Euro to Dollar Forecast: EUR/USD Vulnerable Despite Deutsche Bank 1.18-1.20 Fair Value

Modified: Thursday, 11 September 2025 08:45 BST - Written by Tim Boyer

STORY LINK Euro to Dollar Forecast: EUR/USD Vulnerable Despite Deutsche Bank 1.18-1.20 Fair Value

The Euro to Dollar (EUR/USD) exchange rate retreated to 1.17 on Wednesday as fresh geopolitical concerns and French political uncertainty weighed on the single currency, giving the dollar breathing space after weeks of labour-market driven losses.

Analysts see EUR/USD stuck near 1.1700 in the short term, with ING flagging scope for a dip towards 1.1630 while Deutsche Bank points to a fair-value range closer to 1.18–1.20 based on rate differentials.

EUR/USD Forecasts: Retreats to 1.17

The US Dollar fought back on Tuesday while the Euro was hampered by increased geo-political concerns and French politics.

The Euro to Dollar (EUR/USD) exchange rate dipped to below 1.1700 in Europe on Wednesday before trading just above this level.

ING commented; “Expect EUR/USD to continue trading around the 1.1700 area - though we don't rule out a very temporary dip to the 1.1630/50 area later this week.”

According to UoB; “We do not expect the major support at 1.1650 to come under threat. On the upside, resistance levels are at 1.1730 and 1.1760.”

Deutsche Bank noted that based on interest rate differentials, fair value for EUR/USD would be 1.18-1.20 with internal and external factors hampering the Euro.

French President Macron has nominated Lecornu as the next Prime Minister, but there is no sign of consensus over fiscal policy.

Berenberg focussed on the geo-political risks; “The policy paralysis in Paris spells trouble for France and Europe. It makes it even more difficult for Europe to stand up to Trump and Putin. Even more so than before, the onus is now on Germany to take the lead to defend European interests.”

It added; “President Emmanual Macron can still set foreign policy for France. But he does not control the purse strings and would struggle to get any international agreement ratified by parliament.”

As far as the dollar is concerned, Federal Reserve developments will continue to be watched closely.

A US District Judge Cobb has temporarily blocked President Trump from removing Fed Governor Lisa Cook.

Elsewhere, White House economic advisor Miran is expected to win a confirmation vote on the Senate Banking Committee on Wednesday and his nomination will then go to the full Senate early next week, potentially allowing a vote at next week’s Fed meeting.

TD Securities commented; "A Miran confirmation would be a dovish development for the Fed as he is replacing a hawkish member."

Markets are 100% confident that rates will be cut next week with the potential for a 50 basis-point move back above 10%.

Most analysts are sceptical that the Fed majority will back a larger cut.

Matt Simpson, a senior market analyst at City Index commented; "I think a 50 bp would do more damage than good for sentiment at this point. Besides, the Fed will want to save face and not fully succumb to Trump's wishes."

He added; "Markets are pricing in three cuts over the next three meetings and the Fed is in a good position to play nicely with those expectations, or increase odds of cuts in 2026 – without succumbing to a 50 bp cut next week.”

Deutsche Bank still considers that the dollar is vulnerable; “Uncertainty about the underlying steady state of demand for US assets remains high however. In the meantime the underlying cyclical support for the dollar has deteriorated, reflected in a material narrowing in the EUR – US rate differential.

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TAGS: Euro Dollar Forecasts