April 12, 2025 – Written by Ben Hughes

STORY LINK Euro to Dollar Forecast: Three-Year Best, EUR/USD at 1.20 Possible

The Euro to Dollar exchange rate (EUR/USD) surged to 3-year highs at 1.1470 on Friday before a corrective retreat to near 1.13.

MUFG is another investment bank to have changed its stance and that, with a risk that dollar confidence is eroded further, 1.20 in EUR/USD is now reachable.

According to MUFG; “There are numerous factors that have created these financial market conditions and until some of these are addressed it is difficult to see a turnaround in current market direction.”

Higher US yields have not helped the dollar.

MUFG added; “If we are possibly entering a crisis of confidence period, then there tends to be a breakdown in the normal financial market variables that drive FX. This is happening to some degree now with short-term rate spread moves not aligned to the scale of dollar sell-off.”

The latest data triggered further stagflation fears in the US economy.

The University of Michigan consumer confidence index declined sharply to 50.8 for April from 57.0 the previous month and below consumer forecasts of 54.0. This was the lowest reading since November 2022.

Both the current conditions and expectations components posted sharp declines on the month.

Surveys of Consumers Director Joanne Hsu commented; “Consumer sentiment fell for the fourth straight month, plunging 11% from March.”

She added; “Consumers report multiple warning signs that raise the risk of recession: expectations for business conditions, personal finances, incomes, inflation, and labor markets all continued to deteriorate this month.”

The 1-year inflation expectations index jumped again to 6.7% from 5.0%. This was the fourth successive jump and the highest reading since 1981.

The combination of recession fears and higher inflation would not be favourable for the dollar.

MUFG considers that bond-market vulnerability is another key element.

According to the bank; “We believe it’s no coincidence that the turmoil has unfolded in the same week that we have had developments in regard to Trump’s proposed tax cut plans.

The House has agreed a budget that extends the 2027 tax cuts. According to the Congressional Budget Office, fiscal measures overall would increase the US debt by at least $5trn over 10 years

According to MUFG; “The US fiscal deficit is simply out of control and there appears little appetite in Congress amongst Republicans to tackle the issue.”

In this context, a US-China trade war poses significant risks to the Treasury market and the dollar.

China holds around $700bn in Treasuries and any selling would risk another jump in yields.

According to MUFG; “it remains unclear to what extent UST bond holdings have been reduced. Still, all it would take in current market conditions would be for China to hint at action to likely trigger another wave of volatility and selling.”

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TAGS: Euro Dollar Forecasts

April 9, 2025 – Written by Tim Boyer

STORY LINK Euro to Pound Forecasts RAISED to 0.86 in Six Months at Rabobank

Foreign exchange analysts at Rabobank have raised their exchange rate forecasts for the Euro versus the Pound Sterling.

Recent US tariff concerns have driven investors towards currencies backed by current account surpluses, benefiting the Euro (EUR).

“The Eurozone’s current account surplus appears to be a source of support for the EUR currently.”

The Euro’s resilience as a temporary safe haven reflects investors’ preference to hold cash amid market uncertainty.

“Investors appear to be sitting on cash in CHF, JPY and EURs while waiting for current fog of uncertainty to clear.”

The Pound Sterling (GBP) remains vulnerable due to the UK’s persistent current account deficit, especially when domestic fundamentals weaken.

“The UK’s current account deficit can leave GBP exposed when UK fundamentals turn sour and international investors look for the exits.”

Germany’s shift towards increased public spending, notably in defence and technology, further boosts the Euro’s attractiveness.

“Investors had already been looking for fresh opportunities in Europe, so sitting on cash in EURs may seem like a reasonable position.”

Consequently, Rabobank has raised its EUR/GBP forecast to 0.85 for the six-month horizon.

“We have adjusted our EUR/GBP forecasts higher and now see the currency pair at 0.85 on a 6 month vs. compared with a previous forecast of 0.83.”

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TAGS: Currency Predictions Euro Pound Forecasts

Created on April 11, 2025

• The Euro rallied rather significantly during the trading session on Thursday, touching the 1.12 level, and even breaking above it at one point during the day.
• That being said, the euro is getting a bit overextended, and it will be interesting to see how much longer this can continue.
• While it is possible that the euro continues to scream higher against the US dollar, and it’s also possible that the trump administration would be perfectly fine with that, the reality is that eventually momentum becomes a problem yet again.

Recessionary Fears

While Germany is exiting a recession, it looks like the United States might be heading toward one. Whether or not it is a long-term recession remains to be seen, but it’s worth noting that the CPI numbers were lower than anticipated during the trading session on Thursday, and of course traders are already starting to perhaps get in the back of their mind that the Federal Reserve may have to come in and start cutting rates. If they actually do that, then it makes a lot of sense that we would see the US dollar weaken.

What’s interesting to me is that this is a market that could turn around just as quickly as it rallied, because quite frankly, if the global economy slows down, Europe is not going to be immune from it. Ironically, yields in America are rallying while the dollar is falling, suggesting that perhaps there is still a major influence on the air due to U.S. Treasury selling. Eventually, if countries wish to do cross-border transactions, they will need those US dollars. It is because of this and the structure of the Euro dollar system that I think the upside will eventually slow down.

That being said, we could go to the 1.15 level, but we could just as easily see some type of shock to the system that sends everybody back down to the 1.10 level. Ultimately, the market is certainly trying to break out, but it still got some work to do see if it has any real follow-through at this point.

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Created on April 11, 2025

• The Euro rallied rather significantly during the trading session on Thursday, touching the 1.12 level, and even breaking above it at one point during the day.
• That being said, the euro is getting a bit overextended, and it will be interesting to see how much longer this can continue.
• While it is possible that the euro continues to scream higher against the US dollar, and it’s also possible that the trump administration would be perfectly fine with that, the reality is that eventually momentum becomes a problem yet again.

Recessionary Fears

While Germany is exiting a recession, it looks like the United States might be heading toward one. Whether or not it is a long-term recession remains to be seen, but it’s worth noting that the CPI numbers were lower than anticipated during the trading session on Thursday, and of course traders are already starting to perhaps get in the back of their mind that the Federal Reserve may have to come in and start cutting rates. If they actually do that, then it makes a lot of sense that we would see the US dollar weaken.

What’s interesting to me is that this is a market that could turn around just as quickly as it rallied, because quite frankly, if the global economy slows down, Europe is not going to be immune from it. Ironically, yields in America are rallying while the dollar is falling, suggesting that perhaps there is still a major influence on the air due to U.S. Treasury selling. Eventually, if countries wish to do cross-border transactions, they will need those US dollars. It is because of this and the structure of the Euro dollar system that I think the upside will eventually slow down.

That being said, we could go to the 1.15 level, but we could just as easily see some type of shock to the system that sends everybody back down to the 1.10 level. Ultimately, the market is certainly trying to break out, but it still got some work to do see if it has any real follow-through at this point.

Ready to trade our daily Forex analysis? We’ve made a list of the best online forex trading platform worth trading with.