Wall Street banks predict the euro will drop more than 3% in a year.

Huoxing Finance reports that on June 29, multiple major Wall Street banks simultaneously lowered their euro-to-dollar forecasts. JPMorgan Chase, Morgan Stanley, and Bank of New York Mellon all anticipate the euro will decline more than 3% over the next year to around 1.10. The euro has already fallen to a one-year low this month, sharply contrasting its five-year high above 1.20 at the start of the year. Policy divergence is the key driver: Federal Reserve Chair Walsh has signaled a firm stance against inflation, prompting markets to reprice expectations for rate hikes this year; in contrast, ECB President Lagarde stated no aggressive policy response is needed to the Middle East conflict, maintaining a relatively dovish path. Iran-related tensions have pushed oil prices higher and strengthened demand for the dollar, further undermining the euro. Options markets have also turned bearish, with the one-year risk reversal index falling to its most bearish level since March 2025. Société Générale’s chief FX strategist bluntly stated that “the euro’s rally is essentially over,” comparing the current energy shock to the severe economic damage Europe suffered after the Russia-Ukraine conflict in 2022. While Bank of America lowered its year-end forecast from 1.20 to 1.15, it still maintains a “neutral” outlook, making it one of the few relatively moderate voices.