EUR/USD prediction: Analysts’ outlook

Analysts remained divided in 2025 on the near-term EUR forecast, with monetary policy divergence and growth differentials driving sentiment.

Wells Fargo expected the Fed to begin easing in September with 75 bps of total cuts by year-end, citing a likely slowdown in growth and labour market cooling. By contrast, the ECB has already cut 200 bps since late 2024 and may be nearing the end of its cycle. ‘We see just one final 25 bps ECB rate cut, to 1.75%, in September,’ the bank noted.

Trading Economics saw signs of stabilisation in the eurozone, with inflation expectations falling and 2025 GDP forecast at 0.9%. The June PMI rose to 40.5 – the slowest decline in nearly three years – and business confidence hit a three-year high.

In the US, the Fed held rates steady at 4.25%-4.50% for a fourth meeting in June. Growth is now seen at 1.4% for 2025, with PCE inflation forecast at 3.0%. Trading Economics noted a cautious stance as policymakers assess the economic impact of President Trump’s policies on tariffs, immigration, and taxation.

Meanwhile, S&P Global’s US Manufacturing PMI held at 52 in June, signalling modest growth, though some analysts warned the recent strength may be short-lived. “Such a boost is likely to unwind in the coming months,” said S&P Global’s Chris Williamson.

Capital.com analyst input: Daniela Hathorn

On 1 July, Capital.com analyst Daniela Hathorn said the euro is expected to stay ‘moderately bullish’ in the second half of 2025, supported by signs of eurozone resilience. With ECB rates at 2% as of June, she noted that the bank can now take ‘a more conservative approach going forward’. This front-loaded stance, she said, had been ‘widely celebrated by euro traders’, giving the currency an extra boost.

At the same time, she highlighted that the US dollar had come under ‘significant downside pressure’ due to President Trump’s trade policies, helping lift EUR/USD above 1.17 – its highest level since September 2021.

‘A recovery in European industrial output or improved risk sentiment from continued easing geopolitical tensions could bolster the pair above the 1.18 level,’ Hathorn added. But she warned of lingering risks tied to US trade talks and ‘fragile peace dynamics in the Middle East and Eastern Europe’.

Is the US dollar losing its crown?

Forecasts remain subject to change and should not be used as a substitute for your own market research. Always consider your risk tolerance and trading strategy before trading or investing.