Forex Trading Tools and Services

Currencies EUR/USD

EUR/USD Strengthens as Soft US Inflation Data and ECB Optimism Weigh on the US Dollar

  • BY
  • May 14, 2025
  • 0 Comments

EUR/USD currency pair has seen a notable recovery, strengthening towards 1.1250 as soft US inflation data for April weighs on the US Dollar. The Consumer Price Index (CPI) rose at its slowest pace in over four years, prompting criticism from US President Donald Trump, who renewed calls for the Federal Reserve to cut interest rates. In spite of these pressures, the market continues to look for the Fed to keep its existing rates throughout the summer. In the meantime, the Euro performs ahead of its group with increasing confidence in its status as a reserve currency and hopes regarding the European Central Bank’s ability to make further rate cuts. The couple’s upbeat momentum is bolstered by both the abating US inflation and rising demand for the Euro in the face of a short-lived trade truce between the US and China. While investors wait for significant economic data, such as US Retail Sales and PPI, the EUR/USD continues in a bullish trajectory, with resistance at 1.1425 and support at 1.0950. KEY LOOKOUTS • The gentle April CPI reading has placed pressure on the US Dollar, and there are demands for the Federal Reserve to lower interest rates. Additional weak inflation readings or comments by Fed Chair Powell would shape market expectations and affect the USD. • ECB officials continue to point towards future rate cuts, particularly as Eurozone inflation is soft. Any message from the ECB regarding upcoming monetary policy has the potential to harden the Euro and push EUR/USD trends. • The temporary respite between the US and China has lowered the risks of trade war, but any news in US-EU trade relations or any new announcements of trade policy will lead to currency pair volatility. • The EUR/USD has bounced back above its 20-day EMA and displays a bullish bias, with the RSI pointing towards upside. Breakout above key resistance levels (1.1425) or inability to hold above support (1.0950) will be decisive in determining the pair’s direction. EUR/USD currency pair has registered robust rebound, supported by weak US inflation reading for April and the rising probability of additional interest rate reductions by the European Central Bank (ECB). With the weakening of the US Dollar after the release of the lowest CPI growth in more than four years, President Trump’s attack on the Federal Reserve for failing to reduce rates puts extra pressure on the greenback. In the meantime, the Euro is helped by both its increasing status as a reserve currency and the dovish policy of the ECB, with policymakers signaling another rate reduction before summer ends. Geopolitics, including the US-China trade truce, remain a factor in influencing the market, while technical analysis indicates a bullish trend for the EUR/USD pair, with key resistance at 1.1425 and support at 1.0950. As the traders wait for important economic releases, such as US Retail Sales and PPI data, sentiment in the market will remain precarious, determining the future course of the currency pair. The EUR/USD currency pair gains strength as weak US inflation figures weigh down the US Dollar, with prospects of additional rate cuts by the European Central Bank. Technical charts are bearish, with a resistance level of 1.1425 and support level of 1.0950, with market players waiting for major US economic releases as well as geopolitical events. • April’s CPI figures reported the lowest inflation in more than four years, damping the US Dollar and stoking hopes for possible rate cuts from the Federal Reserve. • President Trump once again urged the Fed to cut interest rates, invoking weakening inflation and economic conditions that in his view require easier money policy. • European Central Bank officials such as Francois Villeroy de Galhau have signaled the potential for another rate cut prior to the summer, which would further prop up the Euro. • The Euro has beaten most of its major peers, fueled by growing confidence in its status as a reserve currency and dovish ECB policy. • A temporary trade ceasefire between the US and China has eased fears of a full-blown trade war, supporting some market sentiment. • The EUR/USD currency pair has rebounded above its 20-day EMA and is displaying bullish momentum, with the Relative Strength Index (RSI) indicating further potential upside. • The market is waiting for crucial US numbers, such as Retail Sales and PPI, which might have an impact on the expectations of future policy from the Fed and on the EUR/USD pair. EUR/USD pair has been picking up momentum after the release of weak US inflation numbers for April, and this has weakened the US Dollar. The April Consumer Price Index (CPI) increased by only 2.3%, its weakest rate in more than four years, leading US President Trump to again urge the Federal Reserve to lower interest rates. With inflation indications of weakening, market participants are now turning to the chances of a more dovish Federal Reserve policy, although traders are still mostly anticipating the Fed to hold interest rates all the way to the summer. EUR/USD DAILY PRICE CHART CHART SOURCE: TradingView The Euro, meanwhile, has been taking advantage of its growing status as a reserve currency and the European Central Bank’s persistent dovish bias. ECB policymakers have suggested that they can make another interest rate cut before summer is out, which has bolstered the Euro against other currencies. At the same time, geopolitical events such as the recent US-China trade truce have relaxed global trade tensions, adding to bullish sentiment for the Euro. With growing optimism over the economic strength of the Eurozone, market players are looking to key economic data releases over the next few days for more signals on the EUR/USD pair’s direction. TECHNICAL ANALYSIS EUR/USD pair has experienced a robust comeback, recently crossing its 20-day Exponential Moving Average (EMA) of approximately 1.1220, indicating a trend reversal towards a bullish move. The duo’s bullish momentum is backed by the Relative Strength Index (RSI), which has recovered from a reading of 40, suggesting that buying pressure is increasing. Important

Read More
Currencies GBP/USD

GBP/USD Approaches 1.3050 as US Dollar Weakens Ahead of Key PPI Data Amid Easing Inflation and Trade Shifts

  • BY
  • April 11, 2025
  • 0 Comments

The GBP/USD is gaining strength, nearing the 1.3050 level, as the US Dollar continues to lose strength in light of easing inflation and changing trade patterns. A lower-than-anticipated US Consumer Price Index (CPI) for March, with headline inflation falling to 2.4% year-over-year, has tempered the greenback’s attractiveness, leading investors to wait for forthcoming Producer Price Index (PPI) releases and consumer sentiment surveys. The US Dollar Index (DXY) has fallen to approximately 100.20, indicating broader market unease regarding the domestic economic outlook. Also, the recent relaxation of global trade tensions—despite a sharp rise in tariffs on Chinese imports—has bolstered risk sentiment in favor of the British Pound. Market expectations are now pointing toward a cautious rate-cut trajectory by the Bank of England, with an update in May looking increasingly probable. KEY LOOKOUTS • Traders are keeping a close eye on March’s Producer Price Index and initial Michigan Consumer Sentiment readings for additional insight into inflation patterns and consumer sentiment. • The US Dollar Index (DXY) has fallen close to 100.20 after softer-than-expected CPI numbers, maintaining pressure on the greenback against major currencies. • Bank of England rate cut expectations in the markets continue to support a phase of gradual relaxation, with possible quarter-point reductions expected in May, August, and November. • The 90-day US tariff pause for most partners, contrasted with higher tariffs on Chinese imports, continues to shape global risk sentiment and currency flows. Markets are looking for a few key drivers of the GBP/USD pair’s recent strength. Focus now shifts to the coming release of the US Producer Price Index (PPI) and initial Michigan Consumer Sentiment numbers, both seen to offer new information on inflationary pressures and consumer sentiment. The US Dollar continues to suffer, with the Dollar Index staying close to 100.20 after a below-forecast CPI reading for March. In contrast, Bank of England rate-cut expectations are still in place, with markets anticipating a probable move in May, followed by possible cuts in August and November. Also, changing global trade flows—dramatized by the US relaxing tariffs on most partners while steeply increasing them on Chinese imports—are influencing investor sentiment and buoying risk-sensitive currencies such as the British Pound. GBP/USD pair is still going higher as the US Dollar declines on the back of weaker inflation reports and risk-off market sentiment. Investors now await major US PPI and consumer sentiment releases to guide them. Hopes for gradual BoE rate reductions are also in support of the Pound. • The pair is trending higher, securing its fourth successive daily gain. • The DXY drops to about 100.20 in the wake of fears over weak inflation and uncertainty in the economy. • March CPI increased 2.4% YoY, less than the 2.6% expectation and down from February’s 2.8%, indicating easing inflation. • Core inflation fell to 2.8% YoY from 3.1%, missing the 3.0% expectation. • Investors look to March PPI and initial Michigan Consumer Sentiment for additional economic indicators. • The US imposed higher tariffs on Chinese imports but suspended increases for most partners, reducing overall trade tensions. • Markets expect three quarter-point reductions by the end of the year, the first in May, then in August and November. The British Pound is strengthening against the US Dollar as market sentiment changes due to recent economic and policy news. One of the main drivers underpinning the Pound is the slowdown in inflation in the United States, with the Consumer Price Index for March revealing a significant slowdown from recent months. This has created increasing expectation that the Federal Reserve will delay further aggressive moves in monetary policy, which in turn has had an impact on confidence in the US Dollar. Concurrently, an overall pick-up in risk sentiment across the world has become more acceptable for investors to hold currencies such as the Pound. GBP/USD DAILY PRICE CHART CHART SOURCE: TradingView To the upbeat mood is added a new direction in US trade policy. Although tariffs on Chinese imports were raised sharply, the US implemented a temporary moratorium on new tariffs for all other trading partners. This action has served to allay concerns of an escalating trade war, paving the way for more settled global economic prospects. Back in the UK, the Bank of England is likely to take a gradual path to monetary accommodation, with any rate cuts dovetailed across the course of the year. Such a measured approach has contributed to the Pound’s relative attractiveness, particularly as markets anticipate crucial near-term data releases. TECHNICAL ANALYSIS GBP/USD is displaying robust bullish momentum as it trades around the 1.3050 resistance level, constituting a potential breakout zone. The pair has sustained an uptrend for four straight sessions, backed by a series of higher lows and higher highs on the daily chart. The 50-day moving average is in an upward trend, supporting bullishness, and the Relative Strength Index (RSI) is still below the overbought level, indicating scope for further appreciation. A continued break above 1.3050 may pave the way towards the next resistance at 1.3100, while short-term support is around 1.2970, followed by the psychological 1.2900 level. FORECAST GBP/USD may keep its momentum going in the short term, particularly if future US economic indicators, including the Producer Price Index (PPI) and consumer sentiment, further indicate a decline in inflation. A weaker prognosis for the US economy would likely make the Dollar even weaker, which could give GBP/USD enough strength to breach the 1.3050 resistance level and head for the next level at 1.3100 or even 1.3150. Enhanced global risk appetite, underpinned by reduced trade tensions and stable UK economic indicators, may also keep demand for the Pound firm. Should the Bank of England continue with a measured and consistent policy of rate cuts, it could give further support to the currency. Conversely, GBP/USD will potentially come under selling pressure should US data surprise to the upside, resuscitating hopes of tighter Federal Reserve policy. A rebound in the US Dollar, particularly if it is fueled by more robust inflation or growth data, might drive the

Read More