EUR/USD Forecast: Forex Friday September 26, 2025

 

• EUR/USD forecast partly hinges on today’s US core PCE print
• Geopolitical tensions remain a wildcard for the euro
• US labour market in sharp focus in week ahead as traders reassess Fed easing bets

 

The US dollar extended its post-FOMC bounce this week on the back of surprisingly strong economic data, forcing markets to trim expectations for additional Fed rate cuts. That resilience has – for now – pushed the EUR/USD lower, but the pair could be setting up for a reversal if inflation numbers fail to justify the recent hawkish repricing. Today’s release of the Fed’s preferred inflation gauge, core PCE, is crucial— a tame 0.2% m/m print or lower could be all it takes for the dollar to give back some of its gains, allowing EUR/USD to rebound. Next week, we will have plenty of US employment data that could impact the EUR/USD forecast, while from the Eurozone CPI and German retail sales are among the highlights.

 

Dollar finds support from data surprises

 

The dollar’s move higher this week has been underpinned by a rare run of upbeat data. GDP for Q2 was revised up sharply from 3.3% to 3.8%, boosted by personal consumption. Weekly jobless claims have also steadied, suggesting that the spike to 264k earlier this month was an anomaly rather than the start of a worrying trend. Meanwhile, durable goods orders jumped 2.9% in August and housing figures also surprised to the upside.

 

While this string of data is dollar-positive, the move feels stretched. The Fed is still in easing mode, and markets remain sensitive to any disappointment in upcoming numbers. If today’s PCE inflation data confirms a cooling trend, rate-cut expectations for December could shift back higher.

 

EUR/USD forecast: Limited euro weakness

 

Geopolitics has also played a role in determining the EUR/USD forecast. Tensions in Europe have pressured the euro, lending the greenback a temporary bid. NATO has warned this week that it is prepared to intercept Russian aircraft. Any escalation could keep the dollar bid, but a de-escalation would likely flip the script.

 

Despite the dollar’s recent dominance, EUR/USD hasn’t collapsed. The single currency has held its own relatively well against other currencies. That suggests the euro still has a cushion, particularly if markets begin to question whether the dollar’s rally has gone too far, too fast.

 

On the eurozone data front, this week’s signals were mixed. French PMI numbers disappointed, slipping below the 50.0 expansion line, while Germany’s services PMI printed a healthier 52.5, lifting the overall eurozone services index to 51.4. Eurozone manufacturing, however, remains stuck in contraction territory, and sentiment surveys such as Germany’s Ifo and GfK continue to highlight a subdued outlook.

 

What’s next: busy US data week could define the trend

 

Looking ahead, eurozone CPI estimates and German retail sales will set the tone next week. Weak consumption data could weigh on sentiment, but if inflation holds firm, it may temper dovish ECB expectations—giving EUR/USD some support. But the EUR/USD forecast is likely be impacted more from the US side of things. Beyond today’s PCE release, the US calendar is stacked with key employment data. JOLTS job openings, ADP private payrolls, ISM surveys, and Friday’s non-farm payrolls will all feed into the Fed narrative. With the dollar feeling a little overextended, it may take another strong set of prints to maintain the bullish momentum. Otherwise, profit-taking could see EUR/USD bounce back in the near term.

 

Among the abovementioned employment pointers, JOLTS Job Openings (Tuesday) and non-farm payrolls (Friday) are likely to be the most important ones to watch.

 

With much of the focus being on a softening US labour market, while inflation concerns linger, any indications of further weakening here should boost expectations of two more rate cuts for 2025. The JOLTS job openings data is forward-looking and will be taken together with the week’s other employment indicators to gauge the strength, or otherwise, of employment.

 

As far as the non-farm payrolls is concerned, well, this will be key. The dollar bounced back post FOMC after Jerome Powell’s comments that there was no risk-free path to interest rates muddied the waters on where rates are headed next. A lot will now depend on incoming data, with labour market and inflation indicators being the main focus. The Fed will at least need to see continued softness in jobs data if not in inflation before delivering more cuts. Will the NFP score a hattrick of own goals with another softer-than-expected figure for this month?

 

Key takeaway points and EUR/USD chart

 

 

The EUR/USD forecast remains finely balanced. The dollar’s rally looks vulnerable if core PCE inflation or next week’s employment indicators underwhelm, opening the door for the euro to reclaim 1.1730 resistance and potentially push higher. However, geopolitical tensions and the heavy US data calendar mean traders should brace for volatility on both sides of the trade. Next area of support on the chart is around 1.1600 where a trend line converges.

 

-- Written by Fawad Razaqzada, Market Analyst

Follow Fawad on Twitter @Trader_F_R