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The EUR/USD pair staged a notable recovery on Tuesday, May 13, 2025, surging past 1.1170 in late trading after softer-than-anticipated US inflation data weakened the US Dollar. The pair, which had already breached the 1.1150 mark earlier in the day, gained further momentum as the Dollar struggled to attract demand, with the US Dollar Index (DXY) retreating to 101.30 from a recent high of 102.00. This upward movement reflects renewed strength in the Euro, bolstered by shifting market dynamics and expectations around Federal Reserve policy, as investors recalibrate their positions in response to the latest economic indicators.
The US Consumer Price Index (CPI) for April, released earlier in the day, showed headline inflation rising at a modest 2.3% year-over-year, below both the forecasted 2.4% and the previous month’s reading. Core CPI, which excludes volatile food and energy prices, met expectations at 2.8%, signaling a cooling in price pressures that undermined the Dollar’s recent rally. Despite this, market expectations for the Federal Reserve to maintain interest rates at 4.25%-4.50% in July held steady at 61.4%, according to market tools, suggesting that the softer inflation figures have not yet shifted the broader monetary policy outlook significantly.
The Eurozone, meanwhile, benefited from the Dollar’s weakness, with the Euro gaining ground against most major currencies. This rally in EUR/USD comes amid a broader risk-on sentiment in global markets, partly fueled by the recent US-China 90-day tariff suspension, which has reduced trade tensions and supported economic optimism. However, the Euro’s advance is also supported by upcoming economic sentiment surveys in Germany and the broader Euro area, which could provide further clarity on the region’s economic health and potentially sustain the pair’s upward trajectory if the data reflects improving confidence.
From a technical perspective, EUR/USD’s climb above 1.1170 marks a break from recent multi-week lows near 1.1060, highlighting renewed bullish momentum. The pair’s ability to hold above the 1.1150 level suggests potential for further gains, especially as the US Dollar faces ongoing pressure. Investors will now look to additional US data releases, such as the NFIB Business Optimism Index and API crude inventory reports, to gauge the Dollar’s next move, while the Eurozone’s economic indicators could either reinforce or temper the EUR/USD’s recovery in the days ahead.
