Danske Bank: Euro to Dollar Expected to Rise, Actual Interest Rate Differential Narrowing

Danish bank analyst Mohamad Al Saraf said in a report that, as the gap between real interest rates adjusted for inflation in the United States and the Eurozone narrows, the Euro may rise against the US dollar in the next year. He suggested that the Federal Reserve may cut interest rates again in June, followed by another cut in September. In contrast, the European Central Bank may maintain interest rates unchanged throughout 2026 and 2027. He mentioned that the recovering European asset markets, as well as increased hedging against the risk of a weakening US dollar as confidence in US institutions weakens, should also boost the Euro exchange rate. Danish bank predicts that the Euro will rise from the current $1.1845 to $1.25 within the next 12 months.