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EUR/USD Extends Gains as Fed Rate Cut Bets Intensify, Dollar Softens Despite Eurozone Gloom
Economic
Summary:
EUR/USD climbs to 1.1685 in Asian trading as a softer U.S. inflation reading fuels September Fed rate cut expectations, pressuring the dollar despite weak Eurozone sentiment data.
Buy
CLOSEDEURUSD
End Time
1.17000
Entry Price
1.18000
TP
1.16300
SL
1.16825 +0.00008 +0.01%
700
Points
Loss
1.16300
SL
1.16300
CLOSING
1.17000
Entry Price
1.18000
TP
The euro extended its advance against the U.S. dollar on Wednesday, with EUR/USD pushing to around 1.1685 during Asian trade, as investors positioned for an increasingly likely Federal Reserve interest rate cut in September. The greenback lost ground after a softer-than-expected U.S. inflation reading reinforced the case for policy easing, overshadowing downbeat economic sentiment figures from the Eurozone.
Market attention now turns to a fresh round of Federal Reserve commentary, with Chicago Fed President Austan Goolsbee and Atlanta Fed President Raphael Bostic slated to speak later in the day. Their remarks could provide more clarity on the central bank’s near-term policy path, particularly after Tuesday’s inflation report bolstered dovish bets.
Data from the U.S. Bureau of Labor Statistics showed headline Consumer Price Index (CPI) growth holding steady at 2.7% year-on-year in July, undershooting economists’ consensus forecast of 2.8%. While core CPI, which strips out food and energy, accelerated to 3.1% from June’s 2.9%, the increase was only marginally above expectations and unlikely to sway market conviction that the Fed is nearing an easing cycle.
The softer inflation data has helped reinforce market pricing for a September cut, with Fed funds futures now reflecting a strong probability of a 25-basis-point reduction. Lower U.S. yields have in turn undermined dollar demand, adding to the euro’s momentum despite lingering concerns over Europe’s own economic outlook.
Political noise in Washington added a further twist to the dollar’s decline. White House spokeswoman Karoline Leavitt said President Donald Trump is weighing legal action against Fed Chair Jerome Powell, ostensibly over the handling of renovations at the central bank’s Washington headquarters. While the comments have little direct bearing on monetary policy, they feed into a broader narrative about Fed independence—something that could unsettle markets if tensions escalate.
Across the Atlantic, however, the euro’s bullish traction was capped by disappointing data from the ZEW Survey of Economic Sentiment. The August survey showed sentiment in the Eurozone tumbling to 25.1 from July’s 36.1, while Germany’s reading slid to 34.7 from 52.7—a far sharper drop than analysts had anticipated. The deterioration reflects investor concerns over sluggish growth momentum and persistent structural challenges in the bloc’s largest economy.
Technical Analysis
From a technical perspective, EUR/USD has been trading firmly within a short-term rising channel, buoyed by support from its 50-day exponential moving average and reinforced by bullish momentum signals from the Relative Strength Index (RSI). The RSI, while hovering in overbought territory, continues to signal underlying strength, with price action holding comfortably above 1.1600 support. Immediate resistance is eyed near 1.1800—a level that, if breached, could open the way for further gains toward the April highs.
For now, the market’s focus will remain on Fed speakers for confirmation that a September cut is on the table. If dovish rhetoric aligns with current market pricing, the dollar could extend its retreat, giving the euro more breathing room. However, traders will also keep an eye on incoming Eurozone data, as a worsening economic backdrop could limit upside potential.
TRADE RECOMMENDATION
BUY EURUSD
ENTRY PRICE: 1.1700
STOP LOSS: 1.1630
TAKE PROFIT: 1.1800
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