The EURUSD rose after Fed Chair Powell hinted at easing policies, leading to nearly a 100% chance of a rate cut in September. Two cuts are expected by the end of this year. The recent spike exceeded key moving averages at 1.1692 and 1.17128. The latest highs were 1.1714 and 1.17303, with targets at 1.17874 and a peak of 1.18289 reached on July 1.

Sellers Face Risk

Sellers are at risk if the price drops below 1.16924, which could signal a reversal. Previously, buyers struggled to stay above this level, but the recent Fed hints have sparked renewed buying interest. The Federal Reserve’s shift toward easier policies suggests that the U.S. dollar may weaken. Markets now expect a rate cut in September, putting upward pressure on the EUR/USD pair. This shift from the Fed is key to our strategy in the coming weeks. This policy change is backed by new economic data from August 2025. The latest Consumer Price Index report shows inflation slowing to 2.6%, and the latest jobs report shows unemployment rising to 4.2%. These numbers support the Fed’s move to start easing. On the other hand, the European Central Bank (ECB) is maintaining its stance, with Eurozone core inflation remaining stubborn at 2.9%. This difference in monetary policy, where the Fed is cutting rates and the ECB is not, creates strong momentum for the euro against the dollar. We see this as a major theme for the third quarter.

Strategic Outlook

With this in mind, we should look for strategies that benefit from a rising EUR/USD, such as buying call options or setting up bull call spreads. The price has already broken through key short-term moving averages, with the next target being the late July 2025 high of 1.1787. If we clear the highs from last week around 1.1730, it would further confirm this upward trend. We must be cautious, though, as there were failed attempts to break higher last week, making risk management crucial. A drop back below 1.1692 would indicate that the breakout has lost momentum and could be a false start. This price must be considered a key support level for any bullish positions. Looking back, we can see parallels to the Fed’s easing cycle that started in mid-2019. During that time, initial rate cuts led to several months of dollar weakness, proving profitable for those who anticipated it. The current situation is beginning to resemble that pattern. Create your live VT Markets account and start trading now.

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