EURUSD Eyes 1.16 as Dollar Season Comes to an End

The EURUSD pair has resumed its upward momentum after the weekend, approaching the psychological level of 1.1600 for the first time in two months.

The market is increasingly cutting expectations for a hawkish Fed policy, with swap-implied odds of a rate hike before the end of 2026 dropping within a week from certainty to 85%.

US data has been disappointing, including non-Farm Payrolls employment unexpectedly falling in July and core inflation dropping to its lowest level since 2021.

The decline in expectations for US interest rate hikes is the primary catalyst behind EURUSD's rise, with technical analysis indicating a potential breakout above consolidation levels.