Euro to Dollar Forecast: Can EUR/USD Test 1.18 on Fragile Dollar Outlook?

Modified: Wednesday, 3 September 2025 22:00 BST - Written by Tim Boyer

STORY LINK Euro to Dollar Forecast: Can EUR/USD Test 1.18 on Fragile Dollar Outlook?

The Euro to Dollar exchange rate outlook (EUR/USD) brightened on Wednesday as the exchange rate surged above 1.1650 after US job openings slumped to a four-year low, fuelling forecasts of Fed rate cuts and fresh Dollar weakness.

With EUR/USD trading up to 1.1670, investors are eyeing a test of the 1.17 resistance zone as the Dollar’s fragile outlook dominates global forex markets.

EUR/USD Forecasts: Above 1.1650

The Euro to Dollar (EUR/USD) exchange rate found support above 1.1600 on Wednesday and rallied to near 1.1650 as the dollar failed to hold gains in global markets. The 1.17 region remains a key resistance area.

Following the latest US labour-market data, EUR/USD rallied further to 1.1670 as job openings dipped to the lowest level since 2021.

According to UoB; “We expect EUR to trade with a downward bias now, but it is too early to determine whether EUR can break clearly below the major support at 1.1570. The downward bias will remain intact as long as EUR holds below 1.1700.”

According to Scotiabank; “Broader turbulence in global bond markets looks to have moderated and the overall tone appears to be stabilizing, offer the EUR some support as participants shift their focus back to fundamentals and the outlook for relative central bank policy.”

It added; “We look to a near -term range bound between 1.1600 and 1.1700.”

According to the latest JOLTS data, job openings declined to 7.18mn for July from a revised 7.36mn previously which was below expectations of 7.38mn and the lowest reading since March 2021.

US Dollar Outlook: Fed Policy and Jobs Data in Focus

US labour-market data will continue to be watched very closely, especially given the impact on Fed policy and expectations surrounding interest rates

ING commented; “Jobs-related data now carries even greater weight after Fed Chair Jerome Powell’s de facto admission that employment risks have overtaken inflation concerns. Market attention may also sharpen on data beyond official payrolls, especially given potential credibility questions after Trump’s appointment of a new BLS chief.”

Scotiabank expects medium-term dollar losses; “We continue to think that the longer run outlook for the USD remains negative (weak fiscal policy, narrower growth and yield advantages, concerns over institutional resilience) but markets need new impetus to drive the dollar out of its current ranges.

The final Euro-Zone services-sector PMI index for August was revised slightly lower to 50.5 from the flash reading of 50.7.

Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank was cautious over the outlook; "Right now, the services sector feels more like stagflation than recovery.”

Markets will continue to monitor French fiscal policy and political drama ahead of next week’s scheduled Assembly confidence vote, especially given the climate on stresses in bond markets.

Fiscal fears are liable to stifle Euro support.

Berenberg commented; “If the French public and the country’s policymakers do not muster the will to change tack, markets will eventually force them to face reality by refusing to finance the gaping fiscal gap.

It added; “We expect France to still muddle through for a few more years with a somewhat elevated risk premium. However, the tail risk of a financial crisis is no longer negligible.”

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TAGS: Euro Dollar Forecasts