Euro to Dollar Forecast: 1.20 on a 3-Month Timeframe say Analysts

Published: Tuesday, 16 September 2025 09:00 BST - Written by David Woodsmith

STORY LINK Euro to Dollar Forecast: 1.20 on a 3-Month Timeframe say Analysts

The Euro to Dollar exchange rate (EUR/USD) pushed higher towards 1.18 on Tuesday. Foreign exchange analysts at Scotiabank target fresh multi-year highs, while ING forecasts EUR/USD at 1.20 within three months.

Attention now turns to Wednesday’s Federal Reserve decision, with markets pricing a 95% chance of a 25bp cut and a slim risk of 50bp.

EUR/USD Forecasts: 4-Year Highs

The Euro to Dollar (EUR/USD) exchange rate secured a fresh advance on Monday as the dollar maintained a defensive tone while the French credit-rating downgrade had little Euro impact.

A break above the early-July high of 1.1830 would lead to 4-year highs.

Scotiabank commented; “The renewed bullishness has us looking to a break of Tuesday’s high in the upper 1.17s, targeting 1.18 followed by a possible push to fresh multi-year highs.”

ING expects a move to 1.20 on a 3-month view.

The Federal Reserve will announce its policy decision on Wednesday. There are very strong expectations that the central bank will cut interest rates with markets pricing in around a 95% chance of a 25 basis-point cut with a small chance of a larger 50 basis-point move.

Commonwealth Bank of Australia (CBA) currency strategist Carol Kong commented; "We are calling for a 25-basis-point cut from the FOMC this week, which is more than fully priced."

The Fed will also release the latest set of economic forecasts with the main focus on interest rate projections by the committee members.

CBA’s Kong added; "In order to have an impact on currencies, Powell will have to out-dove the market by giving quite explicit hints about follow-up rate cuts. And if the FOMC does deliver an outsized 50-basis-point cut, that could also push the dollar down quite significantly, unless he suggests that there is a limited chance of follow-up cuts."

There is still uncertainty whether Trump’s Fed nominee Miran will be confirmed by the Senate in time to attend the meeting which starts on Tuesday.

According to Rabobank; “There’s little doubt that Miran would join July dissenters Bowman and Waller in pushing for a rate cut (maybe even a 50bp cut?) if his appointment is confirmed later today. President Trump certainly seems to think so, he told reporters on Sunday that he is expecting a “big cut” from the FOMC this week.”

ING commented; “We see the dollar staying gently offered into the meeting, and it could sell off a little further should a 50bp cut at the meeting prove a closer call than most expect.”

Commerzbank Head of FX and Commodity Research Thu Lan Nguyen noted the possibility that the Administration will succeed in getting substantial interest rate cuts.

She added; “Given the risk of stagflation in the wake of US tariffs, such a sharp easing of monetary policy would be disastrous for the US dollar.”

Markets will also consider whether there is scope for a wider retreat from US assets amid concerns over attacks on key US institutions.

According to J Safra Sarasin; “While the ‘sell America’ narrative is currently not in focus, there is little the Trump administration has offered to reassure markets that it is committed to safeguarding the integrity of US institutions.”

International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way, ensuring you get the best exchange rates on your currency requirements.

TAGS: Euro Dollar Forecasts