Euro Dips Again as Dollar Gains Ground on Fed Signals and Stellar US Jobs Data

The euro extended its losses against the US dollar for a second straight day, driven by a resurgent greenback bolstered by cautious Federal Reserve guidance and robust US economic data. As of 6:29 PM EEST on September 18, 2025, the EUR/USD pair traded at 1.17868, down 0.22% from its previous close of 1.18132, with the day’s range fluctuating between 1.17501 and 1.18482. The US Dollar Index, which tracks the greenback against a basket of six major currencies, climbed to 97.50, recovering sharply from a year-to-date low of 96.22 following the Fed’s latest policy update. Despite a positive 1.08% gain over the past month and a remarkable 13.82% surge year-to-date, the euro remains under pressure as market sentiment tilts toward dollar strength.

On Wednesday, the Federal Reserve implemented its first rate cut since December, lowering the federal funds rate by 25 basis points to a 4.00%-4.25% range. While markets had largely anticipated this move, attention quickly shifted to the Fed’s updated dot plot and Chair Jerome Powell’s press conference. The 2025 median projection suggested an additional 50 basis points of easing by year-end, targeting a 3.50%-3.75% range, though some officials leaned toward minimal or no further cuts. Forecasts for 2026 and 2027 projected rates at 3.4% and 3.1%, respectively, stabilizing at 3.0% in the long term. Powell described the cut as a “risk management” measure, emphasizing a data-driven approach with no predetermined path for future adjustments. His cautious stance, dismissing a larger 50-basis-point cut, tempered expectations for aggressive easing, fueling the dollar’s rebound.

US economic data released on Thursday further strengthened the dollar’s momentum. Initial jobless claims fell to 231,000 for the week ending September 13, beating expectations of 240,000 and improving from the prior week’s revised 264,000. The Philadelphia Fed Manufacturing Survey for September soared to 23.2, far exceeding forecasts of 2.3 and rebounding from August’s -0.3. These figures underscored a resilient labor market and a robust manufacturing sector, amplifying the dollar’s appeal. Meanwhile, technical indicators for EUR/USD suggest a neutral outlook, with the pair testing a critical resistance zone between 1.179 and 1.1810. Market analysts note the formation of an ascending triangle on the 4-hour chart, hinting at a potential breakout toward 1.1850 if resistance is breached, or a retest of support if rejected.

The EUR/USD pair, the most traded currency pair globally, reflects the dynamics of the world’s two largest economies and has exhibited significant volatility since the euro’s inception in 1999. Recent community discussions highlight mixed sentiments, with some traders anticipating a bullish breakout above the current resistance, while others warn of a potential bearish reversal within an ascending wedge pattern.

Despite its year-to-date strength of 13.82% and a 6.06% gain over the past year, the euro faces headwinds from the dollar’s renewed vigor. As the forex market navigates these shifts, traders are advised to monitor key levels and upcoming economic releases to gauge the pair’s next move in this dynamic landscape.