Via a note from Commerzbank, in summary:
- forecasts the euro could climb to $1.15 by the middle of next year
- forecast hinges on the European Central Bank reducing interest rates more cautiously than anticipated, especially compared to the Federal Reserve
And cautions that regardless, EUR gains may not last:
- ECB’s long-term policies could be overly accommodative (this will increase inflation risks)
- euro's recent strength limits further upward movement, making it susceptible to unfavourable news and developments
- expects euro to weaken against the USD in H2 of 2025, citing the Fed may have completed its rate cuts, potentially leaving US rates higher than projected
