EUR/USD rallies as Fed and ECB rate cut expectations boost risk appetite

EUR/USD advanced 0.35% to 1.0935 as global markets embraced risk-on sentiment driven by growing expectations of coordinated rate cuts from both the Federal Reserve and European Central Bank. The dollar index (DXY) fell 0.4% to 103.20, marking its weakest level in three weeks. Market pricing now reflects a 75% probability of a 25-basis-point Fed cut in September, up from 60% last week, while ECB officials have signaled openness to further easing amid slowing Eurozone growth. Asian and European equity markets rallied 1.2% on average, supporting high-beta currencies. Technical analysis shows EUR/USD breaking above the 50-day moving average at 1.0915, with next resistance at 1.0965. GBP/USD and AUD/USD also benefited, gaining 0.3% and 0.5% respectively. Sustained risk appetite could push EUR/USD toward the psychological 1.1000 level if upcoming economic data confirms the dovish central bank narrative.