Here's a comprehensive forecast for EUR/USD for the year 2025, based on the latest available data:
General Outlook:
The EUR/USD is expected to face significant downward pressure throughout 2025, with many analysts foreseeing a test of parity (1.0000) or even a dip below it in the first half of the year. This bearish sentiment is largely due to the Eurozone's economic challenges, political instability, and a stark contrast in monetary policy between the ECB and the Fed.
Key Factors Influencing the Forecast:
Interest Rate Differentials: Analysts predict that the ECB will cut rates more aggressively than the Fed, leading to a wider spread favoring the USD. The ECB might cut to 1.75% by mid-2025, while the Fed is expected to reduce rates to around 3.75%-4.00% by year-end.
Economic Growth: The Eurozone is expected to grow at a slower pace compared to the U.S., with some forecasts indicating a potential recessionary environment in Europe, further weakening the Euro.
Political and Geopolitical Events: The recent U.S. presidential election results, with Donald Trump's victory, are seen as a catalyst for U.S. dollar strength due to expected protectionist policies and tariff impositions, which could negatively impact European exports.
Inflation and Policy: Inflation in the U.S. is anticipated to remain stickier than in Europe, influencing the Fed to maintain a hawkish stance longer than the ECB, which is more focused on stimulating growth.
Specific Forecasts:
First Quarter (Q1) of 2025: Analysts from JPMorgan suggest EUR/USD could test parity by Q1 due to tariff risks being priced in.
Mid-2025: Several institutions, including ING, predict a range between 1.00 and 1.05, with some like UBS forecasting a recovery to around 1.08 by June.
End of 2025: Forecasts vary, with some like UBS predicting a rise to 1.12 by December, whereas others like Wells Fargo and CoinCodex see the pair staying below or at parity, with potential rebounds later in the year.
Technical Analysis:
The pair has shown signs of being oversold, which might lead to temporary rebounds. However, the broader trend suggests a continued bearish bias unless there's a significant shift in economic fundamentals or policy direction.
Market Sentiment:
Posts on X reflect a general consensus of bearish conditions for EUR/USD throughout the year, with some traders looking for buying opportunities on dips but predominantly preparing for further declines.
This forecast is based on a combination of economic data, policy expectations, and market sentiment as of early 2025. Keep in mind, currency markets are highly volatile, and unforeseen events can significantly alter these predictions.
This is not trading advice.
Trade at your own risk.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.