Euro to Dollar Forecast: EUR/USD Implied Volatility Lowes in 11 Months

Modified: Sunday, 26 October 2025 20:45 BST - Written by Tim Boyer

STORY LINK Euro to Dollar Forecast: EUR/USD Implied Volatility Lowes in 11 Months

The Euro to Dollar exchange rate (EUR/USD) held firm on Friday, finding support near 1.1600 before edging to around 1.1640 as softer-than-expected US inflation data curbed dollar demand.

The pair settled close to 1.1620 into the weekend, with stronger Euro-Zone PMI figures offering additional support.

EUR/USD Forecasts: Softer US CPI Reinforces Near-Term Range

The latest US consumer prices data came in slightly below expectations, reinforcing market conviction that the Federal Reserve will cut interest rates at next week’s meeting. The headline CPI rose 0.3% in September, lifting the annual rate to 3.0% from 2.9%, just under the 3.1% consensus forecast. Core CPI also undershot expectations, increasing 0.2% on the month and easing to 3.0% year-on-year.

Marc Chandler, Chief Market Strategist at Bannockburn Global Forex, commented; “The headline was a bit softer than expected. The dollar was sold on the news, even though markets were already fully confident of Fed cuts in both October and December.”

He added; “Because those cuts are already priced in, this kneejerk dollar weakness may not be sustained.”

ING also pointed to near-term uncertainty; “Markets are fully pricing in 50bp of easing by year-end, and without any jobs data at hand, it will be hard to speculate much beyond the December meeting.”

Meanwhile, Euro-Zone PMI data came in stronger than expected, offering reassurance on growth momentum and helping the euro to consolidate gains.
UoB noted the technical backdrop remains stable: “The price movements still appear to be part of a range-trading phase.”

Commerzbank’s Volkmar Baur observed that EUR/USD implied volatility has fallen to its lowest level in 11 months, cautioning that “given the current geopolitical environment, I would not bet too much on this calm persisting.”

Trade headlines added a layer of uncertainty. US President Trump confirmed his meeting with Chinese President Xi is set for next week, even as talks with Canada were abruptly suspended.

Ben Bennett, Head of Investment Strategy for Asia at L&G Asset Management, commented; “Expectations are quite high for the Trump–Xi meeting, with the upside risk of a significant de-escalation following the face-to-face. Investors are getting used to the pattern of threats followed by compromise.”

For readers planning Euro or Dollar purchases, recent swings highlight how swiftly sentiment can shift on key data and trade headlines. Get in touch to discuss your euro currency purchase requirements.

The euro’s resilience above 1.16 underscores that while Fed cuts are largely priced in, volatility could rise again as traders weigh the upcoming policy statement and any fresh US-China developments.

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TAGS: Euro Dollar Forecasts