Euro to Dollar Forecast: USD Weakens, EUR Rally Builds

Modified: Tuesday, 9 September 2025 22:00 BST - Written by Tim Boyer

STORY LINK Euro to Dollar Forecast: USD Weakens, EUR Rally Builds

The US Dollar slid to 7-week lows on Tuesday, with the Euro to Dollar (EUR/USD) exchange rate touching 1.1780 as traders bet on Federal Reserve rate cuts.

ING sees 1.20 as the medium-term target, though near-term resistance at 1.1790–1.1830 may cap gains.

French political turmoil has had little impact, leaving the Fed’s policy path and looming labour-market revisions as the key drivers for the dollar.

EUR/USD Forecasts: 1.1790–1.1830 Resistance in Focus

The US Dollar has remained under pressure in global markets with a dip in the currency index amplified by renewed Yen gains.

There has been only a very limited Euro impact from the French political crisis.

The dollar index has dipped to 7-week lows while the Euro to Dollar (EUR/USD) exchange rate has also hit 7-week highs at 1.1780 before a marginal correction.

ING commented; “EUR/USD may stall in the 1.1790/1800 area temporarily. But 1.20 is undoubtedly the multi-month target.”

UoB is doubtful that EUR/USD can break above 1.1790 in the near term, but added” Looking ahead, if EUR breaks and holds above 1.1790, it could potentially trigger a rise toward the significant resistance level of 1.1830.”

The early-July peak at 1.1830 remains a key resistance point on the path to 1.20.

Markets remain convinced that the Federal Reserve will cut interest rates next week and there has been a further creep in market expectations with traders now pricing in close to a 12% chance of a 50 basis-point cut.

Later Tuesday, the Bureau of Labor Statistics (BLS) will release the latest labour-market revisions with annual benchmark revisions to the payrolls data.

There are expectations that there will be a substantial downgrade of at least 500,000 for the year to March 2025.

A very substantial downgrade would reinforce concerns over the labour market and trigger increased speculation over a large Fed rate cut next week.

According to Goldman Sachs; “We think the Dollar will depreciate because less exceptional economic performance warrants a less overvalued currency.”

It added; “We view the labor market slowdown through this lens, as we think the slower trend confirms some of the challenges with which the Dollar is contending.”

The US NFIB small-business confidence index edged higher to 100.8 for August from 100.3 the previous month and slightly above consensus forecasts.

There was evidence of reduced labour demand with the number of companies reporting unfilled vacancies declining to the lowest level since July 2020.

NFIB Chief Economist Bill Dunkelberg commented; “While the economy appears to be doing well, small businesses are scaling back on job openings.”

ING sees scope for net outflows away from the dollar; “The drop in short-dated US rates has brought dollar hedging costs for euro area-based investors in US assets down to 2.12% per annum – the lowest since early April. This should encourage fixed-income investors in particular to raise their dollar hedge ratios and pressure the spot dollar exchange rate.”

As expected, French Prime Minister Bayrou lost the confidence vote on Monday and will submit his resignation with President Macron expected to nominate a new candidate.

The French bond market will continue to be watched closely.

MUFG commented; “While the political uncertainty is an unfavourable development we continue to believe that it is unlikely to be sufficient on its own to trigger a weaker euro.”

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TAGS: Euro Dollar Forecasts