On June 9, 2024, MUFG predicts that the Euro to Dollar (EUR/USD) exchange rate will strengthen to 1.12 by March 2025. However, Barclays expects a retreat to the 1.05-1.06 area this year. The EUR/USD was resilient after the ECB rate cut but experienced sharp losses following stronger than expected US employment data, sliding to near 1.08 from 1.09.
US non-farm payrolls increased by 272,000 for May, surpassing consensus forecasts of around 180,000. The household survey showed a weaker unemployment rate at a 2-year high of 4.0%. Average earnings also increased more than expected.
The wages and payrolls data sparked inflation fears and raised doubts about Federal Reserve rate cuts. The chances of a September cut dipped to near 50%. Jane Foley from Rabobank sees limited scope for dollar losses due to potential U.S. inflation picking up again.
BNP believes the dollar will maintain its strength unless there is a significant deterioration in the US labor market or eurozone data surprises positively. CIBC sees USD dips as buying opportunities for the next quarter, expecting a shift in dynamics in the medium term.
Barclays notes underperformance for EURUSD due to disappointing news and data flow from China, along with geopolitical and US election risks. The ECB recently cut all interest rates by 25 basis points at its latest meeting.
MUFG expects an easing cycle with cuts at each forecast meeting and anticipates the next cut to come on September 12th. Overall, the outlook for the Euro to Dollar exchange rate remains uncertain, with various factors influencing its trajectory in the coming months.