EUR/USD Surges to 2025 Highs as Powell’s Testimony Sparks Risk-On Rally

The EUR/USD currency pair climbed to fresh multi-year highs around 1.1640 on Tuesday, driven by improving global sentiment and dovish undertones in Federal Reserve Chair Jerome Powell’s congressional testimony. The rally was further supported by de-escalating tensions in the Middle East and renewed weakness in the US Dollar (USD).

🟢 Key Highlights:

EUR/USD touches a new 2025 high near 1.1640.
Powell maintains a cautious stance, sparking hopes of a potential rate cut.
Israel-Iran ceasefire improves risk sentiment across global markets.
Safe-haven demand declines; equities and high-yielding currencies rise.

🔎 What’s Driving EUR/USD Higher?

The rally in the euro was fueled by two major catalysts:

Middle East Ceasefire Boosts Risk Appetite
President Donald Trump announced on Truth Social that a “Complete and Total CEASEFIRE” had been reached between Israel and Iran, ending what he described as a “12-day war.” This announcement triggered a global risk-on shift, with traders rotating out of safe-haven assets like gold and the USD, and into riskier currencies such as the Euro (EUR).
Fed Chair Powell’s Testimony Signals Caution
In his semi-annual testimony before the House Financial Services Committee, Powell struck a balanced tone. While acknowledging that the US economy remains resilient, he expressed concerns over persistent inflation due to tariff pressures. His comments were perceived as less hawkish, pushing down US Treasury yields and weakening the Greenback. “Our responsibility is to prevent a one-time rise in price levels from becoming entrenched inflation,” Powell said.

📊 EUR/USD Technical Analysis

At the time of writing, EUR/USD is trading around 1.1612, slightly off the session high of 1.1640.

✅ Bullish Signals:

20-day SMA crossed above the 100- and 200-day SMAs, confirming upward momentum.
Daily RSI and MACD indicators remain in bullish territory.
Sustained break above June highs of 1.1631 may open the door toward 1.1680 and 1.1720.

⚠️ Key Levels to Watch:

Support: 1.1560 • 1.1510 • 1.1470
Resistance: 1.1635 • 1.1680 • 1.1720

If EUR/USD clears the 1.1635–1.1640 resistance range, it could mark the beginning of a new bullish phase.

🌍 Eurozone Economic Data Overview

Recent Eurozone macro data has been mixed:

Consumer Confidence: Improved to 89, beating forecasts.
GDP Growth (QoQ): Slowed to 0.6% vs. previous 0.8%.
GDP Growth (YoY): Posted at 2.8%, below the prior 3.4%.

Meanwhile, ECB’s Philip Lane remarked that inflation—especially in the services sector—still poses risks and requires vigilance.

💵 US Dollar Outlook: Weakness Persists

The US Dollar Index (DXY) slipped below 98.00, pressured by softer data and dovish Fed commentary. If Powell’s testimony continues to lean dovish, the dollar may face extended downside across the board.

Key upcoming US events to watch:

Consumer Confidence Index
Richmond Manufacturing Index
More FOMC member speeches

📈 Conclusion: Is EUR/USD Headed for 1.17+?

The EUR/USD pair remains well-supported amid a favorable technical setup, improving Eurozone sentiment, and a broadly weaker USD. A breakout above 1.1640 could trigger a rally toward 1.1680 and potentially 1.1720 in the coming sessions—especially if Powell confirms a rate cut is on the table for Q3.

🔗 For daily EUR/USD updates, visit Daily Forex Pakistan.

Yasher Rizwan