The EUR/USD pair gained modestly to trade around 1.1055 during early European trading on Monday, snapping a three-day losing streak. The pair’s recovery was supported by the US Federal Reserve’s dovish stance, which has weakened the US Dollar (USD) and provided a boost to the Euro.
Market expectations are now heavily leaning towards a potential rate cut by the Federal Reserve in September, with the CME FedWatch tool indicating a nearly 70% chance of a 25 basis points (bps) reduction and a 30% probability of a 50 bps cut. Investors are closely watching the upcoming US employment data on Friday for further clues regarding the Fed‘s next move.
From a technical perspective, the bullish outlook for EUR/USD remains intact as the pair continues to trade above the key 100-day Exponential Moving Average (EMA) on the daily chart. However, the 14-day Relative Strength Index (RSI) hovers around the midline, suggesting that the trend’s momentum is currently neutral, leaving room for potential consolidation.
The immediate resistance for EUR/USD is located at 1.1185, marking the high of August 28. Should the pair break above this level, it could face the next hurdle at the upper boundary of the Bollinger Band at 1.1230. A decisive move beyond this point could trigger a rally towards 1.1275, the high from July 18.
On the downside, the 1.1000 psychological mark serves as the initial support level. A breach below this level could see the pair drop to 1.0950, the low from August 15. Further support is found at the 100-day EMA at 1.0893, followed by the lower boundary of the Bollinger Band at 1.0863.
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