EUR/USD gains ground amid fresh doubts over the Fed

The EUR/USD pair rose to 1.1704 on Monday. The US dollar is trading near one-month lows as the market awaits a series of US labour market reports. These figures could influence the Federal Reserve's upcoming policy decisions.

The key event will be Friday's August employment report, alongside data on the unemployment rate, job openings, and private sector employment.

Investors continue to assess Friday's release of the Personal Consumption Expenditures (PCE) index. It confirmed rising prices and heightened uncertainty regarding the pace of future interest rate cuts. Nevertheless, the market is pricing in an approximately 88% probability of a 25-basis-point Fed rate cut this month.

On the trade front, a federal appeals court ruled that the majority of former President Donald Trump's retaliatory tariffs were unlawful, giving the administration until 14 October to appeal to the US Supreme Court.

Trading activity at the start of the week is expected to be subdued due to the US market closure for the Labor Day holiday.

Technical analysis: EUR/USD

Four-hour chart

On the H4 chart, EUR/USD has formed an upward wave towards the upper boundary of the sideways channel at 1.1736. A breakout above this resistance level could signal the start of a new upward trend. However, a pullback within a corrective wave is possible, which would see the breached resistance level retested as new support. This scenario is supported by the MACD indicator, whose histogram and signal line are above zero and continue to rise. This momentum suggests the upward trend is likely to persist towards the 1.1780 level, with potential corrections along the way.

One-hour chart

On the H1 chart, the pair is forming a correction as it tests the resistance level. A breakout above this resistance would indicate a resumption of the upward wave. The signal line of the Stochastic oscillator is crossing above the 80 level, signalling a potential short-term correction before the upward trend potentially continues.

Conclusion

The pair is benefiting from a weaker dollar as market participants reassess the Fed's policy trajectory. All attention is now on the upcoming US labour market data, which will be crucial for determining the pair's short-term direction. Technically, the outlook remains bullish, with a break above key resistance needed to confirm further gains.