The bet …
Over the weekend, I estimated the EUR/USD would be 1.1380 on Friday 2 May 2025. As of 10:27 pm AST, the spot rate is 1.1350, citing data from x-rates.com. Using the European Central Bank short-term rate of 2.169% and the U.S. 4-week Treasury rate of 4.23% as reported by the Federal Reserve Board, the forward rate is calculated at 1.1349.
My calculation appears out of alignment with the expectations reported in the mainstream financial press. For example, a report by Reuters suggests that the dollar is on a decline citing data that the dollar is down four percent against the euro and the yen. The report does acknowledge a bounce in the dollar near the end of last week due in part to President Trump’s shift in policy tone regarding his tariffs on Chinese imports.
An earlier report by Reuters notes that the European Central Bank (ECB) is expected to cut rates in June given decreases in inflation in the Euro zone. It is likely, according to the report, that the ECB will implement its eighth straight 25 basis point cut at its next meeting.
The NADEX sees a probability of 0.62 that the EUR/USD will close above 1.1325 on Friday 2 May 2025.
Alton Drew
27 April 2025
Disclaimer: The above analysis is intended merely as a thought exercise. It is not offered as legal or trading advice. If you would like to consult on the legal environment surrounding event futures contracts including filing a complaint with the Commodity Futures Trading Commission or the National Futures Association, reach out to me at altondrew@altondrew.com to set an appointment.
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