The EUR/USD pair is holding onto Friday’s momentum, trading slightly above 1.1700 during the early European session on Monday. The common currency shows resilience as the US Dollar (USD) weakens, pressured by Federal Reserve Chair Jerome Powell’s remarks suggesting the possibility of interest rate cuts amid rising labor market concerns.
The US Dollar Index (DXY), which tracks the Greenback against a basket of six major currencies, is struggling near a four-week low around 97.60.
At the Jackson Hole Symposium on Friday, Powell emphasized that the central bank must remain flexible with interest rates as the balance of risks has shifted. With policy already in restrictive territory, Powell hinted that adjusting the stance may soon be justified.
Looking ahead, investors will focus on preliminary Eurozone inflation figures for August and the US Personal Consumption Expenditure (PCE) Price Index for July, both of which could provide further direction.
From a technical perspective, EUR/USD trades close to a downward-sloping trendline near 1.1740, drawn from July’s peak at 1.1830. The short-term outlook remains constructive as the pair holds above the 20-day Exponential Moving Average (EMA), currently positioned near 1.1652.
Meanwhile, the 14-day Relative Strength Index (RSI) is fluctuating between 40 and 60, signaling a consolidative bias.
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Upside Scenario: A breakout above Friday’s high of 1.1740 could pave the way toward July’s top at 1.1830, with further resistance seen at the psychological 1.1900 level.
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Downside Scenario: On the other hand, a fall below Friday’s low of 1.1583 may expose the pair to the August 5 trough at 1.1528, followed by deeper support at the August 1 low of 1.1392.
