Euro to Dollar Forecast: French Calm and Fed Dovishness Lift EUR Outlook

Modified: Wednesday, 15 October 2025 22:45 BST - Written by Tim Boyer

STORY LINK Euro to Dollar Forecast: French Calm and Fed Dovishness Lift EUR Outlook

A spark of optimism over French politics helped the Euro rebound on Wednesday, with the Euro to Dollar (EUR/USD) exchange rate climbing to 1.1640.

Traders welcomed signs that Prime Minister Lecornu may survive a no-confidence vote, while expectations of a near-term Fed rate cut added further dollar pressure.

EUR/USD Forecasts: Rallies from 10-Week Lows

The Euro to Dollar exchange rate (EUR/USD) found support just below 1.1550 on Tuesday and rallied to near 1.1640 on Wednesday.

There were more reassuring developments surrounding French politics which underpinned the Euro while the dollar was hurt by increased confidence over a further Fed rate cut this month.

UoB commented; “Downward momentum continues to slow, and unless EUR breaks and holds below 1.1540 soon, a breach of 1.1645 will not be surprising and would indicate that the weakness from early last week has stabilised.”

In a speech on Tuesday, French Prime Minister Lecornu stated that he was backing suspending the 2023 pensions reforms until after the 2027 elections.

This move was welcomed by a key opposition party, potentially changing the arithmetic in the assembly with Lecornu facing a no-confidence vote and needing to pass the budget.

ING commented; “With Socialist support, the chances of passing a budget have meaningfully improved, even if parliamentary numbers remain tight.”

It added; “If Lecornu survives the no-confidence vote, EUR/USD could edge higher and potentially build strong support around 1.160.”

The US economy also remains a key focus

In comments on Tuesday, Federal Reserve Chair Powell pointed to downside risks in the labour market, although he also noted that there had been some signs of stronger than expected activity.

Powell added that the central bank did consider that the committee had enough information to make accurate judgements on the economy and interest rates.

According to MUFG; “The comment puts to rest the idea that the government shutdown, in creating an information vacuum, could result in the FOMC deciding to hold off on cutting rates.”

Traders overall are very confident that rates will be cut this month while markets are pricing in over a 90% chance of two cuts by the end of 2025.

Peter Cardillo, chief market economist with Spartan Capital Securities commented; "He'll cut by 25 basis points at the end of this month, then they'll assess.”

With a shortage of official releases, the Fed Beige Book on economic conditions is scheduled on Wednesday.

ING noted that the dollar has already lost ground; “After yesterday’s sharp correction, the bar for further USD downside is higher. But with earnings still supporting risk sentiment and the Beige Book potentially flashing warning signs, the balance of risks today remains modestly negative for the greenback.”

The US-China trade wars will also be a key element with President Trump threatening further action against China over cooking oil.

Tensions will remain high ahead of the November 1st deadline with expectations that Trump is attempting to secure Chinese concessions.

Danske Bank commented; “The tariff escalation announced on Friday underscored two key points: first, that any renewed trade tensions under a Trump administration are unambiguously negative for the broad USD. Second, markets still view the announced measures largely as negotiation tactics rather than policy reality.”

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TAGS: Euro Dollar Forecasts