EUR/USD Forex Signal: Slips as Fed Cut Odds Fall – 25 September 2025

Bearish view

-- Sell the EUR/USD pair and set a take-profit at 1.1600.
-- Add a stop-loss at 1.1850.
-- Timeline: 1-2 days.
Bullish view

-- Buy the EUR/USD pair and set a take-profit at 1.1850.
-- Add a stop-loss at 1.1600.

The EUR/USD exchange rate pulled back sharply after the US published a stronger-than-expected home sales report and as some Federal Reserve officials warned about interest rate cuts. It dropped to a low of 1.1735, down from the year-to-date high of 1.1915.

Federal Reserve Interest Rate Cuts Odds Fall

The EUR/USD pair retreated after the United States released a surprising housing report, which showed the new home sales jumped in August as mortgage rates fell and as builders reduced prices to lure buyers.

Sales of single-family homes rose by 20.5% in August to an annualized rate of 800,000, much higher than the median estimate of 650,000. It was also much higher than the those sold in the previous month.

The strong housing report came as some Federal Reserve officials warned that aggressive interest rate cuts will have an impact on inflation, which they noted remains much higher than the Fed's target of 2.0%.

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Fed members like Beth Hammack, Raphael Bostic, and Austan Goolsbee noted that, while they supported last week's cut, the bank should be more cautious in the next meetings. They also emphasized that the labor market was still strong, with the unemployment rate remaining low.

The next important catalyst for the EUR/USD exchange rate will be from the US, where some Fed officials like John Williams, Michelle Bowman, and Mary Daly will talk and share their ideas about interest rates.

The pair will also react to some major economic data from the United States, like the final estimate of second-quarter GDP data and initial jobless claims. While these numbers are all important, their impact on the US dollar is usually minimal.

Instead, traders will focus on Friday’s Personal Consumption Expenditure (PCE) data, which is the Federal Reserve's favorite inflation data. Economists expect the data to show that the headline PCE rose from 2.6% in July to 2.7% this month.

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EUR/USD Technical Analysis

The 12-hour timeframe chart shows that the EUR/USD exchange rate has pulled back from the year-to-date high of 1.1915 to the current 1.1735.

It has retested the lower sides of the ascending channel and slipped below the 50-period Exponential Moving Average (EMA), while the Relative Strength Index has dropped below the neutral point at 50.

Therefore, the pair will likely continue falling as sellers target the psychological level at 1.1600. A move above the upper side of the channel will invalidate the bearish outlook.

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Original Source DailyForex.com provides daily fundamental and technical analysis and signals for those looking to trade based on trends in the currency markets.