EURUSD weekly forecast: the market favours the dollar, but everything depends on the Fed and economic data

At the start of the new week, the EURUSD pair remains within a range, maintaining a moderately bullish tone. The market has already priced in US inflation data for June: consumer prices accelerated to 2.7% y/y, and the core index reached 2.9%. This supported the dollar and reduced expectations for imminent Fed policy easing. At the same time, Washington’s tough rhetoric on tariffs creates nervousness in the markets. Participants continue to monitor central bank statements and signals from the US and eurozone economies. These will shape the future euro-to-dollar trajectory.

EURUSD forecast for this week: quick overview

• Market focus:

Strong US data (CPI growth to 2.7% y/y and steady retail sales) boosted the dollar and cooled expectations of Fed rate cuts. Donald Trump softened his rhetoric regarding the Federal Reserve Chairman, stating he had no plans to dismiss him. This also eased market anxiety. The US dollar maintains a strong position.

• Current trend:

The EURUSD pair corrected from peak levels, but the medium-term uptrend remains intact. In the short term, consolidation within the 1.1580-1.1685 range is likely, amid high sensitivity to macroeconomic data and Fed rhetoric.

• EURUSD forecast for 21-25 July 2025:

If the EURUSD pair consolidates above 1.1685, it could advance towards 1.1835 and then 1.1900. The support level lies at 1.1580 and 1.1530. A breakout below 1.1530 could trigger a deeper correction towards 1.1430. The market focus is on new inflation data, Fed commentary, and geopolitical rhetoric.

EURUSD fundamental analysis

The EURUSD rate has remained under pressure for two weeks. The US dollar enjoys demand amid strong economic data and restrained signals from the Fed.

The US Consumer Price Index rose by 0.3% m/m and 2.7% y/y in June, slightly above expectations. Core inflation stood at 2.9% y/y, slightly below forecasts. These figures suggest persistent inflationary pressure alongside overall economic resilience.

US retail sales in June exceeded expectations, while initial jobless claims fell to a three-month low. This strengthened the view that the Federal Reserve will not rush to cut rates.

Fed Governor Adriana Kugler noted that holding rates at current levels for some time is a reasonable step. However, Federal Reserve Bank of San Francisco President Mary Daly confirmed expectations of two rate cuts before the end of the year. The Fed’s stance remains flexible.

Finally, Donald Trump stated he does not plan to dismiss Fed Chairman Jerome Powell despite ongoing criticism. This reduced political uncertainty surrounding the Federal Reserve and supported investor sentiment.

The focus remains on the next steps from the Fed and ECB, which will steer currency markets in the near future.

EURUSD technical analysis

On the daily chart in July 2025, the EURUSD pair continues its correction following the spring rally. Since early February, the euro has strengthened notably against the dollar, reaching a local high near 1.1830 in June. However, a weakening phase began at the end of June.

The price is currently testing the middle Bollinger Band near current levels. This signals a slowdown in bullish momentum and a transition into a more neutral phase. The lower band near 1.1500 could serve as the nearest support, while resistance remains at 1.1830.

The MACD indicator shows weakness: the histogram is moving into negative territory, with the lines trending downwards. This confirms fading momentum and a high likelihood of continued correction. Meanwhile, the stochastic oscillator sits below 40 but is beginning to turn upwards. This may indicate an upcoming short-term correction or a pause in the decline.

Key levels: support at 1.1439 and the deep sell-off area around 1.1203. In the short term, the euro remains under pressure amid a strong dollar. The 1.1500 level could become a key turning point for the next scenario.

EURUSD trading scenarios

The outlook for the EURUSD pair for the coming week remains neutral, with the possibility of a decline. The fading growth impulse, pressure from a strong dollar, and corrective signals from indicators point to caution among buyers. The pair remains within a range. Its next moves will depend on US economic statistics and comments from Fed officials.

• Buy scenario:

If EURUSD holds above 1.1590 and signs of local stabilisation appear on the daily or H4 chart (such as consolidation within a narrow range, restrained divergence on oscillators, or rising buying volumes), a long position could be considered.

In this case, the target would be 1.1685. A breakout and consolidation above this level could lead to growth towards 1.1760 and 1.1830. A stop-loss is advisable below 1.1540. A breakout below that level would invalidate the corrective growth scenario and increase pressure from sellers.

• Sell (short) scenario:

If EURUSD fails to consolidate above 1.1685 and continues showing weak dynamics with pullbacks towards the lower Bollinger Band, a sell scenario becomes feasible. This is especially relevant if the dollar strengthens further.

The first downside target is 1.1540. A breakout below that level could lead to a move towards 1.1440. A stop-loss should be placed above 1.1705 to avoid losses from a sharp rebound or false breakout near the 1.1685 area.

This scenario is possible amid the general correction and ongoing volatility. Meanwhile, the medium-term trend structure remains moderately bullish.

Summary

The EURUSD correction intensified due to strong US data and reduced expectations of Fed rate cuts. Retail sales and inflation data strengthened the US dollar and cooled interest in the euro. The pair retreated from its peak near 1.1830, currently hovering around the 1.1590-1.1630 support area.

As long as the 1.1540-1.1685 range remains relevant, the short-term scenario favours consolidation. Market focus remains on Fed signals and fresh macroeconomic data from the US. A return above 1.1685 may reignite buying interest and pave the way towards 1.1830.

If pressure on the euro increases and the pair dips below 1.1540, a retreat to 1.1440 and 1.1360 becomes possible. In this case, market sentiment may shift towards the dollar until the Fed’s policy outlook becomes clearer.