EUR/USD clings to gains above 1.1700 at the start of the week.
Fed’s Powell turns dovish on the interest rate outlook.
This week, investors await inflation data from the US and major economies of the Eurozone.
The EUR/USD pair holds onto Friday’s gains slightly above 1.1700 during the early European trading session on Monday. The major currency pair demonstrates strength as the US Dollar (USD) has come under pressure, following comments from Federal Reserve (Fed) Chair Jerome Powell that the United States (US) central bank has opened the door for interest rate cuts amid growing labor market concerns.
At the time of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, strives to hold its almost four-week low around 97.60.
On Friday, Fed Chair Powell stated at the Jackson Hole Symposium that the central bank needs to adjust interest rate as balance of risks has shifted. Nonetheless, with policy in restrictive territory, the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance," Powell said.
This week, investors will pay close attention to the preliminary inflation data from major economies of the Eurozone for August and the US Personal Consumption Expenditure Price Index (PCE) data for July.
EUR/USD trades close to the downward-sloping trendline plotted around 1.1740 from the July’s high at 1.1830. The near-term trend of the pair is bullish as it holds above the 20-day Exponential Moving Average (EMA), which trades near 1.1652.
The 14-day Relative Strength Index (RSI) oscillates inside the 40.00-60.00 range, suggesting a sideways trend.
A fresh upside move in the pair would become inevitable to near the July’s high at 1.1830 and the round-level resistance of 1.1900 if it breaks above Friday’s high of 1.1740.
On the flip side, a downside move by the pair below Friday’s low of 1.1583 will expose it to the August 5 low of 1.1528, followed by the August 1 low of 1.1392.
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