EUR/USD moves away from multi-week low set on Friday, lacks bullish conviction

The EUR/USD pair gains some positive traction on the first day of a new week and for now, seems to have snapped a six-day losing streak to its lowest

The upside seems capped in the wake of the underlying bullish sentiment surrounding the USD.The EUR/USD pair

gains some positive traction on the first day of a new week and for now, seems to have snapped a six-day losing streak to its lowest level since July 6, around the 1.0845 area touched on Friday. Spot prices, however, lack bullish conviction and remain below the 1.0900 mark through the Asian session, warranting caution before positioning for any meaningful intraday appreciating move.

The US Dollar kicks off the new week on a subdued note and consolidates its recent gains to its highest level since July 12, which, in turn, is seen as a key factor lending some support to the EUR/USD pair. That said, firming expectations that the Federal Reserve will keep interesthigher for longer continue to act as a tailwind for the Greenback and hold back traders from placing fresh bullish bets around the major.

The US central bank is anticipated to pause its rate-hiking cycle in September, though the markets have been pricing in one more 25 bps lift-off by the end of this year. The bets were reaffirmed by the latest US CPI report, which showed a moderate rise in consumer prices in July. Adding to this, the US PPI climbed slightly more than expected and suggested that the battle to bring inflation back to the Fed's 2% target is far from being won.

Furthermore, the minutes from the July 25-26 FOMC meeting revealed that policymakers continued to prioritize the battle against inflation. Meanwhile, the incoming US macro data continues to point to an extremely resilient economy and should allow the Fed to stick to its hawkish stance. The outlook remains supportive of elevated US Treasury bond yields, which, along with looming recession risks, act as a tailwind for the buck and cap the EUR/USD pair.

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