EUR/USD Hits $1.1250 After CPI Miss and Tariff Rollback Boost Risk Mood

By: fxleaders|2025/05/14 12:30:06
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EUR/USD hit $1.1250 during the European session today as the softer than expected US inflation and positive shift in global trade sentiment lifted the pair. April’s US Consumer Price Index (CPI) came in at 2.3% year over year, below the 2.4% forecast and the lowest since early 2021. Core CPI was steady at 2.8% as expected. This has cooled off rate hike expectations and raised hopes of a rate cut before year end. The euro also got a boost from improved risk sentiment after the US and China agreed to reduce tariffs. The US will lower tariffs on Chinese imports from 145% to 30% and China will reduce tariffs on US goods from 125% to 10%. The deal lifted equities and weakened the dollar as investors positioned for a more collaborative trade environment. ECB Expectations and German CPI in Focus With geopolitical tensions easing and global trade flows stabilizing, markets are reevaluating how much the European Central Bank (ECB) will ease. Analysts now see the ECB deposit rate at 1.80% by year end – slightly higher than before. This means the euro has support especially as inflation in several eurozone countries is above target. Germany’s upcoming HICP inflation report for April will be watched closely. A strong number could reinforce ECB hawks and give the euro another leg up. Until then, the EUR/USD pair is supported by the diverging policy outlooks between the ECB and the Fed. EUR/USD Price Forecast and Trade Setup Technically, EUR/USD is below the key resistance zone at $1.1264 – a level that coincides with the 50 period EMA ($1.1239) and a descending trendline. A failed breakout could see price drop to $1.1178 or $1.1126. MACD is flattening, momentum is cooling. Trade Setup:

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