Euro to Dollar Forecast 2025: These Banks See 1.20 by 2026

Modified: Tuesday, 23 September 2025 23:30 BST - Written by David Woodsmith

STORY LINK Euro to Dollar Forecast 2025: These Banks See 1.20 by 2026

The Euro to Dollar exchange rate edged above 1.18 but struggled to build momentum as markets weighed mixed central bank signals and uneven Eurozone data.

While ING and HSBC both forecast EUR/USD at 1.20 by year-end, concerns linger that much of the dollar’s downside is already priced in.

MUFG expects risk appetite to limit dollar strength, though warns the pair may remain rangebound until clearer direction emerges.

EUR/USD Forecasts: Euro Edges Above 1.18

Investment banks generally see scope for medium-term dollar losses against the euro. ING and HSBC, for example, both have year-end forecasts if 1.20, but there are also concerns that many negative dollar elements are already priced in.

According to UoB; “There appears to be enough momentum for EUR to rebound further, but a break above the major resistance at 1.1855 looks unlikely for now.”

Equity markets posted gains and MUFG expects firm risk conditions will curb dollar support. It added; “If global sentiment is improving that will make it difficult for the dollar to sustain this rebound from here.”

MUFG still expects that the pair will struggle to make much headway; “EUR/USD clearly rejected the upside levels visited after the FOMC last week and that could well curtail EUR buying appetite ensuring relatively narrow trading ranges until there is clear direction from the US or some disruption to the low-vol positive risk trading environment.”

ING commented; “The risks remain skewed to the downside for the dollar this week, in our view, but today could see some consolidation.”

It added; “While the momentum for the dollar should continue to be mostly on the soft side in the coming days, the euro may take some time to make its way to the 1.190 mark as it is lacking a very strong domestic narrative.”

Markets will continue to monitor comments from Federal Reserve speakers.

New Governor Miran again called for aggressive rate cuts in a speech on Monday.

According to Miran; “Leaving short-term interest rates roughly two percentage points too tight risks unnecessary layoffs and higher unemployment.”

He called for rates to be cut to 2.75-3.00% by the end of this year.

ING noted; “He is clearly an outlier (as suggested by the Dot Plot distribution, too), and we doubt his words were the trigger of dollar weakening.”

Other members were more hawkish and did not back further short-term rate cuts.

The bank added; “it's worth keeping a close eye on speeches by Austan Goolsbee and Michelle Bowman, who are both on the dovish side of the spectrum.”

The French PMI business confidence data was notably weaker than expected, but this was offset by a strong reading for the German services sector.

Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank still had reservations over the outlook; “The overall economy is growing at its fastest clip in 16 months. But do not get too comfortable. Orders are under pressure, especially in manufacturing but also in services, signalling another slowdown could be on the horizon.”

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TAGS: Euro Dollar Forecasts