Euro to Dollar Forecast: Stabilising in Mid/Upper 1.16s

July 16, 2025 - Written by Tim Boyer

STORY LINK Euro to Dollar Forecast: Stabilising in Mid/Upper 1.16s

The Euro to Dollar exchange rate (EUR/USD) has held above 1.1650 on Tuesday, but has been trapped below 1.1700 after mixed US inflation data.

The dollar overall maintained a firm tone with high yields still providing net support, but there still underlying unease over threats to Fed independence.

According to Scotiabank; “the EUR’s medium-term trend remains bullish but the latest pullback has brought its momentum indicators back to neutral.

It added; “We note the continued importance of the 50 day MA (1.1479) in terms of offering medium-term support, and see the near-term range roughly bound between 1.1650 support and 1.1720 resistance.”

UoB sees the risk of further losses; “the risk of EUR declining to 1.1625 is increasing. The downside risk will increase in the coming days as long as the ‘strong resistance’ at 1.1735 is not breached.”

ING sees scope for EUR/USD to retreat to 1.15 by the end of the third quarter.

Markets have been held in relatively narrow ranges during the day, but volatility is still liable to spike higher, especially as the holiday season approaches.


Scotiabank commented; “While markets appear to have something of the summer doldrums about them, this week’s US data should help drive a bit more volatility in FX.”

Markets will also be monitoring EU-US trade talks very closely.

According to EU's lead trade negotiator Maroš Šefčovič; "We’ve been quite close in agreeing the text on the [trade] agreement in principle, but there have been clearly areas where we have quite a big gap between our two positions."

US consumer prices increased 0.3% for June, in line with consensus forecasts, although the headline inflation rate increased slightly more than expected to a 4-month high of 2.7% from 2.4% previously.

Core prices increased 0.2% compared with market expectations of a 0.3% increase while the year-on-year rate edged higher to 2.9% from 2.8% and compared with expectations of 3.0%.

EY chief economist Gregory Daco commented; “This is just the initial onset of these tariff increases, and we're going to see more over the summer."

According to Scotiabank; “Even if the data miss on the downside today, the Fed will want to see a sustained period of low prices before cutting. Whatever the outcome, White House’s attacks on the Fed Chair are likely to continue.”


Elsewhere, the New York Empire manufacturing index improved to 5.5 for July from -16 the previous month and well above consensus forecasts of -8.

There is a strong probability that President Trump and the US Administration will continue to push for an aggressive cut in interest rates.

The aggressive calls for Fed Chair Powell to resign are also liable to continue.

DBS commented; “If Powell leaves, we expect the (U.S. Treasury yield) curve to steepen sharply, with the short-end factoring in front-loaded rates cuts."

It added; "Meanwhile, the loss of confidence in price stability should translate into sharply higher 10-year and 30-year yields."

There will be concerns that higher long-term rates could have an important negative impact on the economy with particular concerns over the housing sector.

Overnight, Moody’s Analytics chief economist Mark Zandi has expressed increased concerns over the housing sector. And stated that he is sending up a “red flare” about the state of the housing market.

According to Zandi; “Home sales, homebuilding, and even house prices are set to slump unless mortgage rates decline materially from their current near 7% soon. That, however, seems unlikely.”

Setbacks in the housing sector would pose significant risks to the wider economy.

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TAGS: Euro Dollar Forecasts