Euro-Dollar on Target for 1.23: KBC
- Written by: Gary Howes
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Image © Adobe Images
A technical analysis from KBC Bank says the Euro to Dollar exchange rate (EUR/USD) can continue to make material gains.
"EUR/USD is in a buy-the-dip pattern," says a new analysis that follows a recent pullback in the exchange rate from 1.18 to 1.1750.
"The end to the ECB’s easing cycle and German/European spending plans help the euro-part of the equation," says the note.
The market expects the European Central Bank (ECB) to cut interest rates again in September, however, there is a growing consensus that it will pause at this point.
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By way of contrast, the market anticipates 50 basis points of easing from the Federal Reserve over the duration of the year, implying two cuts.
Should interest rate expectations return to the drivers seat for currencies in H2, then the Euro could find itself further supported on this divergence in central bank delivery.
However, it is the bigger shift in U.S. policy that will remain the primary force behind Euro-Dollar direction and distance.
Image courtesy of KBC Markets.
"Trump’s explosive policy mix (DOGE, tariffs, big beautiful bill) triggered uncertainty on future US economic growth and sustainability of public finances with markets showing a loss of confidence in the dollar," says the note.
Euro-Dollar has risen by nearly 14% already in 2025, and KBC Bank thinks there is more to come.
"EUR/USD is in a buy-the-dip pattern on track with a medium term target at 1.2349," it says.
