Euro to Dollar Forecast: Fed Turmoil Keeps EUR/USD at 1.1625 After Trump Fires Cook

Modified: Tuesday, 26 August 2025 21:00 BST - Written by David Woodsmith

STORY LINK Euro to Dollar Forecast: Fed Turmoil Keeps EUR/USD at 1.1625 After Trump Fires Cook

The latest Euro to Dollar (EUR/USD) exchange rate forecast has been jolted by fresh political turmoil after President Trump moved to fire Fed Governor Lisa Cook, reviving concerns over Fed independence.

Despite Friday’s slide on Powell’s dovish Jackson Hole speech, the US Dollar has rebounded, keeping EUR/USD near 1.1625.

ING warns a break below 1.1580 could send the pair towards 1.15, though longer-term forecasts still point to gains back to 1.20.

EUR/USD Forecasts: Trump Fires Fed Governor Cook

After a slide on Friday following Fed Chair Powell’s speech, the dollar recovered ground on Monday.

The US currency dipped again in Asia on Tuesday as President Trump launched another assault on the Federal Reserve, but again bounced from lows with the Euro to Dollar (EUR/USD) exchange rate trading around 1.1625.

According to ING, the Euro is vulnerable to further near-term losses; “a break of support at 1.1580/90 could see follow-through to the 1.1500/1520 area – especially since investors probably added to EUR/USD longs on Friday's dovish tilt from Powell.”

UoB is less bearish on the single currency; “The sharp decline appears to be running ahead of itself, and EUR is unlikely to weaken much further. Today, we expect EUR to trade in a range of 1.1600/1.1690.”

ING is still bearish on the dollar over the medium term with EUR/USD gains to 1.20.

A key issue will be whether there is durable damage to the dollar amid fears surrounding Fed independence.

Overnight, President Tump stated that he had dismissed Fed Governor Cook as a central bank governor.

According to Trump there was "sufficient reason" to believe Cook had made false statements on mortgage agreements, and cited constitutional powers which he said allowed him to remove her.

The allegations surround declarations of primary property residence.

Cook fought back aggressively; "President Trump purported to fire me 'for cause' when no cause exists under the law, and he has no authority to do so."

She added; "I will not resign. I will continue to carry out my duties to help the American economy as I have been doing since 2022."

Mizuho chief strategist Shoki Omori commented; "Powell as of now seems to be fighting back but whoever comes next may just listen to whatever the White House wants. Not looking good."

According to Vasu Menon, managing director of investment strategy at OCBC; "Trump's move to fire Lisa Cook will cast a pall on Fed independence and could weigh on the dollar and U.S. Treasuries."

He added; "However, don't expect major market moves as Trump's action is somewhat unprecedented and may be challenged in U.S. courts."

Charu Chanana, chief investment strategist at Saxo noted; "Markets aren't panicking, but they are recalibrating, earlier rate cuts look more likely after Cook’s removal."

She also looked at the wider perspective; "But this isn’t just about rate cuts, it’s about Fed independence and the growing institutional risks in the U.S."

The Euro has also been hampered by the French government’s decision to call a confidence vote on September 8th.

ING commented; “The numbers don't look good in that his centrist party has 210 seats in parliament, while the far left and the far right have a combined 330 seats and have already said they will vote no.”

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TAGS: Euro Dollar Forecasts