EUR/USD Surges Toward 1.0900: What's Driving the Rally? | Key Factors Behind the Dollar's Decline
The USDT TRC20 Trust WalletEUR/USD currency pair staged an impressive rally on Wednesday, marking one of its most significant single-day gains in 2024 as it approached the psychologically important 1.0900 level. This upward momentum comes amid a broad-based weakening of the US Dollar following the release of softer-than-expected US inflation data.
Market participants reacted strongly to the latest Consumer Price Index (CPI) figures, which showed monthly inflation cooling to 0.3% compared to expectations of 0.4%. This development has significantly influenced market sentiment, with traders increasingly pricing in the likelihood of Federal Reserve rate cuts later this year.
Technical indicators suggest the pair is building bullish momentum, having bounced decisively from the 200-hour Exponential Moving Average near 1.0730. The current price action shows EUR/USD trading well above its short-term moving averages, with the 200-hour EMA now providing support around 1.0780.
From a fundamental perspective, the European economic backdrop appears stable, with first-quarter GDP growth meeting expectations at 0.3% quarter-over-quarter. This relative stability in the Eurozone, combined with shifting expectations for US monetary policy, creates a favorable environment for EUR appreciation against the USD.
The CME FedWatch Tool currently indicates a greater than 70% probability of at least a 25 basis point rate reduction when the Federal Open Market Committee meets in September. This expectation has been a key driver behind the Dollar's recent weakness across currency markets.
Looking at the technical landscape, EUR/USD faces potential resistance near 1.0950, where previous price action has created a technical ceiling. However, the pair's ability to break above the 200-day moving average at 1.0798 suggests the current bullish momentum may have room to extend further.
Market participants will continue monitoring upcoming economic data releases for confirmation of these trends, though the immediate focus remains firmly on evolving expectations for Federal Reserve policy in the coming months.
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