Euro to US Dollar Forecast: EUR/USD's "Upward Momentum has Faded"

Modified: Sunday, 17 August 2025 13:15 BST - Written by David Woodsmith

STORY LINK Euro to US Dollar Forecast: EUR/USD's "Upward Momentum has Faded"

The Euro to Dollar exchange rate (EUR/USD) posted net gains on Friday, reversing the bulk of Thursday’s losses as the dollar was subjected to fresh selling.

Despite higher-than-expected inflation data on Thursday, markets remain confident that the Fed will cut rates next month, while pressure on the Fed continues.

The Trump-Putin talks will be monitored closely with some hopes for progress on the Ukraine situation helping to underpin the Euro.

UoB was not expecting a retreat below 1.1645, although there was only a brief excursion below this level.

It added; “The breach of the ‘strong support’ indicates that upward momentum has faded. The current price movements are likely part of a consolidation phase between 1.1585 and 1.1705.”

Scotiabank remains generally positive on the pair; “The EUR’s broader August rebound remains intact, with the market carving out a succession of higher highs and higher lows following the brief August 1 dip under 1.14. Support intraday is 1.1640, ahead of 1.1590/00. A push through this week’s high at 1.1730 should pave the way for a retest of the upper 1.17s.”

The dollar was helped in part by stronger-than-expected wholesale price inflation data on Thursday.


Headline prices increased 3.3% in the year to July from 2.4% previously and well above consensus forecasts of 2.5 while core inflation increased sharply to 3.7% from 2.6%.

Scotiabank commented; “Yesterday’s unexpectedly large US PPI gains indicated that business margins are increasing, which is perhaps not what would be expected if tariffs were being absorbed. That may mean that higher retail prices become more apparent shortly.”

MUFG added; “Overall, the report has provided support for the US dollar by dampening expectations for more aggressive Fed easing but is unlikely on its own to reverse the current weakening trend for the US dollar in the near-term.”

Markets are still extremely confident that the Fed will cut rates at the September meeting with traders still pricing in over a 90% chance of a cut, although talk of a larger 50 basis-point cut has faded dramatically.

The Fed still faces a tough underlying decision.

According to Joseph Carpuso, head of international economics at the Commonwealth Bank of Australia; "The combination of elevated inflation and weak growth in jobs is a conundrum for the Fed."

Scotiabank added; “If the Fed does opt to ease amid intense political pressure for lower rates and stubborn inflation, investors may become more concerned that the Fed’s inflation anchor is slipping which can only weaken the appeal of the USD.”


Friday’s data recorded a 0.5% increase in retail sales for July, marginally below consensus forecasts of a 0.6% gain for the month while core sales met expectations with a 0.3% increase.

The New York Empire manufacturing survey improved to 11.9 for August from 5.5 previously and compared with expectations of a -1.

International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way, ensuring you get the best exchange rates on your currency requirements.

TAGS: Euro Dollar Forecasts