Euro to Dollar Forecast: EUR/USD Ends August Near 1.17 as Fed Cuts Loom

Modified: Friday, 29 August 2025 21:17 BST - Written by Tim Boyer

STORY LINK Euro to Dollar Forecast: EUR/USD Ends August Near 1.17 as Fed Cuts Loom

The Euro to Dollar exchange rate (EUR/USD) is trading at 1.1696, ending August near the key 1.17 level and at the upper end of its monthly range.

July’s US PCE inflation data met expectations, clearing the way for a September Federal Reserve rate cut and leaving the US Dollar outlook fragile.

Foreign exchange analysts remain split, with Scotiabank and UoB calling for range-bound trade, while ING and Danske forecast a recovery toward 1.20.

EUR/USD Forecasts: 1.1720 Resistance

The Euro to Dollar exchange rate (EUR/USD) was unable to break above 1.17 on Thursday and drifted lower towards 1.1660 on Friday ahead of .

Underlying dollar sentiment remains negative, but sellers are struggling to make headway at this stage.

According to UoB; “While momentum continues to suggest upside potential in EUR, with negative divergence forming, any further advance may not reach the major resistance at 1.1720.”

Scotiabank commented; “We look to a near-term range bound between 1.1620 support and 1.1720 resistance.”

The bank noted; “Fundamentals for EUR remain supportive as the 2Y German-US yield spread threatens a break of the March high.”

It added; “Descending resistance drawn from the recent highs is currently in the lower 1.17s, and a break would offer a resumption of the medium-term bull trend.”

US economic data had little impact on the PCE price index, in line with expectations. Headline prices increased 2.6% over the year, while core prices increased 0.3% on the month to give an annual rate of 2.9%.

Markets are continuing to price in just over an 85% chance that rates will be cut at the September meeting.

Overnight, Fed Governor Waller stated that he backed an interest rate cut at the September meeting, although at this stage, he was only advocating a 25-basis-point move.

He did, however, add that he would back a larger cut if there was evidence of more severe labour-market deterioration.

He also called for a series of cuts to 3.00% over the next few months.

MUFG noted, “Importantly, Waller caveated that with his view being dependent on the US jobs report next week, implying that a weak report could see him vote for a 50bp cut at the FOMC meeting in September.”

The bank added; “That prospect does seem quite plausible given his strong views on the need for a cut highlighted by the fact that his speech was titled “Let’s Get On With It”.

The issue of rate cuts remains entwined with unease over threats to Fed independence.

Fed Governor Cook’s lawsuit against President Trump’s attempt to remove her from the Board will be heard on Friday, with Trump continuing to insist that he had the authority to dismiss Cook.

Scotiabank noted, “While Fed Governor Cook is challenging President Trump’s attempts to oust her, former Governor Lael Brainard warned that the manoeuvrings may be a preamble to removing a number of Fed regional presidents next year to reshape the FOMC entirely.”

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TAGS: Euro Dollar Forecasts