EUR/USD Pair Gains Momentum Amid Dollar Weakness and ECB Rate Hike Expectations

The EUR/USD pair is showing positive momentum as it continues to rise during the Asian session on Tuesday, recovering from a slight pullback. However, the spot prices are still below the 100-day Simple Moving Average (SMA) resistance, currently trading around 1.0780 with a gain of over 0.20% for the day.The US Dollar (USD) is experiencing renewed selling pressure, driving it to its lowest level since May 22. This decline in the USD is a major factor contributing to the consecutive days of gains for the EUR/USD pair. Dovish comments from influential Federal Reserve (Fed) officials have raised expectations of a pause in the Fed’s year-long cycle of interest rate hikes.

The decline in US Treasury bond yields further adds to the downward pressure on the Greenback.In contrast, the Euro (EUR) is finding support from increasing expectations of further policy tightening by the European Central Bank (ECB). This positive sentiment acts as an additional catalyst for the EUR/USD pair. ECB President Christine Lagarde has recently indicated the likelihood of additional interest rate increases, indicating that the ECB is not finished with raising rates despite a decrease in consumer inflation. This stance is favorable for bullish traders.However, investors are exercising caution and awaiting the outcomes of important central bank events this week. The Fed’s highly anticipated monetary policy decision is scheduled for Wednesday, followed by the ECB meeting on Thursday. In the meantime, market participants will closely monitor the release of German ZEW Economic Sentiment data and the latest US consumer inflation figures on Tuesday, seeking short-term trading opportunities within the EUR/USD pair.