Euro to Dollar FX Forecast: EUR Range "Between 1.1100 and 1.1290"

May 16, 2025 - Written by Frank Davies

STORY LINK Euro to Dollar FX Forecast: EUR Range "Between 1.1100 and 1.1290"

The Euro to Dollar exchange rate (EUR/USD) has consolidated close to 1.12 as markets take a breather into the weekend, but there are still major underlying issues amid speculation over a shift in huge global capital flows.

ING commented; “We still see 1.120 as a good short-term anchor for EUR/USD, although the bias seems to be for testing 1.130 rather than 1.110 in the short term on the back of lingering USD strategic selling.”

According to UoB; “For the time being, we expect it to trade between 1.1100 and 1.1290.”

Conditions in the US economy will remain one key focus.

ING noted; “This week’s US data has been firmly on the dovish side: lower than expected inflation, soft core retail sales, and most activity surveys still weak.”

Retail sales data recorded a 0.1% increase for May, but the control group which measures underlying spending recorded a 0.2% decline. The data is in nominal terms and there will have been a steeper decline in real spending.

Producer prices declined 0.5% on the month with the annual increase at 2.4% from 3.4% previously.


There has been no change in Federal Reserve expectations with markets still considering the chances of a rate cut by July are less than 50%.

In comments on Thursday, Fed Chair Powell noted the risk of more frequent supply shocks which would also tend to put upward pressure on inflation and deter early central bank easing.

Fed resistance to rate cuts could underpin the dollar in the short term, but criticism of the central bank will increase sharply if the economic data deteriorates further.

There was a dip in US bond yields with the 10-year yield declining to around 4.41% from above 4.50% earlier on Thursday.

To some extent, the move in yields is a lose-lose situation for the dollar.

Lower yields sap support on yield grounds while higher yields increase fears over huge budget deficits and trigger fresh speculation that US assets are being sold.

Overall confidence in the dollar remains fragile with further speculation of underlying selling by global funds.


ING considers that the market bias will be for dollar selling; “Real evidence of a portfolio shift away from US asset markets will emerge with a lag. And any evidence of foreign investors increasing FX hedge ratios on US assets will only ever be anecdotal. But the US policy scare last month – plus the latent fear of another ‘sell America’ moment emerging this summer as unfunded tax cuts proceed through Congress – should now limit the dollar recovery.”

The dollar is also having to contend with on-going speculation over a US preference for a weaker dollar and that key Asian economies will let their currencies appreciate in a deal to secure reduced tariffs.

George Vessey, lead FX and macro strategist at Convera commented; "Speculation is once again mounting that President Trump favours a weaker dollar, potentially pressuring other governments to allow their currencies to appreciate in trade negotiations."

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TAGS: Euro Dollar Forecasts