Modified: Wednesday, 27 August 2025 22:30 BST

– Written by


David Woodsmith

STORY LINK Euro to Dollar Forecast: EUR/USD Vulnerable Despite Powell’s Dovish Shift

The Euro to Dollar (EUR/USD) exchange rate forecast remains fragile after the single currency slipped to fresh lows near 1.1575 on Wednesday before stabilising into the New York open.

Political turmoil in Europe, including renewed fears over France’s government, continues to weigh on the euro, while the US dollar has held firm despite growing concerns about Federal Reserve independence.

Analysts remain split, with some warning of further losses toward 1.14, while others still see scope for EUR/USD to rebound toward 1.17 and even 1.20 over the medium term.

EUR/USD Forecasts: 1.1580 and 1.1745 Range?

The Euro has not been able to gain any traction on Wednesday and dipped to lows around 1.1575 before stabilising at the New York open.

The Euro has been undermined by on-going European concerns while the dollar has been resilient despite on-going unease surrounding the Administration attempts to gain greater control of the Federal Reserve.

According to UoB; “we expect EUR to trade in a range between 1.1580 and 1.1745 for now.”

Scotiabank notes the potential risk of a slide to 1.14, but added; “We remain neutral—for now— looking to a near-term range bound between 1.1550 support 1.1650 resistance.”

ING expects that the Euro can rebound; “We think EUR/USD can ultimately make its way back to 1.170.

Danske Bank expects a medium-term EUR/USD move to above 1.20.

Markets are continuing to monitor the French political situation and the bond market.

According to Rabobank; “the risk has grown substantially that France’s government will fall, which would also raise the risk that the 2026 budget will not include any material spending cuts.”

It added; “The coming days will tell if Bayrou can work the opposition parties to get them on board. The Socialists have said that it’s “inconceivable” that they will vote in favour of the government, but they seem to be the prime minister’s best chance for survival at this point.”

Scotiabank also noted European concerns; “Political uncertainty in Europe appears to be broadening as the Dutch government faces a no confidence vote ahead of an election scheduled for October. French bond markets look to have stabilized somewhat following Tuesday’s announcement of a September 8 confidence vote, however the country’s yields remain elevated as French-German yield spreads continue to widen.”

As far as the US economy is concerned, the consumer confidence index edged lower to 97.4 for August from 98.7 previously, but above consensus forecasts of 96.4.

Stephanie Guichard, Senior Economist, Global Indicators at The Conference Board commented; “The present situation and the expectation components both weakened. Notably, consumers’ appraisal of current job availability declined for the eighth consecutive month.”

According to Rabobank; “Given Powell’s dovish lean at Jackson Hole and the recent repricing of the Fed, we are reluctant to chase the USD weaker in the near term, with downside risks to yields now looking more limited.”

Nevertheless, it added; “Strategically, we continue to recommend selling into rallies, consistent with our view that the USD remains on a downward trajectory over the medium term.”

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TAGS: Euro Dollar Forecasts