Euro to Dollar Forecast: Multi-month Bull Trend "Not yet Been Broken"

July 17, 2025 - Written by Tim Boyer

STORY LINK Euro to Dollar Forecast: Multi-month Bull Trend "Not yet Been Broken"

The Euro to Dollar exchange rate (EUR/USD) dipped to 3-week lows just below 1.16 on Tuesday before attempting to stabilise.

EUR/USD has again found some support below the 1.1600 level after the latest US data but has not been able to make any headway.

Fresh doubts over the potential for a September Federal Reserve rate cut and higher yields have underpinned the dollar while on-going reservations over Fed independence have been kept at bay for now.

According to Scotiabank; “The multi-month bull trend has not yet been broken but we are concerned about the near-term risk of further weakness as we look to potential support at the April 21 high (1.1573) and the 50 day MA (1.1484). Near-term resistance is expected in the 1.1680/1.1700 range.”

UoB added; “The price action continues to suggest downside risk in EUR, and the next level to monitor is 1.1550. On the upside, the ‘strong resistance’ is now at 1.1705 instead of 1.1735.”

ING commented; “We think 1.16 can be a good balance unless data adds much to the US macro story in the next days. Risks are, however, that the dollar gets a bit more support from hawkish repricing and EUR/USD starts looking at 1.15.”

Markets are now pricing in less than a 50% chance of a Fed September rate cut.


Commerzbank commented on the near-term outlook; “Fundamentally, the weakness of the USD looked like it has gone too far. It was unlikely that this trend would continue seamlessly. Short-term corrective movements are therefore not that surprising.”

ING added; “yesterday’s reality check on Fed cuts speculation could have a lasting effect by raising the bar for dovish repricing, and we therefore feel the risks remain skewed to a stronger dollar from here."

US producer prices at the headline and core level were both unchanged on the month with the headline annual increase at 2.3% from 2.7% previously.

The issue of Fed independence and possible forced departure of Chair Powell remains a live story.

Scotiabank commented; “While it is highly unlikely that Fed Chair Powell will quit before his term ends, administration pressure on the Fed leadership is unlikely to relent.”

Scotiabank also noted reports that the Administration could use allegations of overspending surrounding Federal Reserve renovation.

It added; “The appearance of manoeuvring that could potentially lead to the removal of the Fed chair should be of more concern to markets than it apparently is. Such an eventuality would likely be disruptive for financial markets and undermine confidence in the Fed.”


The bank also noted that market inflation expectations have been drifting higher.

Commerzbank expects a 25 basis-point cut in September and added; “Even then, Trump's attacks on the Fed's independence are unlikely to stop. A 25-basis-point cut is unlikely to satisfy him given that he is demanding 300 basis points lower rates. Accordingly, the current [dollar] recovery phase is unlikely to last long as well."

The French government proposed on Tuesday to scrap two bank holidays in order to help curb the budget deficit. There was strong criticism from opposition parties and National Rally leader Le Pen threatened to bring the government down. This could undermine the Euro.

ING commented; “The French deficit story has been very much in the background as of late, but yesterday probably served as a reminder that it is a ticking bomb for EU sentiment. And we could start seeing some FX spillovers in the coming months.”

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TAGS: Euro Dollar Forecasts