SEB Sees Euro Reaching $1.23 by End-2027 Amid Dollar Weakness

SEB's analysts have forecasted that the Euro-Dollar exchange rate is expected to reach $1.23 by the end of 2027, a target they believe will be driven by lower energy prices. The current outlook indicates that the EUR/USD rate may soften over the coming winter due to rising energy costs and concerns about French debt sustainability.

However, SEB's analysts also caution that this recovery is likely to face a setback, predicting that the Euro-Dollar exchange rate will reach 1.15 by the end of 2026 before making a sustained rise through 2027.

The bank attributes their forecast to persistent US inflation already being reflected in interest-rate pricing and the potential for energy costs to fall, which would contribute to Dollar weakness.