EUR/USD rises to seven-week highs as Fed easing hopes, tariff threats hit the USD
The EUR/USD pair has broken above the range of the last few days and is trading above 1.1500 for the first time in almost two months on Thursday. A fresh tariff threat by US President Donald Trump, coupled with the moderate US inflation figures, is hammering the US Dollar (USD).
The effect of the trade truce with China has been short-lived. Trump has stirred markets again, touting that he will impose unilateral tariffs on trade partners if they do not reach a trade deal before the July 9 deadline, Bloomberg reports.
Before that, the US Dollar was already on its back foot following the softer-than-expected US Consumer Price Index (CPI) data released on Wednesday, which increased expectations that the Federal Reserve (Fed) might cut interest rates in September.
Futures markets are pricing a nearly 60% chance of a 25-basis-points rate cut after the summer, up from 50% last week, according to data from the CME Fed Watch tool.
The Eurozone Calendar is light this week, but a slew of European Central Bank policymakers have reiterated President Christine Lagarde’s latest message, hinting at the end of the easing cycle.
This change of rhetoric, supported by a string of positive US data last week, is highlighting a monetary policy divergence with the Federal Reserve that provides additional support to the common currency.
Source : Fxstreet
