## JPMorgan Predicts Euro to Test Parity Against Dollar by 2025
### Euro Bearish Forecast
JPMorgan has made a bold prediction following the US presidential election, foreseeing a test of parity for the Euro against the US Dollar by the first quarter of 2025. This forecast comes as the EUR/USD pair traded 0.8% at $1.0499, showing a bounce at the start of the new week after a nearly 3% decline over the last month.
### Eurozone Growth Disappointment
Analysts at JPMorgan observed that the year 2024 has been marked by Eurozone growth disappointment compared to the US. This trend of softer-than-expected growth in the Eurozone has persisted for seven consecutive years, leading to frustration among FX investors. The performance of the EUR/USD pair in 2024 was primarily driven by rate differentials, with other factors taking a back seat.
### Factors Influencing the Forecast
The forecast for the EUR/USD pair in 2025 anticipates a test of parity by the first quarter due to tariff risks being fully priced in. However, there is potential for a recovery to $1.08 later in 2025, stemming from mitigating factors and a decline in US resilience. This near-term bearish outlook is in line with JPMorgan’s roadmap for the US elections and now considers factors such as potential tariffs and new ECB/Fed policies.
### Eurozone Vulnerability
JPMorgan highlights the Eurozone’s vulnerability to trade conflicts, citing factors such as manufacturing reliance, trade openness, and monetary easing as opposed to fiscal stimulus. This situation is expected to lead to the “Japanisation” of the Euro, making it one of the worst-ranked currencies globally in terms of nominal/real yields in 2025.
By analyzing the content, it is evident that JPMorgan’s forecast carries significant implications for the Euro and the US Dollar. The prediction of the Euro testing parity against the Dollar by 2025 reflects the ongoing trend of Eurozone growth disappointment and factors such as trade conflicts and monetary policies influencing currency dynamics. As an investor or individual, understanding these forecasts can help in making informed decisions regarding currency investments, international trade, and overall financial planning.