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Bank of America Projects EUR/USD to Hit 1.15 by Year-End, 1.20 by 2027
Bank of America is maintaining its forecast for the euro to strengthen against the U.S. dollar, projecting the EUR/USD pair will reach 1.15 by the end of the year and climb to 1.20 by the end of 2027. The bank's outlook was detailed in a research note published on Friday.
Economic Drivers Behind the Forecast
According to the report, the projection is supported by underlying economic conditions in both the United States and the Eurozone. Bank of America noted that U.S. macroeconomic data remains robust, with economic growth holding at approximately 2% and the unemployment rate steady at around 4%.
In the Eurozone, economic activity has performed better than anticipated. The bank also highlighted the European Central Bank's continued commitment to its inflation-fighting credibility as a key factor supporting the single currency.
Acknowledged Market Risks
AdDespite the positive forecast for the euro, Bank of America identified several significant risks facing the market. The report listed a number of potential headwinds, including:
- The ongoing war involving Iran and the potential for related supply shocks.
- Growing market concerns over the potential existential risks of artificial intelligence.
- Broader fiscal pressures and a potential resurgence of trade tensions.
- Uncertainty surrounding the upcoming U.S. mid-term elections.
For the Eurozone specifically, the bank identified high energy prices and recent developments in France as the primary downside risks that could weigh on the euro's performance.
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