Euro to Dollar Forecast: "1.170-1.175 Area for Now"

Modified: Friday, 11 July 2025 09:30 BST - Written by Tim Boyer

STORY LINK Euro to Dollar Forecast: "1.170-1.175 Area for Now"

Evidence of on-going Federal Reserve resistance to interest rate cuts has supported the dollar with markets continuing to monitor trade developments closely.

The Euro to Dollar (EUR/USD) exchange rate was unable to move above 1.1750 on Thursday and retreated to test the 1.1700 area around the US open.

According to ING; “barring major surprises in the details of the deal, EUR/USD may stay attached to the 1.170-1.175 area for now.”

UoB took a similar view; “we view any advance as part of a higher range of 1.1700/1.1755.”

According to Scotiabank; “the multi-month trend remains bullish but the EUR’s latest consolidation has delivered a considerable loss of momentum.”

It sees a slightly wider near-term range; “We see the near-term range bound between 1.1680 support and 1.1780 resistance.”

ING noted that Euro demand in derivatives markets has slowed. It added; “Should this decline prove sustainable, it would signal markets are seriously scaling back bullish views on the pair – another testament of how the dollar is not bearing the risks associated with this round of tariff announcements for now.”

There was an important trade development overnight with the US threatening 50% tariffs on Brazilian exports to the US.

There is, however, still optimism that the EU will be able to negotiate some form of framework deal over the next few days.

According to Scotiabank; “while markets may understand that these announcement are just gambits in more extended trade negotiations, the persistence with tariff action may be wearing on investor patience.”

ING takes a more positive stance on the US currency; “we could see it get to 20% from the current 14%. But how we get there matters hugely for the dollar. A gradual implementation of sector-specific tariffs should do much less damage to the dollar compared to sudden, 'Liberation Day'-style measures. The former may ultimately result in some inflationary effect that can keep the Fed cautious for longer – a dollar positive.”

The latest US data recorded a decline in initial jobless claims to 227,000 in the latest week from a revised 232,000 previously while continuing claims edged higher to 1.97mn from 1.96mn.

The data did not indicate any further near-term labour-market deterioration.

On Wednesday, the Federal Reserve released minutes from the June policy meeting.

Two members saw scope to cut interest rates at the July policy meeting, but the majority were not convinced that inflation trends justified a near-term move.

According to MUFG; “the minutes continued to signal that “most” participants expected it likely would be appropriate to cut rates this year but they are waiting for more data to provide clarity over the impact of tariffs.”

It added; “The prospect of an even earlier rate cut later this month appears to be off the table now after the stronger than expected nonfarm payroll report for June.”

There has been a further shift in market pricing with traders now pricing in only just above a 30% chance of a September cut.

RBC Capital Markets is still positive on the Euro; “As the second-most traded currency, the euro essentially acts as the “anti-dollar,” and the currency’s appreciation this year partly reflects the extent to which the greenback has fallen.”

It added; “Having said that, there have been a number of positive developments in Europe this quarter that could strengthen the currency in coming months.”

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TAGS: Euro Dollar Forecasts