EUR/USD Surges to One-Month High, Bullish Sentiment Prevails

In a strong bullish move, the EUR/USD experienced a surge on Wednesday, climbing from 1.0915 to 1.0989, reaching its highest level in a month. This upward momentum was primarily driven by the Euro's outperformance and a weakened US Dollar, influenced by lower Treasury yields. Federal Reserve Chair Powell's comments during this period provided no unexpected surprises.

Despite warnings from the German IFO Institute about a sharper-than-anticipated German recession, the Euro remained resilient. European Central Bank (ECB) officials, including Kazimir, Schnabel, and Nagel, struck a hawkish tone, emphasizing the need for further work and potentially more rate hikes from the ECB. This sentiment continued to support the Euro, allowing it to outperform, including against the GBP, as EUR/GBP climbed towards 0.8600, disregarding UK inflation figures.

During his testimony to the House Financial Services Committee, Fed Chair Powell reiterated the FOMC's message from last week's monetary policy meeting. He highlighted that if the economic performance aligns with expectations, a majority of FOMC members anticipate further rate hikes this year. Although Powell will address a Senate committee on Thursday, no surprises are anticipated.

Fed's Goolsbee expressed that the previous week's decisions regarding tightening were a close call for him, indicating his ongoing assessment of whether they were sufficient. As US yields turned negative during the American session, the US Dollar faced downward pressure, ultimately weakening against other currencies. This helped drive the EUR/USD towards the 1.1000 target, potentially even reaching 1.1100.