The EUR/USD pair has been trading under pressure lately. At 1.04, the exchange rate is inching closer to parity. Several economic and political factors suggest EUR/USD may test parity in the first half of 2025.
The European Central Bank (ECB) continues to cut rates aggressively. Meanwhile, the Federal Reserve (Fed) has adopted a slower pace of rate reductions. This divergence is creating a widening gap between the euro and the dollar.
The ECB began cutting rates in June and has made four rate cuts this year. While inflation seems controlled, growth remains sluggish. There is also a growing risk of a recession in 2025. Political instability across Europe, particularly in Germany and France, adds further challenges.
Germany faces a snap election in February, and France is struggling after the collapse of Michel Barnier’s government. These events could disrupt investor confidence, pushing EUR/USD lower.
Trump’s return to power has bolstered the U.S. dollar, which now trades at a two-year high. His proposed policies, such as tax cuts and tariffs, are expected to increase inflation. This outlook aligns with a resilient U.S. economy and solid employment data.
The Fed’s cautious rate-cutting strategy also supports the dollar. With only two rate cuts expected in 2025, the Fed has signaled confidence in U.S. economic stability.
On the technical front, EUR/USD faces resistance at 1.0630. Sellers are likely to push the pair toward 1.02 and parity. Buyers, on the other hand, must break 1.0630 to create a bullish trend.
The divergence between the ECB’s and Fed’s policies will likely continue influencing the pair. The ECB faces downward economic pressures, while the Fed confronts inflationary challenges.
The outlook for EUR/USD remains bearish, with parity a realistic target. Traders should monitor upcoming rate decisions, political events, and market sentiment closely.
Don’t miss the latest Forex trading news and analysis of the parity of EUR/USD in the first half of 2025. Visit our website for detailed updates: https://fixiomarkets.com/en/prex-blogs.
Discover if EUR/USD will hit parity in 2025. Learn about the ECB’s rate cuts, Fed policy, and key market trends. Stay updated!
Superior trade execution & trading conditions with the NDD method.
The online FX industry provides a platform for investors worldwide to engage in the buying and selling.
Subscribe to our daily newsletter and get the best forex trading information and markets status updates
Trade within minutes!
日本語
English
Comment (0)