Euro to US Dollar Forecast: EUR Drifts Into "Bearish Territory"

May 15, 2025 - Written by David Woodsmith

STORY LINK Euro to US Dollar Forecast: EUR Drifts Into "Bearish Territory"

The Euro to Dollar exchange rate (EUR/USD) has fluctuated around 1.1200 on Thursday and settled close to this level after the raft of US data.

Scotiabank notes that overall volatility has eased and added; “Near-term support is expected below 1.1100 and recent resistance has been observed above 1.1250.”

According to ING; “We see EUR/USD trading in a 1.11-1.15 range over the coming weeks and months, although risks are skewed to the upside. 1.1265 is now decent intra-day resistance.”

US retail sales increased 0.1% for April, in line with consensus forecasts and followed an upwardly-revised 1.7% gain the previous month. Underlying sales also increased 0.1% on the month, but the control group recorded a 0.2% monthly decline compared with expectations of a 0.3% gain.

Producer prices declined 0.5% for the month compared with expectations of a 0.2% gain while core prices declined 0.4%.

There was no significant shift in interest rate expectations following the data.

As far as business confidence is concerned, the New York manufacturing index edged lower to -9.2 for May from -8.1 previously.


Companies were marginally more positive on the outlook with mixed inflation pressures.

The Philadelphia Fed index improved to -4 for May from -26.4 in April while there was stronger upward pressure on prices. Companies were notably more optimistic over the outlook with on-going inflation pressures.

The dollar’s fundamental outlook remained a key market focus. US bond yields edged lower as markets considered the longer-term fiscal outlook.

According to ING; “The topic involves a lot of speculation about what might happen, but the evidence is also starting to support the diversification thesis.”

There was evidence of strong buying of Japanese bonds and equities for the month.

ING added; “instead of April being a month of deleveraging and global asset managers merely downscaling and repatriating, April proved a month of diversification into Japanese assets by foreign accounts. That looks like a big tick in the box of the diversification element of de-dollarisation.”

The US Treasury has denied that it is looking to weaken the dollar, but Commerzbank is not convinced and considers that there are slightly more subtle ways of achieving the objective.


It noted; “it can also be achieved with a sufficient number of bilateral agreements. One with South Korea, one with Japan, and so on. Now, it is by no means plausible that these countries want to revalue their own currencies against the dollar. But it is easier – at least from the perspective of the US president and his 'neorealist' advisors – to force them to do so one by one."

Danske Bank added; “a negative risk premium remains embedded in the USD, which continues to trade meaningfully away from fundamentals and pre-Liberation Day levels, reflecting eroding confidence in the greenback."

It added; “Longer term, structural challenges like US and euro area political shifts, trade uncertainty, and capital rotation out of US assets suggest considerable USD downside.”

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TAGS: Currency Predictions Euro Dollar Forecasts