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• EUR/USD bidders failed to make a clean break of 1.0900 on Monday.
• Fiber’s near-term bull run set to end as technicals weigh heavily on buyers.
• ECB rate call due in the back half of the week to constrain Euro bids.

EUR/USD fell short of recent bullish momentum, pulling back sharply after a brief jump above 1.0900 to kick off the new trading week and keeping price action strung out along the top end of a descending price channel. Traders are weighing their stance on the Greenback as Fedspeak dominated investor sentiment with appearances from key policymakers on Monday.

Federal Reserve Chairman Jerome Powell acknowledged the recent progress on inflation on Monday. He was followed by a less important statement from San Francisco Fed President Mary Daly. Both key Fed policymakers emphasized that there is no fixed guidance on when Fed rate cuts will happen and that decisions will be made on a meeting-by-meeting basis.

According to the CME’s FedWatch Tool, the market is expecting a rate cut in September. Rate traders are now pricing in a 100% chance that the Fed funds rate will decline by at least 25 basis points when the Federal Open Market Committee (FOMC) meets on September 18.

The upcoming US Retail Sales data release on Tuesday will conclude the recent series of important US economic data releases. It is anticipated that there will be a continued slowdown in US economic activity, with US Retail Sales expected to remain unchanged at 0.0% month-over-month in June.

Euro traders will be buckling down for the wait to Thursday’s latest rate call from the European Central Bank (ECB). A follow-up rate cut to June’s quarter-point trim is anticipated, but not expected until September with a third 2024 rate cut penciled in for December. As noted by Pimco Executive Vice President and Portfolio Manager, Konstantin Veit pointed out that “the ECB has clearly signaled its preference to make interest rate decisions at forecast meetings, i.e. in September and December, and not in July, October or January".

EUR/USD technical outlook
 

Despite tipping into a fresh 16-week high on Monday, EUR/USD flubbed a challenge of the 1.0900 handle, easing back and leaving daily candlesticks mired in technical consolidation at the top end of a rough descending channel. Fiber ended a three-day winning streak, and is poised to tumble out of a bullish stance that dragged bids into the green for all but two of the last 12 consecutive trading days.

EUR/USD daily chart
 

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