The euro rose to a two-week high against the dollar, continuing to focus on the 1.17 resistance level and waiting for the release of European data.
2025-08-13 09:32:49
The euro opened flat against the dollar in Asian trading on Wednesday (August 13), before fluctuating upward on Tuesday (August 12). Diverging US inflation data, coupled with former President Donald Trump's public pressure on Federal Reserve Chairman Jerome Powell, pushed the pair up 0.52% overnight to 1.1674. The pair reached an intraday high of 1.1697, surpassing its near two-week high of 1.1698 reached on August 7.
The market maintained a high risk appetite, and U.S. stocks fluctuated higher after the release of the Consumer Price Index (CPI) data.
Although the year-on-year growth rate of core CPI in July rebounded to 3.1% more than expected (previous value 2.9%, expected 3.0%), the overall inflation rate remained unchanged at 2.7% (expected 2.8%). Market participants selectively focused on easing signals and observed the current pricing of the Fed's September rate cut. The probability of a 25 basis point rate hike has exceeded 90%.
After the data was released on August 12, Trump publicly accused Powell of being "too slow" in cutting interest rates and threatened to sue Powell over the renovation of the Federal Reserve building. This remark further exacerbated the market's sensitive expectations of a policy shift.
Recent statements by Federal Reserve officials have shown a divergent trend: Kansas City Fed President Jeffrey Schmid maintained a hawkish stance, emphasizing the need to keep policies moderately restrictive; Richmond Fed President Thomas Barkin took a neutral attitude, believing that the current monetary policy positioning is reasonable, but warned that the Fed will still face the dual pressure of balancing inflation and employment.
It is worth noting that Stephen Milan, Trump's nominee for the Federal Reserve Board of Governors, emphasized in a CNBC interview that "the independence of the Federal Reserve is crucial," but because the Senate has not yet completed the nomination approval process, he did not make further comments on specific policies.
Economic expectations data in Europe showed weakness. In August, the ZEW Economic Sentiment Index released by the Center for European Economic Research (ZEW) in the EU plummeted from 36.1 to 25.1, with German data being particularly worrying.
Affected by the slower-than-expected progress of the US-EU trade agreement and the decline in economic output in the second quarter, Germany's ZEW economic sentiment index fell sharply from 52.7 to 34.7, significantly lower than the market expectation of 39.8, indicating that there are still concerns about the momentum of economic recovery in the eurozone.
Divergence in monetary policy expectations exacerbated exchange rate fluctuations: the US dollar index fell 0.44% to 98.06 on the day, providing upward support for the euro against the US dollar.
According to PrimeMarketTerminal data, the probability of the Federal Reserve cutting interest rates by 25 basis points at its September 16-17 meeting has reached 91%; however, the European Central Bank (ECB)'s policy paths show significant differences, with a 94% probability of maintaining interest rates unchanged in September and only a 9% chance of a 25 basis point rate cut. This policy divergence continues to dominate the medium-term trend of the euro against the US dollar.
Technically, the EUR/USD pair is showing signs of a key breakout: reaching a high of 1.1697 this week, just shy of the 1.1700 mark, but upward momentum has stalled briefly. The Relative Strength Index (RSI) suggests bulls remain dominant, but its flattening trend suggests a potential technical correction. If the exchange rate falls below the 1.1650 support level, the next key support level lies at the confluence of the 20-day and 50-day simple moving averages (MAs) (1.1626-1.1619). Further weakness could target the psychological level of 1.1600.
On the upside, if the resistance level of 1.1700 can be effectively broken through, the subsequent targets will be 1.1750, 1.1800 and the year's high of 1.1829.
Short-term traders need to focus on the economic schedule on Wednesday: in the United States, Richmond Fed President Barkin, Chicago Fed President Goolsbee and Atlanta Fed President Bostic will deliver speeches; the eurozone will release German and Spanish CPI data. These factors may have a significant impact on the short-term trend of EUR/USD.
(Euro/USD daily chart, source: Yihuitong)
At 09:30 Beijing time, the euro was trading at 1.1677/78 against the US dollar.
Market risk appetite is high and expectations of a Fed rate cut are strong
The market maintained a high risk appetite, and U.S. stocks fluctuated higher after the release of the Consumer Price Index (CPI) data.
Although the year-on-year growth rate of core CPI in July rebounded to 3.1% more than expected (previous value 2.9%, expected 3.0%), the overall inflation rate remained unchanged at 2.7% (expected 2.8%). Market participants selectively focused on easing signals and observed the current pricing of the Fed's September rate cut. The probability of a 25 basis point rate hike has exceeded 90%.
After the data was released on August 12, Trump publicly accused Powell of being "too slow" in cutting interest rates and threatened to sue Powell over the renovation of the Federal Reserve building. This remark further exacerbated the market's sensitive expectations of a policy shift.
Recent statements by Federal Reserve officials have shown a divergent trend: Kansas City Fed President Jeffrey Schmid maintained a hawkish stance, emphasizing the need to keep policies moderately restrictive; Richmond Fed President Thomas Barkin took a neutral attitude, believing that the current monetary policy positioning is reasonable, but warned that the Fed will still face the dual pressure of balancing inflation and employment.
It is worth noting that Stephen Milan, Trump's nominee for the Federal Reserve Board of Governors, emphasized in a CNBC interview that "the independence of the Federal Reserve is crucial," but because the Senate has not yet completed the nomination approval process, he did not make further comments on specific policies.
Weak European data raises concerns about recovery momentum
Economic expectations data in Europe showed weakness. In August, the ZEW Economic Sentiment Index released by the Center for European Economic Research (ZEW) in the EU plummeted from 36.1 to 25.1, with German data being particularly worrying.
Affected by the slower-than-expected progress of the US-EU trade agreement and the decline in economic output in the second quarter, Germany's ZEW economic sentiment index fell sharply from 52.7 to 34.7, significantly lower than the market expectation of 39.8, indicating that there are still concerns about the momentum of economic recovery in the eurozone.
Monetary policy divergence dominates the medium-term trend of the euro
Divergence in monetary policy expectations exacerbated exchange rate fluctuations: the US dollar index fell 0.44% to 98.06 on the day, providing upward support for the euro against the US dollar.
According to PrimeMarketTerminal data, the probability of the Federal Reserve cutting interest rates by 25 basis points at its September 16-17 meeting has reached 91%; however, the European Central Bank (ECB)'s policy paths show significant differences, with a 94% probability of maintaining interest rates unchanged in September and only a 9% chance of a 25 basis point rate cut. This policy divergence continues to dominate the medium-term trend of the euro against the US dollar.
Technical Analysis
Technically, the EUR/USD pair is showing signs of a key breakout: reaching a high of 1.1697 this week, just shy of the 1.1700 mark, but upward momentum has stalled briefly. The Relative Strength Index (RSI) suggests bulls remain dominant, but its flattening trend suggests a potential technical correction. If the exchange rate falls below the 1.1650 support level, the next key support level lies at the confluence of the 20-day and 50-day simple moving averages (MAs) (1.1626-1.1619). Further weakness could target the psychological level of 1.1600.
On the upside, if the resistance level of 1.1700 can be effectively broken through, the subsequent targets will be 1.1750, 1.1800 and the year's high of 1.1829.
Short-term traders need to focus on the economic schedule on Wednesday: in the United States, Richmond Fed President Barkin, Chicago Fed President Goolsbee and Atlanta Fed President Bostic will deliver speeches; the eurozone will release German and Spanish CPI data. These factors may have a significant impact on the short-term trend of EUR/USD.
(Euro/USD daily chart, source: Yihuitong)
At 09:30 Beijing time, the euro was trading at 1.1677/78 against the US dollar.
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