XYZ Corporation operates in both the United States and Europe. It has recently noticed a discrepancy between the forward exchange rates and the expected future spot exchange rates based on inflation differentials. The current spot exchange rate is 1.20 USD/EUR, and the one-year forward exchange rate is 1.25 USD/EUR. The inflation rate in the U.S. is 2% while it is 1% in the Eurozone.

Based on the concept of purchasing power parity (PPP), which of the following statements correctly explains the expected relationship between the forward and future spot exchanges rates over the one-year period?