UBS maintains its year-end forecast for the euro-dollar pair at 1.2000 for the third quarter (Q3). By December, according to analysts, it could reach 1.2300. It is worth noting that UBS Q2 expectations were met, with the pair hitting 1.1800, as reported by Investing.
The bank’s Q3 projected range is between 1.1350 and 1.2050, which is significantly narrower than its estimates for the previous three months.
Analysts anticipate a slowdown in US labor market growth over the summer. This trend could prompt the Federal Reserve (Fed) to continue its monetary easing cycle. According to UBS, the central bank may cut interest rates by 100 basis points in 2025, starting with the September meeting.
Market participants’ risk hedging will likely limit the dollar’s upside momentum in the medium term, though the American currency will retain a yield advantage, UBS analysts note.
In the near term, the euro-dollar pair’s movement will also be influenced by investor concerns over a potential replacement of Jerome Powell as Fed Chair, UBS experts note.