EUR/USD price shows strong gains as U.S. dollar weakens amid inflation data and political commentary
EUR/USD extends bullish move with U.S. dollar weakness
EUR/USD has been displaying bullish momentum over the past few weeks, rising from the support area near 1.10. The pair recently broke above the 1.12 resistance level, confirming the strength of the upward movement.
As of today, the price is testing the next significant resistance level at 1.13, with potential further gains contingent on a clean break above this level.
EUR/USD price dynamics (April 2025 - May 2025) Source: TradingView.
Key breakout and resistance levels
The breakout above 1.12 has marked a significant shift in momentum for EUR/USD. The pair has continued its upward trajectory, challenging the resistance around 1.13, where it has struggled in the past. A break above this level would pave the way for the pair to test the 1.1350 and 1.14 levels. A sustained move above 1.14 could suggest that the bullish trend is likely to continue, with 1.15 as the next medium-term target.
On the downside, support is now found at 1.1150 and 1.11. The 1.1200–1.1250 zone has turned into a strong support area after the recent breakout. If the price retraces, these levels are expected to act as solid support for potential rebounds. A failure to hold above the 1.11 mark could trigger a deeper pullback towards the 1.10 area, which would test the trendline support from lower lows.
U.S. dollar weakness amid soft inflation data and political pressures
The recent EUR/USD rally is partly fueled by the ongoing weakness in the U.S. dollar. This decline followed the release of softer-than-expected US inflation data for April, with the Consumer Price Index (CPI) rising by just 2.3%, marking the lowest level in over four years. U.S. President Donald Trump added pressure by again criticizing the Federal Reserve for not cutting interest rates in light of low inflation and economic concerns.
Meanwhile, European Central Bank (ECB) officials have continued to emphasize the need for further rate cuts, despite the ECB’s dovish stance. Governor François Villeroy de Galhau has highlighted that Europe’s inflation is unlikely to rise, which may support additional rate cuts later this year. The market now looks to the upcoming speech by Federal Reserve Chairman Jerome Powell for further guidance on the Fed’s policy stance, particularly after the temporary U.S.-China trade truce.
