EUR/USD price forecast: Price targets 5-month high as Fed rate cut bet hits 51%
EUR/USD extends rally to $1.0920, marking strongest monthly gain since 2022.
EUR/USD price action extended its rally today, rising 0.7% in the European session to reach $1.0920.
This move solidified the pair’s monthly gain for March at 5%, marking its strongest monthly uptrend since November 2022. The sharp appreciation comes as investors offload the U.S. dollar over concerns that the U.S. economy could face near-term shocks due to President Donald Trump’s "America First" policies.
Although earlier this week, EUR/USD consolidated between the psychological support level of 1.08 and last week’s high of 1.0890. With today’s rally, the pair has broken above this range, now finding support at 1.0890 as the market transitions into the North American session. If this level holds, the next key target is the five-month high of 1.0930.
EUR/USD price dynamics (Feb 2025 - March 2025). Source: TradingView.
EUR/USD price outlook: US jolts job openings report in focus
Fundamental drivers such as Trump tariff-induced slowdown have heightened expectations that the Federal Reserve will reduce interest rates as early as May. The probability of a rate cut at the Fed’s May meeting has risen to 51%, fueling further dollar weakness. Fed Chair Jerome Powell, however, struck a balanced tone at the University of Chicago Booth School economic forum, stating that monetary policy is not on a "preset course" and that the central bank could maintain its restrictive stance longer if inflation progress stalls.
Traders are also closely watching U.S. economic data for further clues. The JOLTS Job Openings report for January, set for release at 14:00 GMT, is expected to show a slight increase to 7.75 million job openings from December’s 7.6 million. Strong labor market data could provide some support for the U.S. dollar, potentially limiting further gains in EUR/USD.
For now, the focus remains on whether EUR/USD can sustain its momentum above 1.0890. A decisive break above 1.0930 could pave the way for further gains, while failure to hold support could lead to a retracement towards the 1.08 zone.
Weaker-than-expected U.S. job growth in February put pressure on the dollar, supporting EUR/USD. The pair faced resistance at 1.0885 and retraced to 1.08 before rebounding.
