodsmith

STORY LINK Euro to Dollar Forecast: EUR/USD at 1.50 Over Next 5 Years

Foreign exchange analysts at Berenberg see scope for the Euro to Dollar exchange rate (EUR/USD) to gain to 1.50 over the next five years, amid US fundamental vulnerabilities.

HSBC expects solid EUR/USD support on any short-term dips and has an end-2025 forecast of 1.20 but expects a limited retreat in 2026.

Berenberg expects structural factors, including the vast and sustained budget deficits, will undermine the US currency; “We expect the US dollar to continue to weaken in the medium term, similar to the period from 2003 to 2008, thereby normalising the overvaluation of the US dollar and US dollar-denominated assets in the coming years.”

It added, “However, the dollar is unlikely to stabilise near purchasing power parity after the correction of its overvaluation. It is much more likely that this trend will continue until the US dollar is significantly undervalued.”

The dollar posted strong gains after the Federal Reserve policy meeting. Although the decision to hold rates at 4.50% was in line with forecasts, there was more hawkish rhetoric than expected from Fed Chair Powell.

In particular, Powell refused to signal any rate cut at the September meeting.

EUR/USD dipped to lows just below 1.14 before a fresh reversal following the latest US jobs data.


Non-Farm payrolls growth was held to 73,000 for July compared with expectations of around 105,000 and there were huge downward revisions of 258,000 for May and June which triggered a notable assessment of labour-market conditions.

According to ING; “This puts a completely different light on what has been happening in the US economy post the 2 April 'Liberation Day' announcements.”

It added; “we’re still pretty comfortable with a year-end forecast for 1.18 and will probably be looking out for the deterioration in US labour market data to swing EUR/USD back the other way over coming months.”

There was a surge in expectations surrounding a September rate cut to near 80% and the dollar posted sharp losses.

Following the data, markets were also less comfortable surrounding the latest Trump tariff announcements. Many of the deals agreed are only political agreements and the overall tariff rate is likely to be near 20% which will have important implications for the economy.

Rabobank forecasts EUR/USD at 1.20 by spring 2026 as the Fed starts to cut interest rates more aggressively.

HSBC continues to see dollar vulnerability; “Cyclical headwinds may return when the Fed resumes its rate-cutting cycle. Questions still remain over US trade policy, the path for the US budget deficit, and the political pressure on the Fed. The USD still faces headwinds from political and, to a lesser extent, structural drivers. All this points to a soft USD in the months ahead.”


It added; Still, recent USD price action is a challenge to those who argue for persistent currency weakness that would extend into 2026 – a narrative we do not agree.”

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TAGS: Euro Dollar Forecasts