Modified: Wednesday, 8 October 2025 21:45 BST

– Written by


Ben Hughes

STORY LINK Euro to Dollar Forecast: USD Benefits from Undermined Confidence in EUR and JPY

The Euro to Dollar exchange rate (EUR/USD) slid to its weakest level in six weeks as French political uncertainty, poor German data, and a resurgent dollar combined to leave investors braced for further volatility.

EUR/USD Forecasts: Slide to 6-Week Low

The US Dollar has continued to make headway in global markets with support from Euro and yen selling.

The Euro to Dollar (EUR/USD) exchange rate dipped sharply to 6-week lows at 1.1610 and struggled to recover amid negative sentiment. French developments will be a key element on Wednesday.

UoB commented; “The decline is oversold, but with no sign of stabilisation just yet.”

According to ING; “based on our view that the dollar will face downside risks with today’s Fed minutes and the USD rally looking a bit overdone in general, we think EUR/USD back at 1.170 is more likely than a test of 1.150 in the coming days.”

The yen has remained under pressure following the weekend election while French political fears have continued to unsettle the Euro.

MUFG commented; “The US dollar has benefitted this week from political developments outside of the US which have undermined confidence in the euro and yen in the near-term and overshadowed the more negligible negative impact on the US dollar from the ongoing US government shutdown.”

The latest German data recorded a 4.3% slide in industrial production for August compared with market expectations of a 1.0% decline.

ING commented; “Extremely disappointing industrial data in August has just increased the risk of yet another quarter of contraction for the German economy.”

MUFG added; “the weakness will add to concerns over the disruptive impact from higher tariffs.”

French political developments will continue to be watched closely with Prime Minister Lecornu facing a deadline today to find a solution to the political impasse and budget deadlock.

MUFG commented; “Lecornu’s last-ditch efforts to reach a political agreement by today’s deadline appear likely to fail. President Macron’s close ally and his first Prime Minister Edouard Philippe has even suggested that he should take a more radical step of offering to resign before the end of his term in 2027 on the condition of a budget being adopted.”

The US data flow is continuing to be disrupted by the US government shutdown

Minutes from the September Federal Reserve policy meeting will, however, be released on Wednesday.

At that meeting, interest rates were cut by 25 basis points with Miran dissenting and calling for a 50 basis-point cut.

Markets are still pricing over just over an 80% chance of two further Fed rate cuts by the end of 2025.

There are, however, also doubts whether further rate cuts are appropriate given overall financial conditions which will create further uncertainty.

Macquarie Group global forex and rates strategist Thierry Wizman commented; “With stock indexes near all-time highs, gold prices rallying higher, and corporate bond credit spreads very tight, the case for monetary policy being overly restrictive still looks rather flimsy.”

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TAGS: Euro Dollar Forecasts