BofA Forecasts EUR/USD at 1.15 by Year-End on Market Risks

Bank of America projects the EUR/USD exchange rate will reach 1.15 by year-end and climb to 1.20 by the end of 2027, driven by resilient U.S. macroeconomic data weighed against accumulating geopolitical and structural market risks, according to an Investing.com report.

The currency pair's trajectory reflects a complex interplay between solid North American economic performance and mounting global uncertainties. While U.S. indicators continue to display fundamental strength, foreign exchange strategists are increasingly pricing in external shocks that could alter central bank policy paths and cross-border capital flows.

U.S. Macro Resilience and Growth Metrics

The economic backdrop in the United States remains solid, providing foundational support for the dollar while global investors navigate heightened volatility. U.S. gross domestic product growth is running at roughly 2%, while the unemployment rate holds steady around 4%.

These figures demonstrate a cooling yet resilient domestic economy that continues to outpace many developed market peers. However, currency valuations are increasingly sensitive to non-economic disruptors as markets look toward the final quarters of the year.

What Market Risks Are Analysts Citing?

Bank of America's multi-year currency outlook highlights several distinct risk factors that could reshape foreign exchange dynamics. The institution's strategists point to a convergence of geopolitical tensions and structural economic challenges:

• The ongoing Iran war and its associated supply shocks on global energy markets.
• Rising market concerns regarding artificial intelligence existential risks and technological disruption.
• The intractability of long-term fiscal challenges across major economies.
• Renewed trade tensions among global trading partners.
• Anticipation surrounding the upcoming U.S. midterm elections.

Eurozone Activity and European Central Bank Policy

On the other side of the currency pair, European economic data have recently surprised to the upside, offering unexpected support to the shared currency. Simultaneously, the European Central Bank has maintained a firm stance to preserve its inflation-fighting credentials.

Despite these stabilizing factors, significant downside risks persist for the eurozone economy. High energy prices continue to weigh on industrial competitiveness, while political and economic developments in France remain key monitoring points for institutional investors assessing the health of the monetary union.