Deutsche Bank: If the Federal Reserve cuts interest rates faster than the European Central Bank, the EUR/USD may pump.

On August 16, Jin Ten Data reported that the euro against the dollar may rise due to the possibility that the Federal Reserve may be more aggressive in cutting interest rates compared to the European Central Bank in response to declining inflation. Ulrich Leuchtmann, a forex analyst at Deutsche Bank, stated in a report that the Federal Reserve may cut rates six times, while the European Central Bank may cut rates four more times. He noted, “We believe that the Federal Reserve’s policy response function is more elastic to changes in inflation compared to the European Central Bank.” Deutsche Bank also anticipates that the economic growth in the U.S. this fall and winter will “not be as remarkable as before,” which may weaken perceptions of the U.S. economy having a structural advantage in growth and weaken the dollar. Deutsche Bank expects that by mid-2025, the euro against the dollar will rise from the current level of around 1.0990 to 1.14.