The EUR/USD currency pair advanced to fresh two-month highs in the upper 1.1500s, closing in on the 1.1600 level as the US Dollar Index (DXY) extended its decline, remaining below 100.00 after a fourth consecutive week of soft US economic data [1][2]. The preliminary Michigan Consumer Sentiment survey dropped to 51 in August from 55.2, missing forecasts, and was accompanied by cooler inflation and a weak Retail Sales report, which together diminished expectations for a September Federal Reserve rate hike [1].
Technically, EUR/USD registered gains of over 0.32%, trading at 1.1564 after rebounding from daily lows of 1.1526, with traders facing resistance at the 100-day Simple Moving Average (SMA) at 1.1567 [2]. The market structure still reflects a downtrend, but since July 30, when the pair reclaimed the 1.1500 area, the risk of a bullish reversal has increased. The Relative Strength Index (RSI) indicates building bullish momentum, and a break above the 100-day SMA could open the way to the 200-day SMA at 1.1629, with further targets at the May 29 high of 1.1685 and potentially the April 17 high of 1.1849 if momentum continues [2].
Currency performance tables from both sources show the Euro was the strongest against the Japanese Yen this week, while the US Dollar was also relatively strong against the Yen on the day [1][2]. The EUR/USD pair's recent strength is attributed primarily to US Dollar weakness, as the Eurozone calendar remains light on surprises and the European Central Bank appears content to wait [1].
Looking ahead, the upcoming week is expected to be dominated by the release of the Federal Open Market Committee (FOMC) Minutes from the July meeting, which may provide further insight into the hawkish split that unsettled markets late last month [1]. No major US data releases are scheduled, keeping the focus on central bank communications and technical levels for EUR/USD [1][2].
CONCLUSION
EUR/USD has gained ground on the back of weaker US data and fading Fed rate hike expectations, with technical indicators suggesting the potential for further upside if key resistance levels are cleared. The market's attention now turns to the FOMC Minutes for additional policy clues, while the Eurozone remains relatively quiet. The overall sentiment is moderately positive for EUR/USD, driven by US Dollar softness.