Forecasts for USD to EUR
The recent election of Donald Trump as President of the United States has produced a notable impact on the USD to EUR exchange rate, as analysts adjust their forecasts based on evolving market sentiments. Following Trump's victory, the US dollar rallied significantly, buoyed by expectations of inflation boosted by his pro-business policies, including tax cuts and the imposition of tariffs on goods from key trading partners, including Mexico, Canada, and potentially Europe. As the USD strengthens to 0.9519 against the euro—2.8% above its three-month average—FX analysts and financial institutions like JPMorgan and Goldman Sachs foresee further upside potential for the dollar, driven by speculation over sustained high US interest rates despite Trump's stated preference for a weaker dollar. Observers are cautious about the implications of these trade policies, with increasing market volatility expected as uncertainties loom over global currency dynamics.
Conversely, the euro faces significant challenges, with recent forecasts predicting a slide towards parity against the dollar, a stark shift highlighted by institutions such as TD Securities and Pictet. Influenced by fears surrounding the ongoing Russia-Ukraine conflict and the weak economic outlook for the Eurozone, the euro has struggled, with analysts fearing that potential recessionary conditions could exacerbate its decline. Moreover, the economic data emanating from Europe, including Germany's inflation rates, may not offer sufficient support to bolster the euro against the greenback. With EUR trading at levels that lack momentum, the expectation of significant downward pressure is rooted in the US currency's strength alongside caution surrounding oil prices, which have been relatively stable but volatile. As OIL to USD maintains trading near its three-month average, market sentiments echo that the euro's precarious position could see it tested further as political and economic conditions evolve, complicating the currency's valuation against the USD.
