EUR/USD Price Forecast: Dollar Weakness Pushes Euro Toward 1.1800

EUR/USD Surges as Weak U.S. Jobs Data Forces Fed Rate Cut Bets

The EUR/USD pair advanced sharply, hitting 1.1714 during Friday’s New York session after the U.S. nonfarm payrolls report revealed only 22,000 jobs created versus expectations of 75,000. The unemployment rate ticked higher to 4.3%, while wage growth stayed steady at 0.3% month-on-month. That combination triggered an aggressive sell-off in the dollar, with the U.S. Dollar Index (DXY) sliding 0.70% to 97.57 and U.S. 2-year yields collapsing to 3.50%, the lowest in five months. Traders have now priced a 100% probability of a 25-basis-point rate cut at the September 17 FOMC meeting and a 14% chance of a 50-basis-point cut, dramatically shifting sentiment in favor of the euro.

Political Pressures in Europe Complicate the Rally for EUR/USD

Even with dollar weakness driving momentum, the euro is facing its own headwinds from French political uncertainty. Elections looming in France have stirred volatility, with investors fearing policy paralysis or market disruptions depending on the outcome. Despite this, the euro gained ground after the Eurozone’s Q2 GDP revision showed annualized growth at 1.5%, slightly above expectations, while Germany’s DIW institute projected a modest 0.2% GDP improvement in 2025. Those data points suggest the European economy, while fragile, may be stabilizing, providing some support to the common currency.

DXY Breakdown Unlocks Room for Euro Upside

The DXY’s fall below its critical 97.70 support level marks a decisive technical break. That level had held since mid-August, and the failure opens a path toward the 96.70–96.80 zone. Such weakness in the dollar index is typically correlated with stronger EUR/USD flows. Friday’s nonfarm payrolls miss also tagged the unfinished July auction at 97.43, adding technical confirmation that bearish momentum in the dollar is broadening. Unless the DXY reclaims 98.00 in the coming sessions, EUR/USD has a clean runway toward retesting 1.1790–1.1829.

Technical Picture for EUR/USD Points Toward 1.1800 Resistance

On the charts, EUR/USD has broken decisively above its 22-day simple moving average, with the Relative Strength Index holding above 50, reinforcing bullish momentum. The pair printed a morning star formation around 1.1400 in early August before reclaiming upside traction. Now, the key test lies at the 1.1759–1.1800 zone, with a clean break exposing the year-to-date high at 1.1829. A failure at resistance could see a pullback toward 1.1650 and deeper to 1.1600, with major support at the 100-day SMA around 1.1526. For now, momentum favors continuation higher as long as EUR/USD remains above 1.1700 on a closing basis.

Macro Drivers Favor Euro Strength Over Dollar

Beyond the immediate labor data shock, broader macro dynamics are supporting EUR/USD. Softer U.S. inflation data last month fueled disinflation expectations, reducing the perceived impact of Trump’s tariffs on price growth. Traders now await fresh CPI and PPI reports next week, where another weak print will cement the case for multiple Fed cuts before year-end. Futures tied to December 2025 fed funds contracts already price in nearly 65 basis points of easing. Meanwhile, the ECB is widely expected to hold rates steady, with market probabilities showing a 91% chance of no move, leaving the policy divergence tilted against the dollar.

Long-Term Outlook Signals Bullish Continuation for EUR/USD

From a structural standpoint, EUR/USD’s rally from the 2022 low at 0.9534 remains intact, with the pair now eyeing the 1.1916 projection zone. Technical analysts highlight that the multi-decade downtrend could already be reversing, with the next major retracement level sitting at 1.2019. Sustained strength above 1.1829 would confirm the bullish case and open the way toward 1.20, with 1.3554 flagged as a long-term extension target if momentum persists. As long as support at 1.1604 holds, the risk bias remains to the upside.

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