Euro to Dollar Forecast: Why Wall Street Is Turning More Positive on the USD

Modified: Monday, 29 June 2026 09:01 BST - Written by Frank Davies

STORY LINK Euro to Dollar Forecast: Why Wall Street Is Turning More Positive on the USD

The Euro to Dollar exchange rate (EUR/USD) remains under pressure as investors continue to favour the US Dollar following a hawkish shift from the Federal Reserve and resilient US economic data.

Although the pair has recovered from 12-month lows near 1.1325, markets remain increasingly convinced that US interest rates could move higher, reinforcing the Dollar's dominance in global currency markets.

EUR/USD Forecasts: Dollar irresistible?

Bank of America (BoA) has adjusted its Euro to Dollar (EUR/USD) exchange rate forecasts and now expects that the pair will trade at 1.15 at the end of this year from 1.20 previously.

UBS has also downgraded its outlook and is now forecasting a retreat to 1.12 at the end of this year.

EUR/USD dipped to 12-month lows near 1.1325 during the week before rallying to 1.1425.

There continues to be speculation that the Federal Reserve will be forced to raise interest rates.

BoA commented; “Meanwhile, US economic data proved highly resilient. Broad labour market measures have continued to improve, amid still uncomfortably high readings of core inflation. Fed communications stemming from the first FOMC meeting under Chair Warsh exceeded even the most hawkish of expectations.”

It added; “ The Fed appears committed to restoring inflation to target, keeping the USD supported via higher real rates.”

UBS commented; “If data ahead of the 29 Jul FOMC are strong, it's not impossible to imagine a hike at that meeting becoming priced in and the market starting to price in three hikes in the cycle.”

It added; “For Q3, we see a grind higher for the USD with already-long positioning the main barrier to a larger move.”

Credit Agricole also sees barriers to strong dollar gains; “We conclude that many Fed-related positives are in the USD price already. The experience from Trump’s first term would also suggest that the US president could resume his calls for easier monetary policy and undermine Fed independence all over again.”

Nordea commented on the medium-term currency outlook; “While we no longer expect the dollar to weaken as much as previously anticipated, we continue to believe that a softer dollar remains the most likely medium-term outcome. Our structural concerns regarding the US fiscal position and the long-term sustainability of current capital inflows.”

It has an end-2027 EUR/USD forecast of 1.21.

Nevertheless it added; “In the near term, however, some factors continue to favour the dollar. The US economy is outperforming most major developed economies, US equity markets continue to attract global capital, and investor sentiment towards US assets has improved markedly.

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TAGS: Euro Dollar Forecasts