EUR/USD Rises 0.4% on Fed Rate Cut Bets, US-China Trade Progress

EUR/USD advanced 0.4% to 1.0875 as markets price in higher probability of Federal Reserve rate cuts following softer US economic data and reported progress in US-China trade negotiations. Fed funds futures now indicate a 75% chance of a 25-basis-point cut by March 2026, up from 60% last week. The dollar weakness extended across majors, with USD/JPY falling 0.6% to 149.20 as risk sentiment improved. Reports suggest US and Chinese officials made headway on reducing tariffs during weekend discussions, potentially easing global trade tensions. Eurozone data remained supportive, with German business confidence unexpectedly rising to 88.3 from 87.5. Technical analysis shows EUR/USD breaking above the 50-day moving average at 1.0855, opening the path toward 1.0900 resistance. Immediate support sits at 1.0840, with momentum indicators favoring continued euro strength in the near term.