The EUR/USD surged to a four-year peak of 1.1878 on Tuesday as investors moved away from the Dollar amid heightened expectations that the Federal Reserve will recommence its easing cycle this week. The currency pair is currently trading at 1.1865, reflecting an increase of nearly 0.90% as of this moment.
EUR/USD experiences a significant increase of over 100 pips, reaching a four-year high before experiencing a slight pullback during the North American session. Markets are anticipating a Fed cut in September, along with two additional cuts later this year; attention is now on Powell’s press conference and the dot plot. German ZEW sentiment shows improvement; Eurozone industrial production increases but falls short of expectations.
>Euro rises sharply as market participants overlook robust US economic indicators, concentrating instead on Powell’s statements, the dot plot, and a more accommodative outlook : The US Dollar is under pressure as market participants anticipate the Fed’s decision and the subsequent press conference with Fed Chair Jerome Powell. Market participants overlooked relatively positive Retail Sales and Industrial Production figures in the United States, resulting in the EUR/USD surging over 100 pips to reach its highest point since 2021. The Federal Reserve meeting that commenced on Tuesday marks the inaugural participation of Dr. Stephen Miran, who has been nominated by President Donald Trump. Furthermore, Fed Governor Lisa Cook is set to attend following the US Court of Appeals’ decision to reject the White House’s request to prevent her participation in the meeting. Market participants expected a reduction in rates in September, along with two further cuts before the year’s end. Market participants ought to keep a close eye on the forthcoming press conference by Fed Chair Powell and the “dot plot,” which enables officials to delineate their forecasts for future interest rates. In Germany, the ZEW Economic Sentiment survey indicates a rise in investor optimism, even as the economy continues to underperform. Meanwhile, Industrial Production in the Euro Area showed improvement, yet fell short of expectations. Next on the agenda, EUR/USD traders will focus on the upcoming release of inflation figures in the Eurozone.
Latest FX Rate Trends : Positive US data does not impact the Euro
- In August, US Retail Sales exceeded expectations, increasing by 0.6% month-over-month, following a 0.5% rise in July and significantly surpassing the anticipated 0.2% growth. The Control Group, integral to GDP calculations, increased by 0.7% month-over-month, surpassing the previous figure of 0.5%.
- Industrial Production experienced an increase in August, bolstered by a slight recovery in manufacturing alongside a decline in utilities output. Factory output increased by 0.1% month-over-month, surpassing July’s contraction of 0.1%.
- Germany’s ZEW Economic Sentiment Index increased to 37.3 points from 34.7 points in August, surpassing economists’ predictions of 26.3 points. ZEW president Achim Wambach stated, “Financial market experts are cautiously optimistic and the ZEW indicator has stabilized, but the economic situation has worsened.”
- The EU’s Industrial Production increased by 0.3% month-over-month, slightly falling short of the anticipated 0.4% growth. Production increased, affirming perspectives that the sector experiences consistent growth, notwithstanding trade tensions.
- The US Dollar Index, which measures the dollar’s performance against a basket of six currencies, declined by 0.71% to 96.65.
- Fitch Ratings anticipates that the Federal Reserve will implement two rate cuts of 25 basis points this year, with one expected in September and another in December, along with three further reductions projected for 2026. The agency does not foresee additional easing measures from the European Central Bank.