May 26, 2025 – Written by Tim Boyer

STORY LINK Euro to Dollar Forecast for Week Ahead: EUR Pares Gains on USD Rebound

Morgan Stanley expects on-going dollar vulnerability with EUR/USD strengthening to 1.20 at the end of next year and 1.27 by the end of 2026.

BNP Paribas has downgraded its dollar outlook and forecasts that Euro to Dollar exchange rate (EUR/USD) gains to 1.18 by the end of 2025.

Credit Agricole notes the risks, but expects EUR/USD gains will be held to 1.14 with a 1.10 level by the end of next year.

Overall dollar confidence has dipped again with fears over budget trends, trade uncertainty and a rotation of assets away from US markets.

There was fresh market turbulence on Friday following President Trump’s threat to impose 50% tariffs on EU exports to the US from June 1st.

This would be much higher than the baseline tariff of 10% and substantially above the 20% tariff threatened in April.

ING noted that the threat could well be a blatant negotiating tactic to secure concessions from the EU.

ING did, however, warn over the potential impact; “Volatility is back. And just to be sure, if fully implemented, 50% US tariffs on European products would shave off some 0.6ppt of GDP growth and bring the eurozone economy close to recession territory. Needless to say, it would also increase stagflationary pressures in the US again.”

Bank of America commented; “we see US tariffs as bad for Europe, but worse for the US.”

Tellingly, although there would be notable costs to the Euro-Zone economy, the Euro recovered from lows and EUR/USD posted fresh gains to around 1.1365 while the dollar index dipped sharply to 3-week lows.

MUFG outlined another strand of dollar vulnerability; “At the same time, USD weakness has been driven by building speculation that the Trump administration is putting pressure on other countries to allow their currencies to strengthen against the USD as part of deals to prevent higher “reciprocal tariffs” from being implemented after 9th July deadline.”

According to Credit Agricole; “the USD could thus remain vulnerable if we see more evidence of persistent selling pressure in the US equity and FI markets.”

It added; “That being said, many negatives seem to be already in its price and potential indications today that the US PMIs have consolidated could help the USD stabilise. We also think that the US will not abandon its strong USD policy.”

The downgrading of the US credit rating from AAA undermined confidence early in the week and there were also underlying budget fears as the House of Representatives passed the budget Bill.

MUFG commented; “The loss of confidence in the USD and US policymaking reflects increased concerns over the fiscal outlook in the US.”

It added; “While the downgrade should have limited impact in forcing investors to adjust exposure to US Treasuries, it provides another timely reminder of the deteriorating US fiscal outlook which remains a structural headwind for the USD.”

According to Deutsche Bank; “At the core of our views in coming months is that the market is becoming increasingly driven by external asset positions, and this is putting combined downward pressure on US bond markets and the USD.”

Deutsche expects risk assets will be vulnerable; “The 2023-24 period saw a combined rise in US yields and equities as the market was revising US growth expectations higher. Today is very different. It is all a building fiscal risk premium into US assets. It is hard to make the case that such a (negative) driver of the rising cost of capital is positive for risk assets.

A key element, therefore, will be whether the dollar can secure defensive inflows.

According to Morgan Stanley this is doubtful; “The combination of elevated policy uncertainty, increased trade restrictions, and an immigration policy-driven decline in labor force growth leads to an underperformance of USD.”

The Euro-Zone recorded a huge current account surplus for the first quarter of 2025, illustrating structural strength.

BNP Paribas sees scope for capital inflows to the Euro area; “Our analysis suggests that eurozone investors are both overweight and underhedged the USD. As a result, we expect the EUR to be a key beneficiary of a potential switch out of US assets.”

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TAGS: Currency Predictions Euro Dollar Forecasts

• The Turkish Lira (TRY) against the US Dollar (USD/TRY) has experienced a sharp decline in recent trading, closing at 0.0256 after starting the week at 0.0371. This reflects a significant loss in the Lira’s value, with a change of -30.97%.
• technically, the daily trading ranged between a low of 0.0255 and a high of 0.0391.
• These substantial movements indicate a state of extreme volatility and instability in the Turkish foreign exchange market, necessitating a precise technical reading of what might unfold this week.

TRYUSD technical Analysis and Expectations Today:

The pair has undergone a powerful downtrend recently, marked by sharp red candlesticks and clear breaches of previous support levels, confirming a decidedly negative short-term trend. Furthermore, the rapid drop from 0.0391 to 0.0256 indicates a complete loss of positive momentum and increasing selling pressure on the Turkish Lira.

The price is currently trading below all major moving averages, reinforcing the bearish outlook for the pair. Momentum indicators (like the RSI) also show entry into oversold regions, opening the door for a potential temporary technical rebound towards nearby resistance levels. However, continued trading below 0.0300 maintains the negative outlook, with the possibility of testing new support levels unless monetary authorities intervene, or signs of imminent economic stability emerge.

Suggested Entry Points:

Bullish Entry Points:

• Entry: From 0.0255 – 0.0260 (if reversal signals appear)
• First Target: 0.0290
• Second Target: 0.0320
• Stop Loss: 0.0245

Bearish Entry Points:

• Entry: From 0.0300 – 0.0310 (if the price fails to break and hold above them)
• First Target: 0.0270
• Second Target: 0.0250
• Stop Loss: 0.0325

USD/TRY Trading Signals:

Given the sharp declines and the Lira’s loss of value, it’s advised not to risk large positions without clear confirmations, especially in the absence of internal economic stability. Speculators can capitalize on the current volatility with a short-term trading approach between support and resistance levels, while strictly adhering to capital management and stop-loss discipline.

TRYUSD Price Weekly Expectations:

Negative pressure on the Turkish Lira is likely to persist this week, unless there’s intervention from the Turkish Central Bank or the release of positive economic data supporting the currency. Moreover, the expected trading range will be between the 0.0245 support level and the nearby 0.0300 resistance. A break of current support could open the way to lower levels; while breaching resistance and holding above it might change the short-term direction and prepare the pair for a rebound towards 0.0340.

Tips for USD/TRY Traders:

Given the high volatility of the USD/TRY pair, traders should exercise caution and avoid emotional decisions. It’s crucial to follow economic and political developments in Turkey, especially those related to interest rate and inflation policies. Decisively, relying on a short-term trading strategy supported by strong technical signals and strict risk management is highly recommended.

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