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The Euro to Dollar exchange rate (EURUSD) is still favoured to return back above 1.15, however, near-term Dollar strength will continue to frustrate any major recovery for some time yet.

Next week could see the Dollar remain supported with the U.S. Federal Reserve convening next week to determine its stance on interest rates.

Market analysts are closely monitoring the decision, which could significantly impact the exchange rate dynamics between the Euro and the U.S. Dollar.

Economists at ING suggest that the Federal Reserve is likely to maintain the current interest rate level, opting for a cautious approach.

But James Knightley, Chief International Economist at ING, believes the Fed will likely signal a rate hike being likely in July.

He states, "The Fed wants to see 0.2% month-on-month or below CPI readings to be confident inflation will return to 2%. We aren't there yet, so if they do hold rates steady, as we predict, it is likely to be a hawkish hold with the door left open to further rate hikes if inflation doesn't slow – July is clearly a risk."

Chris Turner, Global Head of Markets and Regional Head of Research for UK & CEE, says the Fed meeting comes as the U.S. dollar rebounds from the impact of the regional banking crisis earlier this year.

He notes that central banks, including the Federal Reserve, remain frustrated by the persistence of core inflation with both the RBA and BoC surprising this week with rate hikes.

This frustration, combined with concerns about inflation credibility, could lead to prolonged late-cycle dollar strength.

Turner suggests that EUR/USD could hover around 1.06/1.07 for the next one to two months, with potential for a breakthrough based on clear evidence of U.S. disinflation or weak activity data influencing the Fed's decisions.

He adds, "Our baseline assumes that something like 1.05 will be the worst case for EUR/USD this summer, and we still like it ending the year above 1.15."