The Euro to Dollar (EUR/USD) exchange rate has traded in a tight range for most of 2025, consolidating near 1.17 after strong gains earlier this year. Analysts remain divided on whether the euro can extend higher into 2026 or drift lower as US monetary policy shifts.
Accordingly, this report reviews the latest EUR/USD forecasts, central bank updates, and market drivers shaping the outlook.
EUR/USD in 2025: Current Market Context
- As of late August 2025, the euro is up nearly 14% year-to-date.
- The pair has held between 1.14 and 1.18 since March, with resistance near 1.1790.
- Recent gains followed expectations of Federal Reserve rate cuts and signs of stabilisation in the eurozone economy.
The divergence between the European Central Bank (ECB) and the Federal Reserve remains the key driver. The ECB has already lowered rates to 2.0%, while markets now price in Fed cuts later this year.
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Bank Forecasts: A Divided Outlook
Major banks and institutions hold very different views on EUR/USD into year-end and 2026:
- ING expects EUR/USD at 1.20 by end-2025, rising to 1.22 in 2026.
- Scotiabank projects a range near 1.16–1.22, with upside momentum into next year.
- Wells Fargo sees a retreat toward 1.12 in 2026, citing dollar recovery potential.
- Goldman Sachs suggests EUR/USD could approach 1.25 within 12 months.
- BNP Paribas expects the pair to consolidate closer to 1.15 by December.
- Credit Agricole remains bearish, forecasting 1.10–1.12 by late 2025.
This wide spread reflects uncertainty over central bank actions and political developments in both regions.
Central Bank Policy: ECB and Fed in Focus
European Central Bank (ECB)
- Eight rate cuts since late 2024 brought the deposit rate down to 2.0%.
- Inflation has fallen to 2%, with further easing now seen as limited.
- Analysts believe the ECB will pause for the rest of 2025 unless growth falters again.
US Federal Reserve
- Rates remain at 4.25–4.50% after a long pause.
- Markets expect one or two cuts in Q4 2025, possibly September and December.
- Chair Powell has highlighted labour market risks but insists decisions remain data-dependent (Federal Reserve Press Releases).
Key Market Drivers
Several forces will guide the euro to dollar outlook in the months ahead:
- Interest Rate Differentials
- A narrowing gap between Fed and ECB rates tends to support the euro.
- Inflation and Growth Data
- Softer US inflation could bring earlier Fed cuts, weighing on the dollar (IMF World Economic Outlook).
- Eurozone GDP is forecast around 1.2% this year, aided by lower energy costs (S&P Global).
- Political Developments
- President Trump’s fiscal policies and tariffs create uncertainty for the dollar (Reuters).
- German coalition talks continue, with potential reforms seen as euro-positive.
- Geopolitical Risks
- Ukraine remains a key factor, though reduced energy shocks have eased pressure on the euro.
- Technical Factors
- Resistance lies near 1.1790–1.1870.
- Support holds at 1.1500–1.1440.
- A weekly close above 1.20 could signal further upside.
Euro to Dollar Forecast: End-2025 Scenarios
Based on current projections, three broad scenarios are in focus:
- Bullish Case: EUR/USD climbs toward 1.20–1.22, supported by Fed easing and eurozone stability (ING, UBS, Scotiabank).
- Neutral Case: Pair consolidates around 1.15–1.17, with alternating shifts in data and sentiment (BNP Paribas, Commerzbank).
- Bearish Case: A pullback toward 1.10–1.12 if US growth holds firm and Fed cuts are delayed (Wells Fargo, Credit Agricole).
Consensus now points to 1.15–1.18 by December 2025, with scope for higher levels into 2026.
Long-Term View: Beyond 2025
Forecasts for 2026 and beyond suggest gradual euro appreciation:
- UBS: EUR/USD at 1.23 by June 2026.
- SocGen: Around 1.20 by end-2026.
- AI Models: Wallet Investor sees a narrow 1.16–1.18 range in late 2025; Long Forecast is more aggressive, targeting 1.35 by December 2025.
These projections highlight the uncertainty of long-range forecasting, especially with shifting political and policy conditions.
What This Means for International Transfers
For businesses and individuals moving funds between Europe and the US, EUR/USD remains highly sensitive to central bank moves. Accordingly:
- A stronger euro offers opportunities for those selling dollars into euros.
- A firmer dollar could benefit those repatriating funds from the eurozone.
Exchange rate volatility can directly impact costs. Accordingly, comparing providers and planning transfers in advance helps secure better value.
Will the Euro Go Up?
Talk to our currency experts for a free, personalized quote today.
Cambridge Currencies – The Finance Expert View
At Cambridge Currencies, we see EUR/USD holding between 1.15 and 1.18 into year-end, with upside risk if the Fed cuts more aggressively than expected. While parity is not seen as a base case, sharp shifts in US politics or eurozone growth could quickly alter direction.
FAQs – Euro to Dollar Forecast 2025
Will the euro strengthen against the dollar in 2025?
Most analysts expect EUR/USD to trade between 1.15 and 1.18 by year-end. Upside is possible if the Fed cuts rates more aggressively.
Could the euro reach parity with the dollar again?
Parity in 2025 is seen as a low-probability outcome. Analysts note it would require a major economic or political shock.
What is the euro forecast for 2026?
Forecasts suggest EUR/USD could move toward 1.20–1.23 by late 2026, though views differ.
Why is EUR/USD so volatile?
The pair reacts to central bank policy, inflation data, political developments, and global risk appetite. Even small shifts can drive large moves.
Is now a good time to exchange euros for dollars?
That depends on your transfer needs. If the euro continues higher, exchanging later may be favourable. If the dollar recovers, acting sooner may reduce costs. Always compare rates before transferring.