Euro to Dollar Forecast: EUR/USD Risks Retest of 1.1750 Before Recovery to 1.1850

Modified: Sunday, 21 September 2025 17:30 BST - Written by Ben Hughes

STORY LINK Euro to Dollar Forecast: EUR/USD Risks Retest of 1.1750 Before Recovery to 1.1850

The US dollar extended its rebound into Friday, forcing the Euro to Dollar (EUR/USD) exchange rate back under 1.1750 at the New York open.

While short covering and firmer US data have underpinned the greenback, the euro remains trapped below 1.1800, with traders debating whether support at 1.1750 can hold or if deeper losses toward 1.1700 are on the cards.

EUR/USD Forecasts: Test Support Below 1.1750

The Euro to Dollar exchange rate (EUR/USD) found support on dips to 1.1750 on Thursday, but has not been able to regain the 1.1800 level and again dipped to below 1.1750 at the US open.

The dollar has been able to gain net support in global markets with evidence of short covering following the Federal Reserve interest rate cut.

Scotiabank commented; “The outsized reaction to Thursday’s better than expected claims data have also revealed a market that appears vulnerable to a squeeze.”

According to UoB; “Although downward momentum has not increased significantly, EUR could retest the 1.1750 level before a more sustained recovery is likely.

Scotiabank focussed on potential support; “We look to support around the previously broken descending trend line drawn from the July highs, and would expect it to limit losses below 1.17.”

On the upside UoB added; “if EUR breaks above 1.1825, it would indicate that the current downward pressure has eased.”

ING is still positive on the outlook; “We are sticking to our call for EUR/USD to climb back to the 1.1850 handle in the coming days.”

Markets will continue to digest this week’s Federal Reserve decision and the policy outlook.

As far as the near-term outlook is concerned, markets are pricing in over a 90% chance that there will be a further 25 basis-point cut at the October policy meeting.

RBC Capital Markets expects further dollar losses; “The FOMC has embarked on a new rate cutting cycle, the first and most important of several pillars we are expecting to drive US$ to weaken.”

Credit Agricole, notes the scope for a dollar to recover from over-sold levels; “The Fed did not validate the excessively dovish market expectations at its September meeting, and this helped the USD regain some ground across the board.”

The bank discussed the potential for a more sustained recovery; “The question remains, however, whether the FOMC pushback would be sufficient to help the currency recover on a more sustained basis. We think that this could be the case in part because the market USD-bearish narrative has evolved considerably of late.”

European developments have not had a major impact at this stage.

ING noted developments in France; “Their latest political news isn’t very encouraging, as the new prime minister is facing harsh union opposition to his fiscal plans, and negotiations with the Socialists – who are believed to hold the key to passing the budget – have not yielded good results so far.”

It added; “The risk of further widening in the OAT-Bund spreads remains tangible, but what matters most for the euro is the rate of change in those adjustments, and so far we are not expecting a material FX spillover.”

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TAGS: Euro Dollar Forecasts