EUR/USD Breaks Out of the Comfort Zone
Yesterday, the EUR/USD pair sprinted up to about 1.0856, nudging close to a fresh monthly peak. It’s the kind of rally that makes traders grin and say, “Hold onto your hats!”
Why the Euro Is Getting a Boost
- U.S. CPI & Retail Sales – Both came in softer than analysts expected. Lower inflation numbers tug the dollar lower.
- U.S. PPI Sticks Around High – Still a bit stubborn, yet the dollar slid to its weakest spot in over a week.
- USD Index dip – Broke below the 105.00 support line, sending the greenback to retreat.
- Fed Expectations – Investors echo a strong bet that the Fed will let rates fall in September. Jerome Powell’s cautious stance feeds this optimism.
What’s Bellwether of the Fed’s Next Moves?
With 10‑year Treasury yields hovering at 4.42%, expectations for a rate cut in September remain steady. Powell has steered clear of more hikes, pushing for a longer restrictive period to tame inflation.
Euro’s Short‑Term Resilience
Despite the dip in the U.S. dollar, the euro isn’t going anywhere today. Economists think the ECB might keep tightening for longer, and a slow Fed pace could mean a slower easing in the Eurozone.
“Policy divergence is the secret sauce,” notes investors. A wider gap between the Fed and ECB often paints the euro in a brighter light, opening up lucrative trade margins across Europe.
Looking Ahead
Momentum can flip quickly. Any unexpected data from the U.S. could shift the narrative—and traders might pull back on September rate‑cut bets. For now, though, the euro remains fortified on the back of a prolonged Fed pause.
