EUR/USD Breaks Above Resistance as Fed Hike Expectations Fade

The EUR/USD currency pair has broken above the resistance level of 1.1580, reaching a two-month high of 1.1614 on August 17.

This move is largely attributed to the reduction in expectations of further Federal Reserve tightening, following weak US data that weakened the case for another rate hike.

The July employment report showed a decline of 23,000 nonfarm payrolls, and subsequent statistics, including retail sales and CPI, were also unfavorable for the dollar.

In contrast, the eurozone economy grew by 0.4% q/q and 1.0% y/y in Q2, while inflation accelerated to 2.9% y/y in July, leaving the ECB with less room for accommodative policy.