Euro to Dollar Week-Ahead Forecast: USD Bullish View Is Under Pressure

Modified: Monday, 3 August 2026 08:01 BST - Written by James Fuller

STORY LINK Euro to Dollar Week-Ahead Forecast: USD Bullish View Is Under Pressure

The Euro to Dollar exchange rate (EUR/USD) closed the las trading week near 1.1530 after gaining around 1.4%, with the post-Federal Reserve decline in US yields triggering a sharp Dollar sell-off.

Stronger Eurozone growth and inflation also supported the single currency, although US business surveys and Friday’s employment report will be crucial in determining whether EUR/USD can extend its recovery towards 1.1600.

EUR/USD Forecasts: 1.16 resistance in focus

ING expects EUR/USD to remain supported around 1.1500 in the near term, although the bank considers a sustained move above 1.1600 a more difficult proposition.

According to ING; “There may still be room for further USD long-squeezing.”

The bank added that EUR/USD broke through 1.1500 “with little resistance”, with stretched Dollar positioning potentially generating further gains for the pair.

EUR/USD closed at 1.1530 on Friday after gaining for four successive sessions and recovering from levels close to 1.1370 at the beginning of the week.

The pair gained just over 1.0% during July and reached a monthly high of 1.1547.

ING expects buyers to emerge around 1.1500, but warned that a move through 1.1600 would probably require another decline in US interest-rate expectations and an easing of geopolitical tensions.

The Federal Reserve voted 9–3 to leave interest rates unchanged at 3.50%–3.75%, with three members supporting an immediate quarter-point increase.

The Dollar nevertheless weakened as markets focused on Chair Kevin Warsh’s press conference and questioned whether the Fed would follow through on its inflation warnings with further tightening.

Danske Bank commented; “The main driver behind EUR/USD rising above 1.15 has been the post-FOMC decline in US real rates.”

It added; “The shift does challenge our recent USD-positive narrative.”

Danske has not abandoned its expectation of further US tightening and maintained that “the macro case for the Fed hiking rates is very much alive.”

The Euro also gained support from domestic data, with the Eurozone economy expanding 0.4% in the second quarter and annual inflation increasing from 2.8% to 2.9% in July.

Deutsche Bank expects the European Central Bank to increase its deposit rate from 2.25% to 2.50% in September.

The bank commented; “A hike in September feels more or less a done deal.”

JP Morgan remains more positive on the US currency despite the sharp post-Fed losses.

The bank described the meeting as a “material setback” for the Dollar, but maintained that it was “not the end of the long-USD trade just yet”.

JP Morgan pointed to elevated inflation expectations, high short-term US yields and a lack of compelling alternatives to the Dollar.

US data will dominate the coming week, with the ISM manufacturing index due on Monday and the services survey scheduled for Wednesday.

Friday’s July employment report will be the most important release, particularly after markets reduced expectations of a September Fed increase.

Weak business surveys and a softer employment report would reinforce the decline in US yields and could push EUR/USD above 1.1547 towards 1.1600.

The Eurozone calendar includes final business surveys and June retail sales, with firm data likely to reinforce expectations of a September ECB increase.

Strong US employment figures would revive Fed tightening expectations and could push EUR/USD back below 1.1500.

A sustained break beneath this level would bring 1.1400 back into focus, while a close above 1.1600 would strengthen the case for an extension towards the June resistance region around 1.1665.

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TAGS: Euro Dollar Forecasts