EUR/USD Soars Past 1.18 as Dollar Dives and Eurozone Sentiment Sparks Optimism

EUR/USD surged above 1.18000 on board-based US dollar selling. It hit an intraday high  of 1.18181 and is currently trading around 1.18111. Overall trend remains bullish as long as support 1.1575 holds. 

With a rise from 34.7 in August to 37.3 points in September 2025, Germany's ZEW Economic Sentiment Index unexpectedly soared well beyond predictions of 26.3, indicating a cautious stability in forward-looking optimism following a sudden decline from 52.7 peak in July, especially supported by gains in export industries despite recent declines. The ZEW Current Situation Index, however, fell to-- -76.4 from -68.6, surpassing predictions of -75.0 and highlighting worsening current economic problems. Among a poll of 180 financial experts indicating mid-term expectations, President Achim Wambach of ZEW noted continuing risks from U.S. tariff uncertainties and Germany's ongoing reforms. on a scale from -100 to +100. As the only G7 economy stagnant for two years, Germany battled a 0.1% contraction in Q2, caused by declining U.S. demand before tariffs and structural obstacles, which led to downward revisions in 2025 growth forecasts despite hopes for Chancellor Friedrich Merz's government to spur a revival.

According to the CME Fed watch tool, the probability of a 25bpbs rate cut in the Sep meeting increased to 96.10% from 93% a week ago.

The pair is holding above the 55 EMA, 200 EMA, and 365 EMA in the 4-hour chart. Near-term resistance is seen at 1.1835; a break above this may push the pair to targets of 1.855/1.1900/1.19780. On the downside, support is seen at 1.1750; any violation below will drag the pair to 1.1700/1.1660/1.15750/1.1545/1.1480/1.1435.

Market Indicators and Trading Strategy

Commodity Channel Index (CCI)-  Bullish

Average Directional Movement Index (ADX) - Bullish

 It is advisable to buy on dips around 1.1768-70 with a stop-loss at 1.170, aiming for a target price of 1.1900.