Modified: Sunday, 28 September 2025 19:45 BST

– Written by


Ben Hughes

STORY LINK Euro to Dollar Forecast: Oversold EUR/USD Tests Crucial Support

The Euro-to-Dollar exchange rate slipped to three-week lows on Thursday, with EUR/USD testing support near 1.1650 after stronger-than-expected US data boosted the greenback.

Markets scaled back Fed cut bets, while analysts warned that a break of the 50-day moving average at 1.1660 could open the door to deeper losses.

ING, however, still sees scope for EUR/USD to rebound above 1.170 in the short term.

EUR/USD Forecasts: Slides to 3-Week Lows

The Euro to Dollar (EUR/USD) exchange rate was unable to make headway on Thursday and dipped to 3-week lows just below 1.1650 before a tentative recovery to 1.1680 on Friday.

The US data releases on Thursday were stronger than expected with no sign of an increase in layoffs which helped underpin the dollar.

There was a shift in market pricing with traders considering that the chances of two further Fed rate cuts by the end of 2025 had dipped towards 60%.

According to UoB; “While the decline is deeply oversold, there is no sign of stabilisation just yet. Today, as long as EUR holds below 1.1715, there is a chance for EUR to continue to decline. That said, the major support at 1.1610 is likely out of reach for now.”

SocGen considers that the dollar is around key support; “The pair is currently testing an ascending trend line established since August; the 50-day moving average near 1.1660 is a crucial support.”

It added; “Should it fail to defend the moving average near 1.1660, the down move may extend. In such a scenario, the next objectives could be located at the late August lows of 1.1600/1.1570 and 1.1500.”

ING is doubtful that the dollar can hold recent gains; “our baseline view is for the dollar to give back some gains, and we think a return above 1.170 can happen as early as today.”

It did note potential further Euro setbacks; “One risk, aside from any more US data strength, is that markets take rising geopolitical tension in Europe more seriously. NATO said yesterday that it is ready to shoot down any Russian planes violating its airspace.”

MUFG noted that the US data was stronger than expected; “It’s been some time since US data has surprised to the upside and driven both yields and the US dollar higher but the data yesterday and on Wednesday certainly did surprise to the upside and given positioning has been so skewed of late toward weakening economic data in the US we have seen a notable rebound for the dollar just when volatility is hitting new lows in FX and bonds.”

The bank expects that the labour market will be crucial for developments.

MUFG added; “If the labour market data was to prove better than expected next week, it would certainly undermine the primary argument put forward by Fed Chair Powell to cut rates further and force the Fed to give more weight to the upside inflation risks.”

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TAGS: Euro Dollar Forecasts