EUR/USD turned positive and hit a three-week high after briefly falling below the 200-day moving average on Monday. Investors are speculating on the possibility of more aggressive Federal Reserve rate cuts in 2025, along with technical factors supporting the pair. Recent U.S. data points to a softening job market and a return to disinflation. Short-term rates markets still anticipate two rate cuts in 2024 but have increased bets on more cuts in 2025. March 2026 Fed funds futures prices have rallied since late April, reaching a three-month high on expectations of a less restrictive Fed.

Technically, EUR/USD shows upside risks with monthly and daily RSIs rising but not yet overbought, suggesting continued upward momentum. The 200-DMA has limited the downside, and the pair remains above the daily cloud. Key risks include Fed Chair Powell's testimony before the Senate, as well as upcoming June CPI, PPI, and weekly jobless claims data. If the data indicates persistent disinflation and weaker employment, EUR/USD could target the 1.1000 level.

In the New York session, EUR/USD opened near 1.0825 after trading at 1.07910 overnight, with the rally extending. The pair reached a three-week high of 1.0847, driven by U.S. dollar selling. However, buying pressure on the U.S. dollar emerged as stocks and gold traded down, causing EUR/USD to erase early New York gains, dipping below 1.0830 and ending the session down 0.4%. Overall technical indicators lean bullish, with the monthly RSI rising and the pair staying above the 200-DMA. Fed Chair Powell's upcoming testimony to the Senate Banking Committee remains a key risk for the pair.

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