The Euro had a promising start to the week as it gained some upward momentum against the US Dollar on Monday. This pushed EUR/USD above the key 1.0800 yardstick, which also aligns with the significant 200-day SMA.
On the other hand, the Greenback experienced a partial retracement of its recent two-day advance and revisited the 104.00 area, as indicated by the USD Index (DXY). This occurred amidst a modest recovery in risk-associated assets and a minor correction in US yields across different maturities.
Meanwhile, investors appear to have already absorbed Chair Jerome Powell's speech at the Jackson Hole Symposium on Friday. In his speech, Powell maintained flexibility in policy options and reiterated that the possibility of further rate hikes should not be dismissed.
On the latter, and according to CME Group, the probability of a 25 bps rate hike at the Fed's November 1 meeting approaches 52%.
Concerning monetary policy, there is a revitalized discussion surrounding the commitment of the Federal Reserve to uphold a stricter stance for an extended duration of high interest rates. This increased focus arises from the impressive resilience of the US economy, despite the slight easing in the job market and decreased inflation statistics witnessed in recent months.
Simultaneously, inside the European Central Bank (ECB), conflicts among its council members have surfaced around the potential extension of rigorous measures beyond the summer period. These differences of opinion are causing a renewed sense of vulnerability, which is negatively impacting the Euro.
On the US calendar, the only scheduled release on Monday will be the Dallas Fed Manufacturing Index which is a key indicator of business confidence and may create some opportunities in the EUR/USD currency pair.