EUR/USD Eyes Gains Amid Dovish Fed Signals; GBP/USD Nears 11-Week High

In Tuesday’s Asian trading session, the EUR/USD pair consolidates with bullish undertones, oscillating just below the mid-1.0900s—levels not seen since mid-August. The US Dollar languishes near a two-month nadir as market consensus grows around the Federal Reserve nearing the end of its rate-tightening cycle.

Such expectations have led to the market discounting further rate hikes and have even begun to factor in potential rate cuts. The downtrend in US Treasury yields further fuels the Euro’s momentum against the Dollar.

Despite the prevailing risk-on mood, which usually dampens demand for the Greenback, the weakened USD is providing a tailwind for the EUR/USD . However, this dynamic could be challenged by any hawkish insights from the forthcoming FOMC meeting minutes.

If they suggest a persistence of rate hikes to curb inflation, as intimated by Richmond Fed President Thomas Barkin, the Dollar could find grounds for a rebound, influencing the EUR/USD trajectory.

Supporting the Euro, recent ECB officials’ statements have tempered expectations for an early pivot to rate cuts, providing a solid backdrop for the currency pair’s ascent. With the ECB’s stance seemingly firmer than anticipated, the EUR/USD pair could find the impetus for a continued upward movement.

Across the channel, the GBP/USD pair extends its gain for a third session, drawing strength from Governor Bailey’s speech, which hinted at a gradual stabilization in inflation, particularly in the food sector. The Pound is also buoyed by PM Sunak’s tax reduction plans amid easing inflation, alongside the Chancellor’s growth-focused fiscal measures.

EUR/USD Technical Outlook

From a technical standpoint, the EUR/USD pair is touching and attempting to breach a critical level at 1.0960, with the next target at 1.1080. The EMA50 buttresses this bullish narrative, but the pair needs to secure a foothold above 1.0960 to maintain its trajectory toward higher targets.

GBP/USD Technical Outlook

Similarly, the GBP/USD pair’s bullish trend is underpinned by a positive chart pattern, aiming for a key Fibonacci level at 1.2590. The pair’s bullish outlook remains contingent on sustaining levels above 1.2460 and 1.2430.

Today’s expected ranges for EUR/USD and GBP/USD suggest a bullish trend, with both pairs looking to test higher resistance levels, provided key supports hold firm.