EUR/USD Ascending channel favors bulls ahead of the key central bank event risk

• EUR/USD kicks off the new week on a softer note amid a modest USD uptick.
• The lack of follow-through selling warrants some caution for bearish traders.
• Investors also seem reluctant ahead of the key FOMC decision on Wednesday.

The EUR/USD pair trades with a mild negative bias below mid-1.1500s through the Asian session on Monday amid a modest US Dollar (USD) uptick, though it lacks bearish conviction. Spot prices remain close to the highest level since October 2021, around the 1.1630 area touched last week as traders now look to the crucial FOMC policy decision on Wednesday before placing fresh directional bets.

Heading into the key central bank event risk, expectations that the Federal Reserve (Fed) will resume its rate-cutting cycle in September might hold back the USD bulls from placing aggressive bets. Moreover, the European Central Bank’s (ECB) hawkish signal, that the end of the rate-cutting cycle is nearing, should act as a tailwind for the shared currency and continue supporting the EUR/USD pair.

From a technical perspective, the recent move-up witnessed over the past month or so, along an ascending channel, points to a well-established short-term uptrend and favors bullish traders. Moreover, oscillators on the daily chart are holding in positive territory and suggest that the path of the least hurdle for the EUR/USD pair is to the upside. Hence, any corrective slide could be seen as a buying opportunity.

In the meantime, the 1.1500 psychological mark could protect the immediate downside ahead of the 1.1450-1.1445 horizontal resistance breakpoint. This is closely followed by the trend-channel support, around the 1.1435-1.1430 area, which should act as a pivotal point. A convincing break below the latter could drag the EUR/USD pair further below the 1.1400 mark, towards the 1.1370-1.1365 support zone.

On the flip side, the 1.1570 area, followed by the 1.1600 round figure and the 1.1630 region, or the multi-year peak touched last Thursday, now seems to act as immediate hurdles. Some follow-through buying beyond the 1.1655-1.1660 zone, or the top end of the short-term ascending channel, will be seen as a fresh trigger for bullish traders and allow the EUR/USD pair to aim towards conquering the 1.1700 mark.

EUR/USD daily chart