Euro to Dollar: "Multi-month Trend Remains Bullish" say Forecasters

May 31, 2025 - Written by Tim Boyer

STORY LINK Euro to Dollar: "Multi-month Trend Remains Bullish" say Forecasters

The Euro to Dollar exchange rate (EUR/USD) was unable to test the 1.1400 area in Asian trading on Friday and retreated to trade just below 1.1350 after the New York open but continued to find solid support on dips.

Month-end position adjustments could lead to choppy trading late in the European session.

According to Scotiabank; “the multi-month trend remains bullish, given the sequence of higher highs and higher lows.”

It added; “Momentum is modestly bullish, and the short-term range is roughly bound between support below 1.1250 and resistance above 1.14.”

It notes longer-term resistance towards 1.16.

Markets are continuing to monitor trade developments with reservations over the US economy adding to fears over an underlying “sell dollar” narrative.

Overnight, a federal appeals court granted a temporary stay “until further notice” on the ruling the previous day which ensures the reciprocal baseline tariffs and the fentanyl related tariffs remain in place.


MUFG commented; “The government can continue to collect tariffs until the Supreme Court rules. So the uncertainty continues and with other courses of action available to President Trump anyway, the US dollar yesterday retraced the entire move stronger.”

The next hearing is due on June 5th and there is a high degree of uncertainty over the potential timescale with the likelihood of an eventual move to the Supreme Court.

MUFG considers that uncertainty will be damaging for the economy.

Scotiabank added; “the erratic developments in tariff policy means uncertainty for business remains particularly acute and will surely become more apparent in US hard data soon.”

Deutsche Bank commented; “The US dollar has fully reversed its gains since the tariff news overnight. From our perspective the market has moved on from the specifics of the trade shock to the broader question of dollar asset allocations.”

Commerzbank examines the debate on whether Federal Reserve independence is in danger. It notes the consensus that the Fed has legal protection but, in view of recent developments, is doubtful whether safeguards will be seen as sufficient.

According to the bank; “the market is unlikely to derive sufficient certainty from this. From a market perspective, confidence in the US legal system is likely to become increasingly insufficient, regardless of what individual court rulings say."


There were no shocks from the US data on Friday which was broadly in line with consensus forecasts.

The PCE prices index, which the Federal Reserve uses as its inflation target, increased 2.1% in the year to April from 2.3% previously.

The core index increased 0.1% on the month with the year-on-year increase at 2.5% from 2.7% previously which was in line with market expectations and the lowest reading for four years.

The dollar was hurt by higher than expected jobless claims on Thursday with continuing claims at the highest level since November 2021.

MUFG commented; “The data yesterday could have indicated an imminent worsening of labour market conditions.”

The ECB is expected to cut interest rates by 25 basis points next week which would take the deposit rate down to 2.00%.

There is speculation that the ECB will cast doubt on the potential for further cuts.

According to Rabobank; “Barring new shocks, we maintain that 2% probably marks the low of the current cutting cycle.”

Standard Chartered commented; “An ECB rate pause should provide support to the EUR. However, any near-term rotation back towards US assets is likely to lean against these EUR-positive factors.”

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TAGS: Currency Predictions Euro Dollar Forecasts