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EUR: Analyst Views on Most Recent EURUSD Developments

EUR
USCEEMEABulletMarketsForeign Exchange BulletsNorth America
  • *JP Morgan: Near-term bearish forecast is consistent with JPM’s roadmap for the US elections in a ‘Red sweep’ and now accounts for the potential for tariffs as well as the new ECB / Fed calls – a cut to below neutral to 1.75% for the ECB. JPM preliminary EUR/USD target was 1.00-1.02, and now look for parity break (1Q 0.99 with downside risk). They have a low-confidence recovery to 1.08 pencilled in 2H25 on moderating US resilience and mitigating factors.
  • *Deutsche (Pre- PMIs): The dollar is only pricing a 3% safe-haven premium on their models compared to a 10% maximum during the first trade war. The bottom line is the market is still not pricing a lot of Trump. DB remain bullish on the dollar and would view EUR/USD levels of 1.00 as the intensity of the Trump policy mix gains traction, with potential for even greater downside depending on what happens next year. Market pricing of the ECB should be at 1.5% as a minimum.
  • *CIBC: The sharp EUR weakness following the miss in PMI data is a clear break of the strong support level of 1.0450 which the market has respected since the start of 2023. Note in addition to the PMI miss, and speculation on the ECB delivering an outsized cut, Russia/Ukraine tensions may also dissuade the market from the Euro near term.
  • *Rabobank: While the market has been pricing in the possibility of less rate cuts from the Fed, a discussion has been blazing as to whether the ECB needs to step up the pace of easing. This morning’s dismal set of PMI data for Germany and France has added fuel to this debate and EUR/USD has taken a step closer to parity. While Rabo see scope for recoveries towards 1.05 in the coming weeks, they have adjusted their forecasts lower and see a move to parity around the middle of next year to coincide with the potential implementation of fresh US trade tariffs.
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  • *JP Morgan: Near-term bearish forecast is consistent with JPM’s roadmap for the US elections in a ‘Red sweep’ and now accounts for the potential for tariffs as well as the new ECB / Fed calls – a cut to below neutral to 1.75% for the ECB. JPM preliminary EUR/USD target was 1.00-1.02, and now look for parity break (1Q 0.99 with downside risk). They have a low-confidence recovery to 1.08 pencilled in 2H25 on moderating US resilience and mitigating factors.
  • *Deutsche (Pre- PMIs): The dollar is only pricing a 3% safe-haven premium on their models compared to a 10% maximum during the first trade war. The bottom line is the market is still not pricing a lot of Trump. DB remain bullish on the dollar and would view EUR/USD levels of 1.00 as the intensity of the Trump policy mix gains traction, with potential for even greater downside depending on what happens next year. Market pricing of the ECB should be at 1.5% as a minimum.
  • *CIBC: The sharp EUR weakness following the miss in PMI data is a clear break of the strong support level of 1.0450 which the market has respected since the start of 2023. Note in addition to the PMI miss, and speculation on the ECB delivering an outsized cut, Russia/Ukraine tensions may also dissuade the market from the Euro near term.
  • *Rabobank: While the market has been pricing in the possibility of less rate cuts from the Fed, a discussion has been blazing as to whether the ECB needs to step up the pace of easing. This morning’s dismal set of PMI data for Germany and France has added fuel to this debate and EUR/USD has taken a step closer to parity. While Rabo see scope for recoveries towards 1.05 in the coming weeks, they have adjusted their forecasts lower and see a move to parity around the middle of next year to coincide with the potential implementation of fresh US trade tariffs.