Bank of America has outlined a near-term foreign exchange outlook that favors the euro while highlighting downside risks for the U.S. dollar. The bank left most of its bilateral dollar forecasts unchanged but flagged upside potential for the euro and downside pressure on the dollar in its latest assessment.
The bank’s revised projections for the euro-dollar pair see the exchange rate reaching 1.12 by the end of the third quarter, 1.15 by year-end, and 1.20 by the end of 2027. These targets reflect a constructive view on the single currency’s prospects in the coming months and years.
Bank of America also adjusted its outlook for the yen, lowering its USD/JPY forecasts amid shifting dynamics in Japan and rising risks of further coordinated intervention. The firm published a report titled FAQs on coordinated yen-buying intervention on August 5, 2026, underscoring concerns over potential currency stabilization efforts.
In its assessment of the Canadian dollar, the bank revised its USD/CAD forecast downward to around 1.40-type levels for the remainder of the year and into 2027. This adjustment aligns with expectations that the Bank of Canada is likely to maintain its policy stance in the medium term, limiting upside pressure on the loonie.
The firm’s updated forecasts follow a period of heightened volatility in major currency pairs, with traders closely monitoring central bank signals and intervention risks.
