The Euro to Dollar (EUR/USD) exchange rate has stabilised near 1.1410 after suffering a sharp sell-off during June as stronger US economic data and geopolitical tensions boosted demand for the Dollar.

Berenberg believes the Euro may continue to struggle in the short term, but expects a more supportive backdrop to emerge as economic growth on both sides of the Atlantic begins to converge.

The bank argues that the single currency “lost twice” against the Dollar this year. Not only did the Iran conflict and higher energy prices weaken the Eurozone economy, but the US economy simultaneously received a boost from the AI investment boom and stronger-than-expected economic data.

According to Berenberg, this combination of weaker European growth and stronger US momentum created a powerful tailwind for the Dollar.

Earlier in the year, the Euro had benefited from improving Eurozone data and strong international investment flows into European equity and bond markets, briefly pushing EUR/USD above 1.20 for the first time since 2021.

However, Berenberg believes the medium-term outlook is more balanced. The bank expects growth differentials between the US and Eurozone to narrow as the boost from Germany’s fiscal stimulus gathers pace.

While the bank cautions that “the currency is likely to continue to struggle in the short term”, it believes improving Eurozone growth prospects should provide support for EUR/USD over the medium term as the current divergence in economic momentum begins to fade.

– Written by


Frank Davies

STORY LINK GBP/USD Forecast: Burnham’s Fiscal Pledge, Peace Talks Lift GBP

The Pound US Dollar (GBP/USD) exchange rate advanced on Monday as easing tensions between the US and Iran lifted appetite for risk.

At the time of writing, GBP/USD was trading at around $1.3241, up roughly 0.3% on the day.

The US Dollar (USD) slipped on Monday as improving market sentiment weighed on demand for the safe-haven currency.

Risk appetite strengthened after tensions in the Middle East appeared to ease, with the US and Iran agreeing to pause further attacks following a weekend of retaliatory strikes.

The two countries are due to meet in Doha on Tuesday for further peace talks, helping to reassure markets that the recent escalation may not derail diplomatic efforts.

With investors adopting a more upbeat stance, demand for the safe-haven ‘Greenback’ faded, leaving USD on the back foot at the start of the week.

Meanwhile, the increasingly risk-sensitive Pound (GBP) found support from the brighter market mood, while Sterling also drew strength from a speech by Andy Burnham – who is widely expected to replace outgoing Prime Minister Keir Starmer.

In the address, Burnham set out plans to deliver more balanced regional growth across the UK economy. Importantly for GBP investors, he also reaffirmed his commitment to fiscal discipline, while outlining aims to reindustrialise parts of the country and bring down welfare spending.

Markets welcomed Burnham’s comments, with UK gilt yields edging lower in response. However, as the speech focused more on broad ambitions than concrete policy proposals, the Pound’s upside remained somewhat limited.

Near-Term GBP/USD Forecast: Strong UK GDP to Support the Pound?

Looking ahead, the UK’s finalised first-quarter GDP figures could act as a key driver for the Pound on Tuesday.

If the data confirms that growth accelerated at the beginning of the year, Sterling may find some modest support. However, the release may not trigger much movement if it comes in line with previous estimates.

A revision could spark a sharper reaction. An upward adjustment may strengthen GBP, while a downgrade could drag on the UK currency.

For the US Dollar, Tuesday afternoon brings the latest JOLTS job openings data. Evidence of resilient hiring demand in May could help underpin USD exchange rates.

The latest US consumer confidence index may also influence the ‘Greenback’, with economists expecting household morale to have improved in June.

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The US dollar is slightly positive against the Japanese yen. We continue to see the 162-yen level being an area of difficulty, but once we break above there, we will be free to continue to grind higher. The Bank of Japan did intervene at the end of April, and they have said a few things here and there, but quite frankly, when the market has made up its mind, most of the time, the best a central bank can hope for is slowing down the move, and I think that’s what you kind of have here.

The continuation of the contradiction between the main indicators led to delay the negative attempts of platinum, to form some bullish corrective waves by reaching $1625.00, by the above image, we notice the stability of the trading within minor bearish channel levels, to confirm the stability of the bearish scenario by its stability below the initial resistance at $1745.00.

And that makes us wait for gathering extra negative momentum, which allows it renew the negative attempts that might target $1555.00 and $1510.00, while breaching the resistance and holding above it will provide extra chances for recovering more losses by its rally $1775.00 reaching the next barrier near $1855.00.

The expected trading range for today is between $1515.00 and $1680.00

Trend forecast: Bearish

The EURJPY pair formed some bearish trading, however it didn’t settle for longtime by its stability above 183.40, forming several bullish waves by targeting 184.85 barrier, to settle near 184.20.

In spite of the stability of the price below 184.85 barrier, however the contradiction of the main indicators might force it to provide unstable mixed trading, to keep waiting for gathering extra negative momentum, which allows it to renew the pressure on the mentioned barrier, where breaking it will extend the trading towards the negative stations near 182.90 and 182.20.

The expected trading range for today is between 183.40 and 184.60

Trend forecast: Fluctuating within the bearish trend

The Euro to Dollar (EUR/USD) exchange rate has edged back above 1.14 after rebounding from multi-month lows earlier this week, helped by a softer US Dollar.

Scotiabank believes the Euro is showing signs of stabilising, despite markets trimming expectations for further European Central Bank interest-rate increases.

The bank notes that falling oil prices have reduced inflation concerns across the Eurozone, while the ECB’s one-year inflation expectations measure eased to 3.5% in May from 4.0% previously.

Although this has prompted investors to scale back rate hike expectations, Scotiabank believes the Euro has remained relatively resilient.

From a technical perspective, the bank says the recovery from this week’s low near 1.1325 is encouraging, with EUR/USD already reaching its first upside retracement objective.

Scotiabank believes intraday momentum remains supportive and sees scope for the pair to extend gains towards the 1.1440-1.1450 area in the near term.

While the broader trend remains uncertain, the bank considers the short-term outlook to be neutral-to-bullish as EUR/USD attempts to build on its latest recovery.