EUR/USD Soars on Policy Divergence; Eyes 1.1835 as Fed Rate Cut Odds Climb

EUR/USD  surged above 1.1700 on policy divergence between the Fed and the ECB. It hit an intraday high of 1.17306 and is currently trading around 1.17219. Overall trend remains bullish as long as support 1.1590 holds.

The CME FedWatch Tool indicates that investor expectations for a Federal Reserve interest rate decrease at the September 17, 2025, FOMC meeting have significantly grown, now implying a 94–98% likelihood of a 25-basis-point reduction. Recent weak labor market figures and a lower July inflation report have contributed to this rise in expectations, which has caused a fall in Treasury yields and future markets mostly pricing in a lowering of the federal funds rate to 4.00%–4.25%. Although certain Fed officials have indicated that several reductions should the economy continue to be weak, the choice is data-dependent; the September meeting will include an evaluation of additional inflation and employment data.

The pair is holding above the 55 EMA, 200 EMA, and 365 EMA in the 15-minute chart. Near-term resistance is seen at 1.1765; a break above this may push the pair to targets of  1.1800/1.1835/1.1900. On the downside, support is seen at 1.1660; any violation below will drag the pair to 1.1600/1.1545/1.1480/1.1435.

Market Indicators and Trading Strategy

Commodity Channel Index (CCI)-  Bullish

Average Directional Movement Index (ADX) - Bullish

 It is good to buy on dips around 1.1700 with a stop-loss at 1.1660 for a target price of 1.1835.