EUR/USD Continues To Rise As Weak US Inflation Data Weakens The US Dollar
EUR/USD moved higher near 1.1250 during European trading hours on Wednesday (05/14), extending Tuesday’s gains. The major currency pair has attracted significant bids at the expense of the US Dollar (USD), with the US Dollar Index (DXY) – which measures the greenback’s value against a basket of six major currencies – extending its retracement from a monthly high of 102.00 to around 100.50.
The greenback suffered as US President Donald Trump criticized the Federal Reserve (Fed) again for not lowering interest rates following the release of lower-than-expected Consumer Price Index (CPI) data for April on Tuesday. The data showed that the headline CPI rose by 2.3%, its lowest level in more than four years.
"No Inflation, and Gasoline, Energy, Food, and almost everything else, is DOWN!!! The FED should lower COST RATES, just like Europe and China have done," Trump said in a post on Truth Social, adding: "What's wrong with Powell being Late? Not fair to America, who is ready to grow? Just let it happen, it will be a wonderful thing!".
Despite slowing inflationary pressures and calls for a rate cut from US President Trump, traders have not reduced bets in favor of the Fed cutting its benchmark lending rate before its September policy meeting. According to the CME FedWatch tool, the probability of the Fed keeping rates unchanged in the 4.25%-4.50% range in July fell slightly to 63.3% from 65.1% seen on Tuesday.
It appears that the improving US economic outlook due to a deal with China for a temporary trade truce has taken the sting out of cooling inflationary pressures. On Monday, the US and China agreed to avoid a full-blown trade war and lowered tariffs by 115 percentage points.
Source: FXStreet
