Macquarie sees further euro-dollar gains as ECB and Fed rate paths diverge

Macquarie analysts forecast further upside for the euro-dollar pair, citing diverging monetary policies between the European Central Bank (ECB) and the Federal Reserve (Fed). While the ECB signals it may soon end its rate-cutting cycle, the Fed, in contrast, is leaning toward easing credit conditions.

Macquarie experts point to recent comments from ECB President Christine Lagarde as the key driver behind their forecast. She indicated that justifying additional borrowing cost reductions would be challenging. The policymaker's remarks came after the central bank’s eighth consecutive monetary policy easing.

While the ECB remains hawkish, the Fed appears headed in the opposite direction. Macquarie analysts predict the US central bank may adopt a more dovish stance by June, especially if the unemployment rate climbs past 4.2%.

The euro is finding additional support from unexpectedly robust economic growth in the region. Revised Eurostat data shows the bloc's GDP expanded by 0.6% quarter-on-quarter in the first three months of 2025, marking its strongest performance since the second quarter of 2022.