Euro to Dollar Forecast: EUR/USD Slips Below 1.17 as US Data Clouds Fed Cuts

Modified: Thursday, 25 September 2025 22:45 BST - Written by Frank Davies

STORY LINK Euro to Dollar Forecast: EUR/USD Slips Below 1.17 as US Data Clouds Fed Cuts

The Euro to Dollar exchange rate fell to two-week lows against the Dollar on Thursday, with EUR/USD sliding under 1.1700 as strong US data cast doubt on the scale of Fed rate cuts this year.

Markets grew less confident in October and December easing, though MUFG still sees policy divergence lifting the pair back towards 1.20 by year-end.

EUR/USD Forecasts: 1.17 Breached

The Euro only briefly traded above 1.1750 against the US Dollar on Thursday and dipped to 2-week lows below 1.1700 after the New York open.

Solid US data triggered doubts whether the Fed would engage in further aggressive rate cuts this year which supported the dollar.

According to UoB; “Conditions are deeply oversold, but the sharp decline has scope to break below 1.1715. Given the oversold conditions, EUR might not be able to maintain a foothold below this level, and the next major support at 1.1670 is also unlikely to come into view.”

Scotiabank will be concerned over the outlook if EUR/USD sustains a move below 1.1720.

MUFG still expects medium-term Euro gains; “With the ECB set to leave rates on hold through the rest of this year while the Fed plans to deliver two more 25bps rate cuts, we continue to believe that the near-term policy divergence will lift EUR/USD up towards the 1.2000-level by year end.”

Geo-political developments will continue to be watched closely.

ING commented; “We don't really buy into the story that geopolitics has driven the dollar stronger this week. Instead, this week's dollar strength is probably a function of not enough bearish news to justify what, after all, is quite an expensive proposition in being short dollars.”

US initial jobless claims declined to 218,000 in the latest week from a revised 232,000 previously and below consensus forecasts of 233,000 while continuing claims held at 1.93mn.

The data does not suggest widespread layoffs, although there are still concerns over a decline in both supply and demand for labour.

Markets were less confident that the Fed would cut interest rates in October and December.

Danske Bank is not backing two cuts; “The Fed remains divided over how to manage downside risks to the labour market and upside risks to inflation. We are still better aligned with the hawkish camp as we forecast only one more rate cut this year. Policymakers have to consider both easing financial conditions as well as tightening liquidity conditions.”

Euro-Zone political developments will still be watched closely.

According to Scotiabank; “Political risk in France is once again rising amid reports that Marine Le Pen and her National Rally party are pushing for fresh elections.”

UBS was more positive and noted that newly-appointed French Prime Minister Lecornu has started budget negotiations with all parties to form a new government and added; “Any positive progress on this front would likely provide further support for the euro.”

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TAGS: Euro Dollar Forecasts