EUR/USD Annual Price Forecast: Parity looks likely in 2025 as the gap between European economies widens.
- Central banks continue to prioritize inflation, but growth is expected to take the lead.
- The potential return of Donald Trump to the U.S. presidency is likely to have significant global implications.
- Meanwhile, the EUR/USD pair is set to test parity during the first half of 2025.
The EUR/USD pair began the year trading at approximately 1.1040 and ended near its annual low of 1.0332. By September, the pair had surged to 1.1213, and the Euro (EUR) appeared poised for global dominance.
Throughout the first half of the year, the financial world focused on inflation levels and the anticipation that central banks would ease their monetary tightening policies. However, as the year draws to a close, it has become evident that these expectations were not realized.
Expectations that central banks would implement extensive easing measures amid falling inflationary pressures, which were still within their targets, gradually faded. Over time, concerns about employment and growth became more pronounced, eventually overshadowing worries about inflation.
It is important to note that central banks’ primary focus is on inflation and employment, not economic growth—though their policies can influence it. This dynamic played out throughout 2024.
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