Euro to Dollar Forecast: "Break Above 1.1780" Would indicate EUR Recovery

Modified: Monday, 22 September 2025 23:30 BST - Written by Tim Boyer

STORY LINK Euro to Dollar Forecast: "Break Above 1.1780" Would indicate EUR Recovery

The Euro to Dollar exchange rate steadied near 1.1725 before regaining ground to 1.1780 on Monday as expectations of further Fed rate cuts weighed on the greenback.

Markets are now focused on a heavy slate of Fedspeak, including remarks from Chair Powell and new Governor Miran, which could set the near-term tone for EUR/USD.

Foreign exchange analysts at ING see upside risks beyond 1.180 this week, while MUFG and Commerzbank highlight scope for sustained dollar weakness as rate differentials narrow.

Dollar Dips Ahead of Fed Talk, EUR/USD Looking to Regain Momentum

The Euro found support near 1.1725 against the US Dollar and recovered to 1.1780 ahead of the US open with the dollar undermined by expectations of further Fed rate cuts.

UoB commented; “a break above 1.1780 would indicate that EUR is starting to recover.”

According to ING, there is scope for gains; “EUR/USD’s short-term fair value is 1.190 as of this morning, and we see upside risks beyond the 1.180 level this week as the dollar may shed its post-Fed gains.”

The outlook for US monetary policy will be a key market element.

According to ING; “Expect a lot of focus on Fedspeak this week. Investors are attempting to gauge whether Powell’s cautious tone on the need for more cuts is shared by the majority of the FOMC.”

Powell himself will also make a speech on the economy on Tuesday and will take questions from the audience.

The comments from new Governor Miran will also be watched very closely.

Joseph Capurso, head of FX, international and geoeconomics at Commonwealth Bank of Australia commented; "The one that I think would be most interesting for markets is the speech from Stephen Miran, because markets would want to get a gauge about what he thinks about independence of the Fed and what influence the President might have and the like."

MUFG looked at the overall outlook; “the medium-term outlook remains the same and we maintain our view of a further weakening of the US labour market, more rate cuts with the risk of the market being under-priced for what is delivered greater than the risk of being over-priced.”

It added; “Following the Fed’s latest policy decision, our Hawk-Dove Index (HDi) has turned negative for the first time in 12 months, signalling a notable dovish shift in communication. As a result, we do not expect the initial USD rebound to prove sustainable.”

As far as economic data is concerned, the latest PMI business confidence data will be released on Tuesday.

Markets expect no significant change in the Euro-Zone data while the US data will be watched closely with an emphasis on both the inflation and employment components.

Further evidence of a weaker labour market would reinforce expectations of a more dovish Fed policy stance.

Commerzbank focussed on yield spreads; “Lower rates reduce the yield advantage of USD-denominated assets, raising risks of capital outflows. In contrast, the EUR is showing signs of resilience. Rate cuts are not on the ECB’s immediate horizon and the resulting narrowing rate differential supports the EUR.”

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TAGS: Euro Dollar Forecasts