EUR/USD above the 1.1500 mark: A look at the drivers and implications
The EUR/USD exchange rate has surpassed the psychologically significant mark of 1.1500, reaching 1.1550 on April 21, 2025, a level last observed in November 2021. This development reflects growing doubts about the strength of the US dollar (USD), driven by several factors:
Political Influence on the Fed
According to reports, US President Trump plans to dismiss Fed Chair Jerome Powell as he refuses to implement interest rate cuts. This threat undermines the perceived independence of the Federal Reserve, historically leading to market volatility. Concerns about political interference in monetary policy decisions further weigh on the USD.
Economic Concerns
Lingering worries about a potential US recession increase downward pressure on the Greenback. At the same time, a lack of progress in EU-US trade negotiations favors the Euro as a “safer” currency.
Technical Perspective
- Price Development: The pair is trading near a three-and-a-half-year high, showing a clear upward trend since breaking the April high at 1.1474.
- Indicators: The RSI (14 weeks) indicates an overbought signal at ~75 but does not necessarily warn of an immediate downturn.
- Targets: The next hurdle is at the round number of 1.1600, while support is located at 1.1276 (July 2023).
Market Implications
Further increases in EUR/USD could:
- Burden Exporters: European companies suffer from a more expensive Euro.
- Dampen Inflation: A stronger Euro reduces import prices in the Eurozone.
- Pressure the Fed: Political attacks could damage the credibility of US monetary policy in the long run and trigger capital outflows.
The combination of political risks and technical dynamics suggests ongoing volatility – especially if Trump’s plans materialize or macroeconomic data weakens.