The EUR/USD currency pair fell under the 1.1750 level last week, due in large part to the resurgent US dollar. On Wednesday, the pair came under further bearish pressure to stay well below this key threshold. The Euro The uncertain short-term growth outlook for the Eurozone weighs on the currency’s performance. This is all quite a bit, especially coming on the heels of July 27th’s announcement of a US-EU trade deal.
Professional economists have submitted widely divergent predictions about the euro area’s growth this year. This divergence among forecasters is a significant departure from the trend, as in the past growth forecasts have usually joined together as the year wears on. Recent high-frequency business sentiment data out of Germany has come in on the weak side. For the time being, this has driven down Euro even more. Unsurprisingly, global markets are reacting with extreme caution. Consequently, strength of the US dollar is rising, moving the EUR/USD down into a bearish trend.
EUR/USD has continued to stretch its daily loss to the downside, largely driven by a combination of fiscal, monetary, and market fundamentals. The forecasts use data sets that span from October 2010 through August 2025. This wide range provides a bird’s-eye view of trends over time. Forecasters pretty evenly split on euro area growth forecasts. The MAE paired forecast absolute difference indicates that, as we progress through the year, analysts have less and less information to argue about.
This trend can be a powerful force that carries forecasters toward the consensus. This is especially unsurprising given that the Eurozone’s growth forecasts like to meet in the middle as the year progresses. It aggregates predictions from over 130 banks, financial institutions, think tanks, and international organizations that submit their own GDP forecasts. Together, this powerful collaboration provides a comprehensive analysis.
The recent EUR/USD fall offers a cautionary reminder of the outsized influence foreign news can have on currencies. A worried and nervous market sentiment pushes investors to look for safer assets. This, in turn, undermines confidence on currencies such as the Euro. Through this dance between economic strength and currency valuation, we can see the battle that happens on the forex markets every day as traders react to market sentiment.
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As 2023 progresses, analysts will be keeping a keen eye on the economic situation in the Eurozone and elsewhere. Forecasts are now beginning to converge, which may increasingly produce a consensus outlook from economists over the next few months. The present differences underscore the unanswered questions still haunting the Eurozone economy.