EUR/USD nears 1.1560 resistance after ECB-Fed policy divergence

The EUR/USD pair hovered near a key technical level on Tuesday, with the euro gaining ground as divergent monetary policy signals from the European Central Bank (ECB) and the U.S. Federal Reserve fueled speculation over near-term rate trajectories.

The single currency last traded at 1.1545, up 0.1% on the day, after ECB policymakers indicated a more cautious approach to rate cuts compared with the Fed’s more accommodative stance. ECB Governing Council member Olli Rehn said on Monday that while inflation risks were balanced, the central bank would proceed with data-dependent decisions, tempering expectations for aggressive easing.

In contrast, Fed officials have signaled openness to rate reductions, with Atlanta Fed President Raphael Bostic stating that a September cut could be on the table if incoming data aligns with projections. The divergence has widened the gap between market-implied rate paths, supporting the euro’s advance against the dollar.

Technical levels are in focus, with the 1.1560 mark serving as a critical resistance point. A sustained break above this level could open the door to further gains toward 1.1600, while a failure to clear the barrier may see the pair retreat toward 1.1500. The Relative Strength Index (RSI) on the daily chart remains neutral, suggesting room for either direction pending catalyst-driven momentum.

Positioning data from the Commodity Futures Trading Commission (CFTC) shows speculative net long euro positions increasing for a third consecutive week, reflecting growing bullish sentiment. However, risks remain skewed to the downside given ongoing geopolitical tensions and potential shifts in central bank rhetoric.

The ECB’s next policy meeting is scheduled for September 12, while the Fed’s Federal Open Market Committee (FOMC) meets on September 17-18. Traders will closely monitor inflation prints and labor market indicators ahead of these events for further directional cues.