Danske Bank forecasts Euro to climb to $1.22 within a year

Danske Bank recently released a forecast predicting that the euro will strengthen to $1.22 from its current level of $1.1340 within the next 12 months. According to the bank, expected cuts in U.S. interest rates will weaken the dollar and allow the euro to appreciate.

Analysts at Danske Bank estimate that the Federal Reserve may implement roughly 125 basis points in rate cuts by June 2026, spurred in part by the economic effects of President Trump’s tariff policies. They suggest that these cuts could start as soon as next month, although more clarity on China’s tariffs and other reciprocal measures is expected by June and July.

Despite these anticipated reductions, the Fed seems likely to hold rates steady at this Wednesday’s meeting, with Danske Bank noting that commitment to rate cuts doesn’t seem imminent at this stage.