HSBC analysts predict that EUR/USD may rebound in December, but the trend will be difficult in 2025 and may fall below parity.

Recent driving factors have shown that the euro against the US dollar is priced reasonably relative to interest rates, so further decline will require additional changes in the spread.

HSBC added, "Trends beyond interest rates may occur in 2025, so the euro against the US dollar may consolidate around 1.05 by the end of the year

The euro fell 6.0% against the US dollar compared to October, which represents a significant sell-off and raises questions about whether the exchange rate will fall below parity.

Analysts say that by historical standards, the decline of the US dollar is significant, and the US dollar may experience a cooling off period for the rest of this year. James Reilly, Senior Market Economist at Capital Economics, said, "History suggests that after such runs, there may be a period of consolidation - the first two such runs were like this

As shown in the following chart, based on certain indicators, the sell-off of the euro against the US dollar seems to have reached its recent limit

After Trump won the US election earlier this month, the US dollar exchange rate soared, and investors competed to digest the tariff hike and domestic policies supporting the US dollar. However, there are some signs of weakness in the upward trend, as the US dollar has not made any significant progress after Trump's recent tariff threats. Trump has threatened to impose tariffs on countries such as Mexico and Canada over domestic issues, confirming that he will use tariffs as a foreign policy hammer.

Despite analysts warning that Trump will inevitably increase tariffs on the eurozone, the euro against the US dollar has remained relatively unaffected by this news. This confirms the recent weak rise of the US dollar, which may lead to the recent consolidation of the euro against the US dollar.

HSBC said, "It seems difficult to find a catalyst for the exchange rate to decisively fall below the support level of 1.0450 for the rest of this year

The analyst added, "Although we are still bearish on the euro, the problem is that the exchange rate has already digested many negative factors - at least in the context of interest rate differentials

Looking ahead to 2025, HSBC strategists say they are still bearish on the euro, believing it will fall below parity against the US dollar.