May 9, 2025 - Written by Tim BoyerSTORY LINK Euro to Dollar FX Forecast: 1.1180 Key to "Preserve Bullish Structure" With a significant
May 9, 2025 – Written by Tim Boyer
STORY LINK Euro to Dollar FX Forecast: 1.1180 Key to “Preserve Bullish Structure”
With a significant US Dollar comeback on Thursday, the EUR/USD exchange rate dipped sharply with a test of support below 1.12 and 4-week lows.
Ahead of the weekend, the Euro-Dollar conversion is seen trading at 1.12601, 0.29 percent higher on the daily open.
The UK-US trade deal boosted optimism that the US Administration would adopt a more conciliatory stance on tariffs. This would lessen the risk of major damage to the US economy and lessen the dollar premium in global markets.
Talks with China and the EU could well prove pivotal in the short term with some dialogue between the US and Chinese representatives due over the weekend.
According to ING; “We’ll see whether EUR/USD starts to form a new support floor at 1.1200; a break lower would signal a marked shift in sentiment on the pair and potentially pave the way for larger corrections, with 1.100 being the next big support.”
SocGen added; “EUR/USD must hold above 1.1180 to preserve its bullish structure. A break below could usher in a deeper correction.
ING commented; “Markets have turned tentatively more optimistic on the dollar thanks to Trump’s reinforced hopes of upcoming trade agreements and seemingly greater attention to market indications.”
It added; “This is still a far cry from the “pragmatic” version of Trump that markets were pricing in as the baseline on Inauguration Day, but it’s enough to prevent growth and debt-related bearish bets on the dollar from mounting. There are reasonable doubts about markets’ readiness to rebuild strategic dollar positions just yet, and time might be needed to reinstall market confidence in the dollar as a safe-haven asset.”
According to MUFG; “Investors have certainly taken this as the start of a number of trade deals, which in turn will reduce the risks associated to the end of the suspended reciprocal tariff rates due to go live again on 9th July.”
It added; “The bigger development may well end up being Trump’s signal that a deal could be reached with China and that he thinks “it’s going to be substantive”. The US trade delegation will meet with China over the weekend so there is a good prospect for this better risk sentiment, higher equities and a stronger US dollar could extend into the close of the week.”
According to Rabobank; “the broader message of this is that, although the US is willing to climb down from the very high stakes it started this trade war with, it may not budge on the universal tariff and it wants a clear stake in strategic supply chains and (economic) security matters in exchange for a reduction in sectoral or reciprocal tariffs.”
UBS commented; “We continue to view positive trade headlines as supportive for the USD. However, as we expect any dollar strength to be short-lived and anticipate the currency to weaken over the remainder of the year, we favor selling the USD during rallies—specifically below EURUSD 1.12.”
After an initial setback, German CDU leader Merz was confirmed as Chancellor by the Bundestag.
According to UBS; “We expect Merz to prioritize the implementation of the previously discussed fiscal package and increased defense spending, which could provide additional support for the euro.”
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