Euro to Dollar Forecast: USD Retreats on Trade Fears, EUR Finds Support

Modified: Friday, 17 October 2025 11:15 BST - Written by Tim Boyer

STORY LINK Euro to Dollar Forecast: USD Retreats on Trade Fears, EUR Finds Support

The Euro to Dollar exchange rate (EUR/USD) climbed to one-week highs near 1.1650 as renewed US economic worries and rising trade tensions weighed on the dollar.

ING analysts maintain a bullish stance, keeping its 1.20 year-end target intact.

EUR/USD Forecasts: One-Week High

The dollar has lost ground in global markets amid expectations of two further Fed rate cuts this year with the US currency also hurt by renewed fears over a US-China trade war.

In contrast, the Euro has also gained some support from optimism that the French government will survive confidence votes on Thursday.

The Euro to Dollar rate traded just above the 1.1650 level with the US official data vacuum contributing to the wider sense of unease with gold hitting a fresh all-time high.

UoB expects a near-term cap around 1.1680; “Given that there is still no significant increase in upward momentum, we do not expect a continued rise above this level. The major resistance at 1.1720 is also not expected to come into view.”

ING is also cautious at this stage; “It's hard to see EUR/USD breaking above the 1.1685/1730 area in the near term. However, the longer EUR/USD can consolidate here, the closer it comes to the seasonally bullish period of November and especially December. We retain a 1.20 year-end call.”

US-China trade tensions have increased further with overnight comments from President Trump that the US and China are in a trade war.

ING commented; “FX markets are reasonably calm as attention builds on China's export controls on rare earths. The decision to impose such controls has clearly touched a nerve in the US and across G7 nations. The ability or failure to get those controls negotiated away will be one of the hottest topics for financial markets over the next four weeks.”

Rhetoric will be watched closely in the short term. Markets will be looking for further evidence whether Trump will meet Chinese President Xi late this month.

Another key issue is whether there will be an extension of the current truce on overall tariffs will be extended beyond November 10th. Without an extension, tariffs are due to revert to 145%.

According to Joseph Capurso, head of foreign exchange at Commonwealth Bank of Australia; "An extension, rather than a grand bargain that settles all trade issues, is probably the most realistic second-best outcome compared to the alternative of escalation of retaliation."

Betting markets expect the US government shutdown to extend into November, increasing potential economic damage, and traders are pricing in around a 95% chance of two Fed rate cuts by the end of 2025.

At this stage, markets expect no change in ECB rates which would support the Euro if the Federal Reserve does deliver two further rate cuts by the end of this year.

MUFG considers that the ECB should keep its options open.

It added; “One cut by mid-2026 is unlikely to derail prospects of a rebound in EUR/USD given the Fed is set to be much more active and with a risk of pricing of cuts over that period increasing further as well.”

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TAGS: Euro Dollar Forecasts