Euro to Dollar Weekly Forecast: EUR Hits 7-Week High as Fed Rate Doubts Grow

Modified: Monday, 10 August 2026 09:01 BST - Written by James Fuller

STORY LINK Euro to Dollar Weekly Forecast: EUR Hits 7-Week High as Fed Rate Doubts Grow

The Euro to Dollar exchange rate (EUR/USD) climbed to a seven-week high above 1.1550 after a shock decline in US payrolls intensified doubts that the Federal Reserve will deliver the rate hikes previously expected by markets.

With speculative Dollar positions still elevated, softer US data has increased the risk of further position unwinding and provided fresh momentum for the Euro.

EUR/USD Forecasts: Fed doubts continue

MUFG forecasts that the Euro to Dollar (EUR/USD) exchange rate will strengthen to 1.20 by the second quarter of 2027.

Standard Chartered expects a retreat to 1.13 on a 3-month view before a medium-term recovery.

EUR/USD secured a limited net gain to a 7-week high just above 1.1550 after weaker than expected US data.

ANZ commented; “USD longs remain extended, leaving the market vulnerable to further liquidation if US data soften or rate support continues to erode.”

It did add; “ This is not a one-way USD bear case.”

The US employment report recorded a decline in non-farm payrolls of 23,000 compared with consensus forecasts of an increase of around 85,000 while the June increase was revised down to 20,000 from the 57,000 reported previously.

There was a decline in the unemployment rate to 4.1% from 4.2%, but this was due to another decline in the participation rate.

ING commented; “Today’s outcome supports our call for a prolonged pause from the Federal Reserve, but remember that ahead of the September FOMC meeting we have a further jobs report, two inflation prints and the Federal Reserve’s Jackson Hole Symposium.”

It added; “Given we are expecting encouraging news on disinflation, we are consequently expecting the Fed to remain on hold well into 2027.”

MUFG noted underlying Fed dynamics; “Perceptions of a reluctance to hike were reinforced by President Trump’s comment after Warsh’s press conference ended that Warsh would “love to lower rates”. There were three dissents – all Presidents – and division between the Board of Governors and regional Presidents also does not help instil confidence.

It added; “A further steepening of the yield curve is now more likely given the uncertainty over the Fed’s reaction function that points to increased longer-term rates volatility resulting in a larger term premium and a weaker US dollar.”

Standard Chartered noted long-term pressures; “Structurally, the USD trades roughly 16% above purchasing power parity fair value, the net international investment position has ballooned to -67% of GDP and investment income has turned negative. With the US current-account deficit financed by equity inflows, any fading of foreign appetite – potentially amid an AI trade wobble – would likely drag the USD into a cyclical, and ultimately structural, downtrend.”

CIBC expects medium-term dollar losses; “The Fed having skipped July was crucial to our USD lower view, as we expect that the data between now and the September meeting will soften enough such that hikes may be questioned. Meanwhile, rest of world data is picking up relative to the US and we expect that a continuation of this theme will also weigh on the USD.”

International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way, ensuring you get the best exchange rates on your currency requirements.

TAGS: Euro Dollar Forecasts