April 24, 2025 – Written by David Woodsmith
STORY LINK Euro to Dollar Forecast: Crucial EURUSD Support Near 1.13
After finding support above 1.1300, the Euro to Dollar exchange rate (EUR/USD) posted strong gains to just below 1.14 on Thursday before settling just above 1.1350 as the dollar’s recovery from 3-year lows ran out of steam and better than expected data helped protect the Euro.
Scotiabank commented on the short-term outlook; “EURUSD remains in an uptrend, with a clear sequence of higher lows and higher highs. Recent support has been observed in the 1.1280 area and near-term resistance appears limited ahead of 1.15.”
According to ING; “The 1.130 area is key: in the past couple of weeks, attempted EUR/USD corrections faced heavy buying interest around that level. A decisive break below 1.130 can open the door for a bigger leg lower.”
Goldman Sachs chief economist Jan Hatzius noted the perils of forecasting; “I often dodge questions about the dollar. A large body of academic literature and my own experience as an economic forecaster have taught me that predicting exchange rates is even harder than predicting growth, inflation and interest rates.”
He does, however, have strong views; “But with all due humility, I believe that the recent dollar depreciation of 5% on a broad trade-weighted basis has considerably further to go.”
Hatzius pointed to two historical periods with similar dollar valuations to the present day – the mid-1980s and early 2000s – and these set the stage for a 25-30% depreciation.
Markets are continuing to monitor trade related headlines very closely, but there have been no major developments surrounding tariff talks on Thursday.
MUFG commented; “While further steps to water down/reverse tariffs would be positive developments, we are not convinced that recent developments are sufficient yet to support a more sustained rebound for the US dollar at the current juncture.”
Scotiabank added; “Grounds for optimism on trade should remain in check, I think which will serve to keep the USD on the defensive.”
There was further relatively dovish rhetoric from Fed Governor Waller who stated that he expects tariff-related price increases would be a on-off event and that we would be willing to look through price increases.
Waller also stated that the focus on data brings the risk of being too late on policy action.
The German IFO business confidence index edged higher to 86.9 for April from 86.7 previously and significantly above consensus forecasts of 85.1.
There was a net improvement in the current conditions index with only a small retreat in the expectations component.
According to the IFO; “Uncertainty among the companies has increased. The German economy is preparing for turbulence.”
ING commented; “All in all, today’s Ifo index comes as a positive surprise.”
The bank, however, put this into perspective; “Still, we caution against too premature optimism. There are currently more unknowns than knowns for the German economy, and we continue to expect another year of stagnation – which would mark the first time ever for Germany to go through three consecutive years without growth.”
ECB rhetoric remains relatively dovish with the potential for further rate cuts while there were also reports from within the central bank that is considering changing strategy to enable more nimble moves.
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TAGS: Euro Dollar Forecasts
