HSBC: EURUSD- Raising Year-end Forecast

For EUR-USD, we are raising our 2025 year-end forecast to 1.04 from 0.99. Expansionary fiscal spending has the potential to drive EUR-USD even higher in the most optimistic scenario (not our base case). European leaders are losing faith in the US security umbrella and are rushing to strengthen from within. It has triggered a new sense of urgency, reminiscent of the response to the 2020 pandemic. If this drives much greater cooperation and strengthens EU economic governance, it could deliver a positive feedback loop of reform, investment and stronger growth. However, we are some way from this positive outcome. After all, Germany’s fiscal package is yet to be confirmed by parliament. Although Chancellor-in-waiting Friedrich Merz’s intent is clear, implementation of fiscal plans may take longer than planned and will depend on accompanying reforms. In the near term, EUR-USD may stay supported on the back of new euro-convergence optimism, but trade wars still pose a threat to Europe. If the US imposes tariffs on imports from the EU, it would damage regional and global growth, especially if the bloc retaliates. We think this will shift EUR-USD lower gradually over the coming quarters. However, we are alert to the risks should greater optimism for Germany and Europe arise.

AccuTrade2000

1. AccuTrade System:
tradingview.com/v/yDFPnb1J/
2. Signal Performance:
thedailyfx.com/performance/
3. We provide Free TradingView Premium and Essential Membership.

Also on:

Disclaimer

The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.

AccuTrade2000

1. AccuTrade System:
tradingview.com/v/yDFPnb1J/
2. Signal Performance:
thedailyfx.com/performance/
3. We provide Free TradingView Premium and Essential Membership.

Also on: