Euro to Dollar Forecasts Lowered at Commerzbank, Now Target 1.10 by End 2024

February 25, 2024 – Written by David Woodsmith


Commerzbank has modestly lowered its EUR/USD forecasts due to a reassessment of US monetary policy, now anticipating fewer rate cuts than previously expected and the market currently prices in.

“We now expect the EUR/USD exchange rate to be around 1.1000 at the end of 2024 (previously: 1.1200) and around 1.0800 at the end of 2025 (previously: 1.1000).”

According to the bank; “The main reason for the change in forecast is the reassessment of US monetary policy. Instead of eight rate cuts by the end of 2025, we now expect only five, which is less than the market is currently pricing in.”

Bank of America maintains their forecast that the Euro to Dollar (EUR/USD) exchange rate will strengthen to 1.15 at the end of 2024.

Deutsche Bank analysts expect a retreat to 1.07 at the end of the second quarter and the potential for 1.05.

EUR/USD made net gains for the week, but a spike to 1.0885 faded quickly and it settled around 1.0825.

Deutsche expects economic divergence between the US and Europe will drive dollar gains.


It adds; “US election is a key driver as markets add to a USD safe-haven premium as election risks build into the second half of the year.”

Bank of America expects Fed rate cuts will have greater weight in the market; “Even though we expect the ECB to start cutting rates at the same time and at the same pace, we have been arguing that Fed cuts matter more for markets, as they have global implications and affect overall risk sentiment.

It added; “With the USD still overvalued, we assume a gradual move towards its long-term equilibrium. Our end-year forecast of 1.15 is about half-way there.”

Overall market confidence in a weakening dollar narrative has faced further challenges.

ING commented on US economic developments; “Nobody said the disinflation path to 2% was going to be an easy one. That is certainly the case in the US, where stronger jobs data and now higher January CPI figures have created a large speed bump, but we still think this the true direction of travel.”

ING added; “The back up in US rates has naturally lifted the dollar. This may not have too much further to run in that it will be hard to see the market pricing less than 75bp of Fed cuts this year.

Nordea also discusses the inflation outlook; “Slowly normalising wage growth will eventually help bring services inflation lower, but it will take time.”

The bank expects that it will take longer for conditions to allow a rate cut. It now expects a first cut in September with only one further cut in 2024.

Nordea added; “Our new interest rate forecasts where the Fed will cut later and to a lesser degree than the ECB are in favour of a smaller USD weakening than we expected previously.”

It has, however, resisted the temptation to make major changes; “broadly speaking, we see EURUSD range locked between 1.05-1.10 area over the upcoming year.”

Danske Bank has also adjusted its Fed rate forecasts.

According to the bank; “After the recent upside surprises in macro data, not least last week’s CPI, we revise our Fed call and now look for the first 25bp rate cut in May (from March previously). In total, we see three cuts in 2024, in May, July and November.”

Although Danske notes that market pricing has already adjusted sharply, it adds; “However, that does not make us more pessimistic about the USD in the near term.”

It still expects US exceptionalism and tighter financial conditions will support the US currency.

The Euro-Zone PMI data suggested a tentative rebound in the services sector.

Westpac expects that a solid current account Euro-Zone position will tend to support the Euro and suspects that a further period of range trading is likely.

It adds; “The fate of EUR/USD remains very much USD driven, but if survey data show signs of a turn in recently bleak regional activity, EUR/USD may reaffirm that it remains within its recent 1.07-1.10 range.”

MUFG notes the risk of an equity-market correction; “the depreciation of the dollar that coincided with a strong performance for equities was always at risk given the move higher in US yields.”

It added; “with the equity market rally triggered by AI-related tech it makes it more questionable whether the dollar can weaken on the back of increased risk appetite.”

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