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The EUR/USD advances again after some hesitation on Tuesday and approaches 1.1660 intraday highs ahead of the US session opening. The US Dollar is losing ground amid the escalating war between Trump and the US Federal Reserve (Fed), as investors brace for weak US Durable Goods Orders and deteriorating Consumer Confidence figures.

Trump shocked markets on Monday, ordering Cook´s removal on an alleged mortgage fraud in Georgia, a move that has been rejected by the Fed policymaker, who has confirmed that she will remain in her duty, as she said, the president has no authority to fire her. The market sees Trump's attempt to oust Cook as a maneuver to replace her with a loyalist dove and accelerate the bank's monetary easing cycle.

The Euro, however, is struggling to capitalize on the Greenback's weakness. News from France reveals that the opposition parties have rejected the possibility of supporting French Prime Minister François Bayrou in a confidence vote to apply harsh spending cuts, which would likely lead to the government's fall and to the resurgence of eurosceptic rhetoric in the heart of the EU.

Beyond that, Trump has threatened with "substantial" additional tariffs on all countries applying digital taxes, a vow that fully affects the European Union, whose Digital Services Act is considered by the US president as discriminatory for US technological companies.

Daily digest market movers: US Dollar rallies find sellers amid hopes of Fed rate cuts

• The US Dollar Index is showing a moderate bearish tone on Tuesday, as Trump's attacks on the Fed erode the credibility of the world's main central bank, while market hopes of imminent cuts keep upside attempts limited. That said, the risk-off mood stemming from the unprecedented political pressure on the Fed and the challenges ahead for the EU are keeping Euro bulls in check.
• Fed Governor Lisa Cook has responded to Trump's announcement by confirming that she will carry on with her duties within the central bank, as she defends, the US president has "no authority to do so."
• On Monday, the New York Fed President John Williams said that the era of low real interest rates is "far from over" as he assessed that the global demographic and productivity growth trends that pushed real interest rates lower have not reversed. These comments suggest that the Federal Reserve's margin to ease its monetary policy might be limited.
• In the US economic calendar on Tuesday, July's US Durable Goods Orders are expected to have dropped by 4% following a 9.3% decline in the previous month, due to lower orders for aircraft. The core Nondefense Capital Goods Orders ex Aircraft are seen bouncing up by 0.3% after a 0.7% decline in June.
• Later in the day, US Consumer Confidence is expected to have declined to 96.2 in August, from 97.2 in July, revealing that the deteriorating employment perspectives are weighing on the sentiment of US consumers. All in all, this does not provide the best fundamental support for the US Dollar.

Technical Analysis: EUR/USD loses bullish momentum, the focus shifts to 1.1585 support

(Click on image to enlarge)

EUR/USD was capped again at the descending trendline resistance from July 1 highs, and lost momentum on Monday, following a 0.85% reversal. The pair is now looking for direction, but the lower Relative Strength Index (RSI) on the 4-hour chart, which remains below the 50 line, keeps the bottom of the last four weeks' trading range, around 1.1585 in play.

A bearish move below the 1.1585 area, which held bears on August 11 and August 22, would open the path towards the 50% Fibonacci retracement of early August's bullish run, around 1.1560, although the August 5 low, near 1.1520, right above the 61.8% Fibonacci retracement of the same cycle, seems a more plausible downside target.

To the upside, immediate resistance is at the 1.1660 intraday high. Further up the 1.1730-1.1735 area, where the August 13 and 22 highs meet the above-mentioned trendline resistance, will pose a significant challenge for bulls.

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