EUR/USD jumps but fails to grasp 1.10

• EUR/USD bumped higher on Monday before easing back into range.
• European Retail Sales due on Tuesday, economic calendar remains thin.
• Softening US data keeps rate cut hopes pinned to the ceiling.

EUR/USD scrambled for higher ground on Monday, launching bids into 1.1000 before settling back into a familiar range near 1.0950 and failing to set a fresh high for 2024. Broad-market expectations for rate cuts from the Federal Reserve (Fed) have run well ahead of the curve, with investors hoping for an initial double-cut from the Fed in September.

Forex Today: Fed’s rate cut gathers pace

The economic calendar remains thin overall for the trading week, though European Retail Sales will be one last speedbump for the Fiber before markets can fully settle in for the long wait to September’s rate call season. Pan-EU Retail Sales are expected to ease to just 0.1% for the year ended in June compared to May’s YoY period of 0.3%.

Based on the CME’s FedWatch Tool, the rate markets are currently indicating an 85% probability of a 50 basis points double-cut from the Fed on September 18th. This change in sentiment follows mixed US data on Friday and Monday. The economic data calendar for the rest of the trading week is relatively light, which gives the markets some breathing space and time to analyze their current positions.

The US Composite Purchasing Managers Index (PMI) for July came in at 54.3, below the expected 55.0. On the other hand, the ISM Services PMI for the same period increased to 51.4, surpassing the expected 51.0 and returning to expansion territory above 50.0. Despite this, the ISM Services Prices Paid for July rose to 57.0 from 56.3, exceeding the market's anticipated decrease to 55.8. This indicates that inflation pressures at the business level are still present.

EUR/USD technical outlook

Fiber has once again broken out of the top end of a rough descending channel on daily candlesticks, but a lack of determined bullish momentum will likely leave bids to get swamped back into the 200-day Exponential Moving Average (EMA) at 1.0801.

Despite thin, overextended gains on the daily chart, price action has chalked in a rising pattern of higher lows, and bullish hopefuls will be looking to kick EUR/USD into a fresh bullish cycle after the pair spent most of 2024 churning in the midrange.

EUR/USD daily chart