Modified: Thursday, 28 August 2025 22:15 BST

– Written by


David Woodsmith

STORY LINK EUR/USD Forecast: Euro Higher Toward 1.17 as Dollar Outlook Sours

The Euro to Dollar (EUR/USD) exchange rate forecast is turning more constructive after the currency pair rebounded sharply from three-week lows near 1.1580.

With the exchange rate pushing towards 1.1670, traders are watching whether EUR/USD can reclaim the 1.17 level as Federal Reserve fears and political pressure on the central bank continue to undermine US dollar support.

EUR/USD Forecasts: Looking to Regain 1.17

The Euro to Dollar exchange rate (EUR/USD) bounced quickly from 3-week lows just below 1.1580 on Wednesday and extended the recovery to 1.1670 on Thursday.

Dollar sentiment remains negative as investors continue to fret over US Administration attempts to gain control over the Federal Reserve while Euro-Zone political fears have eased slightly.

According to Scotiabank; “We see limited resistance ahead of the lower 1.17s and look to a near-term range bound between 1.1620 and 1.1720.”

UoB is also not expecting a breakout from narrow ranges in the near term; “The brief decline did not result in any clear increase in downward momentum. We continue to expect range trading but now expect a narrower range of 1.1580/1.1720.”

Federal Reserve policy and President Trump’s attacks on the central bank remain key elements.

As far as the September meeting is concerned, markets are pricing in around an 85% chance of a cut.

Governor Waller, who backed a rate cut at the July meeting, is due to make a speech after the New York close.

ING commented; “He’s now a dove (and a Republican) and could turn even more dovish after the July jobs report validated his concerns over the weakening labour market.”

MUFG maintains a bearish dollar stance and commented; “The US dollar is softer versus most G10 currencies after a turnaround yesterday from intra-day highs with uncertainty over Trump’s attack on Fed independence set to remain a strong deterrent against any sustained buying of the dollar.

It added; “The strength of the dollar yesterday looked somewhat detached from the fundamental news and was likely a reflection of month-end related flows.”

ING commented; “Short-dated US yields remain near their recent lows, and most would conclude that this week’s removal of the Fed’s Lisa Cook by President Trump is dollar-negative.”

Cook has stated that she is suing Trump over his attempts to fire her while it is still unclear whether she is still in her post.

US economic data was slightly stronger than expected which stemmed the potential for further aggressive near-term dollar selling.

Second-quarter GDP was revised up to an annualised 3.3% from the previous figure of 3.0% while initial jobless claims declined to 229,000 from 234,000 previously.

Euro-Zone political concerns have eased slightly, although there are still important tensions.

Scotiabank commented; “The Dutch PM won Wednesday’s confidence vote and France’s PM is making a considerable effort to negotiate with lawmakers ahead of his own Sept 8 confidence vote.”

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TAGS: Euro Dollar Forecasts