Euro to Dollar Forecast: Start of Move Above 1.1700?

June 26, 2025 - Written by David Woodsmith

STORY LINK Euro to Dollar Forecast: Start of Move Above 1.1700?

The dollar lost further ground on Tuesday and the Euro to Dollar (EUR/USD) exchange rate jumped to 44-month highs just above 1.1640 before a retreat to near 1.1600.

An immediate easing of Middle East tensions has undermined defensive dollar demand with the currency also hurt by reservations over the US economy and increased speculation over Fed rate cuts.

ING is not convinced there will be further EUR/USD gains; “The EUR/USD rally stalled again in the 1.160-1.165 area and it is plausible markets may require a more compelling macro story (most likely from the US) rather than the mere unwinding of geopolitical risks for a break higher.”

UoB discussed the potential for a range break; “Although there has been an increase in upward momentum, it is not sufficient to suggest a sustained advance. For the time being, we continue to expect EUR to trade in a range between 1.1480 and 1.1660.

It added; “Looking ahead, should EUR break and hold above 1.1660, it could signal the start of a move above 1.1700.”

At this stage, the Iran-Israel ceasefire is holding, but underlying tensions remain elevated, especially with leaked US intelligence reports that Iran’s nuclear programme had not been destroyed.

Joseph Capurso, head of international and sustainable economics at Commonwealth Bank of Australia commented; "The market is complacent about some of the downside risks. The thing I get is this issue is not over, which means it could come back to be a driver of commodity prices and currency markets again.”


MUFG noted the importance of energy prices; “If crude oil falls further from here, it will help counter tariff risks and there also remains a reasonable chance of some Trump back-tracking on tariffs which would also increase July rate cut risks. This backdrop will likely keep the dollar under downward pressure.”

US fundamentals will also be a key element.

As far as fiscal policy is concerned, the Budget Bill is still being debated in the Senate with the Republican leadership aiming to start voting at the end of this week and complete the process by July 4th.

There will, however, be an intense debate and pressure for significant amendments.

Tariff developments will also be important ahead of the July 9th US deadline to reach trade deals with major partners.

ING commented; “From here, further USD losses may need to be justified by US-specific factors: data, Fed, Trump's spending bill and tariffs.”

In testimony on Tuesday, Fed Chair Powell stated that inflation was likely to be pushed up by tariffs over the next three months.


Powell’s overall message was still that the central bank needed to be patient. He did, however, add that an earlier rate cut could be on the cards if inflation is lower than expected or there is deterioration in the labour market.

Markets are pricing in over an 85% chance that there will be a Fed rate cut in September.

According to ANZ; "We think economic growth is slowing and the improvement in services and shelter inflation will push back against tariff rises, allowing cuts to resume in September."

ING did note the risks of heavy dollar selling; “There is a sharply USD-negative scenario where the Fed turns more abruptly dovish and markets doubt Fed independence. But in that scenario, Treasuries would come under pressure.”

It added; “Instead, if Powell's communication allows only a moderate dovish repricing without signalling that he is bending to political pressure, the damage to the dollar can be limited.”

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TAGS: Euro Dollar Forecasts