EUR/USD crawls higher as the US Dollar drifts on risk appetite

• The Euro is drawing support from a weaker US Dollar to test multi-week highs.
• Hopes of a dovish turn by the Fed are weighing heavily on the US Dollar.
• EUR/USD bulls are pushing against 1.1790, with the 1.1830 long-term high in focus.

EUR/USD appreciates for the fourth consecutive day on Tuesday. The pair trades at 1.1775 at the time of writing, favoured by a risk-on mood as investors brace for, at least, a 25-basis-point (bps) interest rate cut by the Federal Reserve (Fed) on Wednesday and at least one more before the end of the year.

US President Donald Trump did not want to miss the opportunity of taking part in the event and called for a "bigger" rate cut on social media. This highlights the unprecedented political pressure, which is putting the central bank's ability to act independently into question.

The market, however, has been celebrating lower interest rates in anticipation. The US Dollar Index, which measures the value of the Greenback against six major currencies, has dropped to nearly two-month lows, and Wall Street indexes rose to fresh record highs. In this context, risk appetite has offset concerns about French debt, and the Euro (EUR) has risen higher.

Later on the day, the Eurozone Industrial Production and the ZEW Economic Sentiment Index might test the Euro's strength. In the US, August's Retail Sales data might provide some fundamental guidance for the USD, but they are unlikely to alter the expectations of a Fed rate cut this Wednesday.

Daily digest market movers: Hopes of lower interest rates are weighing on the US Dollar

• The US Dollar remains on its back foot as the market prices a quarter-point interest rate cut on Wednesday, coupled with a more dovish forward guidance. Investors are starting to think that the Fed is behind the curve and that it will be forced to accelerate its monetary easing cycle with a series of cuts over the next months.
• The US Senate has confirmed Trump's former economic advisor, Stephen Miran, as Fed Governor, which grants the US president a dove loyalist on the board from this meeting on.
• Fed Governor Lisa Cook will also be on the board at the upcoming two-day meeting, as the Federal Appeals Court has blocked President Trump's bid to fire her on an alleged mortgage fraud.

Technical Analysis: EUR/USD rallies to the 1.1790 resistance area

EUR/USD continues to head north, as US Dollar weakness weighs more than the Eurozone's domestic issues, at least for now. Technical indicators show a solid bullish momentum, with the Relative Strength Index (RSI) at 66 on the 4-hour chart.

Bulls are attempting to break the July 24 high at 1.1790 at the time of writing, the last hurdle before the July 1 high at 1.1830. Further up, a trend-based Fibonacci tool shows the 161.8% extension at 1.1875.

To the downside, a previous resistance is now acting as support at the 1.1750 area ahead of the September 12 low near 1.1700, and the ascending channel's bottom, now around 1.1690. Below here, the September 11 low near 1.1660 would come into view.