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Apr 11 - 02:55 PM

ING: The Case For Higher EUR/USD Fades; Rethinking Our EUR/USD Forecast

By eFXdata  —  Apr 11 - 01:30 PM


ING has adjusted its end-2024 EUR/USD forecast to 1.10, aligning with the consensus due to significant revisions in the Federal Reserve's policy outlook. Despite initial optimism for a favorable EUR/USD environment marked by lower US rates and slight global growth improvements, widening real interest rate spreads favoring the dollar and resilient US economic data have dampened these expectations. Consequently, ING has also decided to maintain its 2025 EUR/USD forecast at 1.10, citing the currency pair's proximity to its medium-term fair value and the uncertainties surrounding the US's monetary, fiscal, and trade policies.

Key Points:

  • Fed Profile Adjustments: Significant revisions in the Federal Reserve's outlook prompt a conservative adjustment in EUR/USD forecasts.
  • Stalled Expectations: The anticipation of EUR/USD gains in response to a Fed rate cut and global growth improvements has not materialized as expected.
  • Real Interest Rate Spreads: Widening spreads in favor of the dollar and strong US data have countered potential EUR/USD increases.
  • 2025 Outlook: The EUR/USD forecast for 2025 remains at 1.10, reflecting current fair value assessments and future US policy uncertainties.
  • USD/JPY Forecast: Adjustments to the USD/JPY forecast account for a potentially more hawkish Bank of Japan and the anticipated return of a term premium to US Treasury markets.


ING's revision of the EUR/USD forecast reflects a pragmatic response to evolving economic indicators and policy expectations, particularly from the US Federal Reserve. The adjustment acknowledges the complex interplay between real interest rate differentials, global equity market dynamics, and macroeconomic data, shaping a more cautious outlook for EUR/USD. With uncertainties looming over US policies in 2025, maintaining a stable forecast suggests a wait-and-see approach to future developments in currency markets.

ING Research/Market Commentary


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