The Euro is expected to gradually drift lower against the US Dollar, with analysts at Brown Brothers Harriman suggesting the EUR/USD pair could move toward the 1.1400 level in the near term.
According to strategist Elias Haddad, the currency pair briefly fell to around 1.1500 following the European Central Bank’s recent policy decision before rebounding to a high near 1.1590. The recovery was supported by improved global market sentiment after reports of progress in US-Iran negotiations.
Despite the short-term bounce, analysts believe the broader trend still points to weakness for the Euro, mainly due to stronger economic growth expectations in the United States compared to the Eurozone.
The European Central Bank recently raised its key interest rate by 25 basis points to 2.25%, citing persistent inflation pressures. The decision was unanimous, with policymakers continuing to see inflation risks tilted to the upside, while growth risks remain skewed to the downside.
At the same time, the ECB slightly increased its inflation forecasts but lowered its projections for economic growth in 2026 and 2027, highlighting concerns about the region’s weaker economic outlook.
Market expectations suggest there is still a chance of another rate hike at the ECB’s next meeting in July, although analysts believe the central bank may prefer to wait and assess incoming data before making further moves.
Brown Brothers Harriman noted that while higher interest rates in a low-growth environment can provide some support for the Euro, they are unlikely to reverse its broader weakening trend.
Slower wage growth and weak demand across the Eurozone are also expected to limit inflation pressures going forward, reducing the need for aggressive monetary tightening and keeping pressure on the single currency.
Overall, analysts expect the Euro to remain under pressure and gradually move toward the 1.1400 level as economic divergence between the US and Europe continues to widen.
