EUR/USD Forecast: Currency Pair of the Week June 23, 2025

EUR/USD Forecast: Currency Pair of the Week – June 23, 2025

• EUR/USD forecast hinges on oil-driven geopolitical tension more than macro data
• Iran-related risk premium gives limited lift to the dollar
• Mixed global PMI data largely ignored

After initially starting lower, the EUR/USD rebounded by afternoon to turn positive on the day as the dollar sold off thanks to crude oil’s struggle to stay supported. Indeed, it is all about oil prices right now.  When oil goes up, it is risk off, and dollar finds support. When it eases back down, risk assets stage corrective bounces, and down goes the dollar. It is all about how Iran will retaliate now. Whatever it does, the impact of it on the EUR/USD would be through oil prices. High oil prices should point to a weaker EUR/USD forecast given that the Eurozone is an oil importer.

All about oil prices

So, the EUR/USD forecast this week finds itself at the mercy of forces well beyond the usual rate speculation and central bank speak. A weekend of fresh geopolitical unease—following US strikes on Iran—nudged the dollar modestly higher in early trading, before oil and the dollar both fell. FX markets have been surprisingly restrained. It’s as if traders are wary of jumping too heavily into safe-haven mode without more clarity from Tehran.

Brent crude briefly surged above $80 a barrel, but prices have since pulled back sharply following the events at weekend. From its highest point overnight to the current lows, Brent lost some $4.9 or 6.2%. This is the number one reason why the EUR/USD (and indeed the GBP/USD and others) have bounced back.

EUR/USD Forecast: Powell, Eurozone data, and US PCE Inflation in the Spotlight

It’s a pivotal week ahead for currency traders, and the EUR/USD forecast hangs in the balance. With global purchasing managers’ indices (PMIs), Fed Chair Jerome Powell’s two-day testimony, and the closely-watched US core PCE inflation report all lined up, there’s no shortage of catalysts on the horizon. Throw in the lingering geopolitical risk from the Middle East, and you’ve got the makings of an uneasy few days for EUR/USD.

Eurozone data in focus

As for as the euro is concerned, the coming days bring a packed calendar. Today’s flash PMIs came in mixed to slightly lower and that initially caused the euro to stay under pressure. Later in the afternoon we saw strong US PMIs, yet this failed to lift the dollar and the EUR/USD turned positive. Tomorrow, we will have the Ifo survey from the Eurozone’s largest economy, which should offer a glimpse into whether sentiment is picking up in tandem with easing global trade pressures. Later in the week, flash CPI prints from France and Spain will shed light on inflation dynamics that could influence ECB tone heading into July.

Powell takes the stage: Clarity or more confusion?

Tuesday sees Jerome Powell back before Congress, and markets will be listening closely. Last week’s Fed meeting had a hawkish tint, with policymakers now split on the outlook for rate cuts. While the median forecast still shows two cuts by year-end, an increasing number of officials see no change at all.

Uncertainty over inflation, employment, and trade—much of it tied to the knock-on effects of tariffs and geopolitics—has clouded the Fed’s outlook. Powell’s words may offer clarity on how far the central bank is willing to lean into the current data mix. For EUR/USD outlook, any hint of a dovish reversal could weaken the dollar’s recent rebound.

Core PCE Inflation: The Fed’s Favourite Metric

The week closes with the release of May’s core PCE inflation figure—the Fed’s preferred inflation measure. The FOMC expects core PCE to end the year at 3.1%, a touch higher than the headline rate. These projections, however, rest on fragile assumptions about the impact of trade tensions and oil prices.

With oil recently spiking on Middle East fears, markets are watching closely to see whether these factors begin to show up in the data. A stronger-than-expected PCE print could reinvigorate dollar bulls, adding weight to resistance levels in EUR/USD.

Technical EUR/USD Forecast: Key levels to watch

Source: TradingView.com

The EUR/USD chart has climbed back above the 1.1500 handle, having benefited from a modest unwind of geopolitical risk. But with momentum fading and no fresh bullish drivers, the upside appears limited. The recent oil rally and firmer Fed tone have brought the dollar modestly back into favour – although the greenback needs a lot more help to carve out a bottom

Support at 1.1450 remains critical. A break below this could open the door to a deeper pullback, potentially down towards the 1.1210–1.1280 region—levels that marked key resistance in previous years. On the flip side, the pair has yet to decisively take out April’s high of 1.1573. Beyond that, this month’s peak at 1.1631 and the psychological 1.1700 level come into view.

For now, the EUR/USD forecast remains delicately poised. The fundamentals are fluid, and the technicals are tight. With volatility simmering just below the surface, traders would be wise to keep a close eye on both the headlines and the charts.

-- Written by Fawad Razaqzada, Market Analyst

Follow Fawad on Twitter @Trader_F_R