U.S. Dollar's V-Dominance Signals Euro Parity in 2025, According to Reuters Poll
The U.S. dollar continues its robust performance in global foreign exchange markets, with experts predicting its potential to reach parity with the euro in 2025. The greenback gained 7% against major currencies in 2024, nearing an 8% increase from 2022. This rise was fueled by strong U.S. economic resilience and the Federal Reserve's cautious stance on interest rate cuts, alongside inflation concerns spurred by incoming tariff and tax policies under President-elect Donald Trump.
Euro Under Pressure
Currently trading at $1.03, the euro is forecasted to see minimal gains, reaching $1.05 by year-end, according to a Reuters poll of over 70 strategists. However, nearly two-thirds of respondents believe the euro could reach parity with the dollar, particularly in the first half of the year. Factors such as lower European yields and expectations of substantial ECB rate cuts contribute to the euro's struggles.
Broader Market Implications
Higher long-term U.S. Treasury yields and global central banks' dovish stances reinforce the dollar's dominance. Speculative positions show increased net-long bets on the greenback, signaling continued investor confidence in its strength. Strategists also highlight temporary periods of dollar alternatives but emphasize the dollar's central role in 2025's financial landscape.
This ongoing trend underscores the dollar's stronghold and the euro's challenges in a shifting global economic environment
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