EUR/USD likely to find a peak near 1.25: UBS
Investing.com - Bank of America expects the euro to strengthen against several major currencies through the remainder of 2025, citing a "lower bar for upside Europe/Germany surprises" following recent economic developments.
The bank maintains a constructive outlook on the euro versus the Japanese yen, U.S. dollar, and Swiss franc, while taking a neutral to bearish stance against other G10 currencies. BofA analysts highlighted that while they remain bearish on the U.S. dollar broadly, their euro forecast reflects caution on certain euro crosses, including EUR/GBP and EUR/AUD.
BofA notes the European Central Bank’s flexibility to implement stimulus measures when necessary, contrasting this with the Federal Reserve’s more challenging "stag-flationary trade-offs." This monetary policy divergence forms part of the bank’s rationale for euro strength against select currencies.
The recent U.S.-EU trade agreement has lowered expectations for European economic performance, according to the bank’s August 8 and August 11 sentiment surveys. BofA indicates that investors continue to assign "meaningful implementation risks to German fiscal and European defence spending" following the deal.
The bank also points out that fiscal expectations in Europe stand in contrast to market concerns regarding fiscal situations in the United States, Japan, and the United Kingdom (TADAWUL:4280), potentially creating additional support for the euro in coming months.
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