Euro to Dollar Forecast: Consolidation Around 1.16 Confirmed

July 22, 2025 - Written by David Woodsmith

STORY LINK Euro to Dollar Forecast: Consolidation Around 1.16 Confirmed

The Euro to Dollar exchange rate (EUR/USD) found support below 1.16 last week and has rallied to near 1.1670 on Monday with unease over Fed policy and independence still unsettling the US currency.

According to ING; “EUR/USD has found support under 1.16. There is not a strong case for it to go much lower this week, and consolidation inside last week's 1.1550-1.1720 is our call.”

UoB also expects a phase of consolidation; “Today, we continue to expect sideways trading, likely between 1.1590 and 1.1665.”

Scotiabank added; “We look to a near-term range bound between 1.1550 support and 1.1680 resistance.”

A break above this resistance area could be a catalyst for further gains.

The issue of Federal Reserve policy and independence will remain a key element for the dollar.

Last week, President Trump backed away from his immediate threat to dismiss Chair Powell which reversed a dollar slide.


There has been market chatter that Treasury Secretary Bessent had convinced Trump that any move to fire Powell would have a very damaging impact on US markets.

Traders have cut the potential for a September interest rate cut to below 40% following a run of generally solid data and there are strong expectations that rates will be left on hold next week, but Waller could potentially dissent.

Scotiabank commented; “Fed Governor Waller has made it pretty clear where his vote will land at the FOMC next week. It’s rare for FOMC voters to show their hand ahead of the meeting but it’s not unknown.”

MUFG remains concerned over underlying pressures on the Federal Reserve.

According to the bank; “We see this as more than just about whether Trump fires Powell. The comments from Fed Governor Waller indicate potential political influence with his comments much more explicit in calling for a July rate cut than in the past.”

The dollar will still be under considerable threat if there are renewed threats to Powell’s position and wider moves to politicise the central bank.

Economic data will also remain under scrutiny.


ING commented; “we're probably going to need to see some very soft data, particularly in the labour market, to convince investors that early cuts are coming.”

The bank is, however, uneasy over risks to the housing sector, especially with the 30-year bond yield trading around 5.00%.

According to ING; “Things might be quieter, but the attention will switch to the housing market. Have still-high mortgage rates caused the housing market to seize up? Some are worried that the June existing and new home sales data released on Wednesday and Thursday this week could show some deterioration.”

The latest US PMI business confidence data will also be important for overall confidence surrounding the economy.

There are strong expectations that the ECB will leave interest rates on hold at this week’s meeting with the deposit rate held at 2.00%.

According to ING; “We doubt ECB President Christine Lagarde will shake things up too much ahead of the central bank's summer break, although there may be some continued concerns over recent euro strength and particularly the direction of tariffs.”

Danske Bank added; “This week's focus will be the ECB meeting on Thursday. Neither we nor the market expect any policy changes, so focus will be on guidance ahead of the September meeting. We expect Lagarde to reiterate the data dependent approach and leave the door open for September, without giving firm signals as data has been limited.”

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TAGS: Euro Dollar Forecasts