EUR/USD Volatility Expected on PCE Data and Fed Uncertainty

EUR/USD faces heightened volatility risks as markets await crucial US PCE inflation data while digesting news of Fed Governor Cook's potential dismissal. The pair currently trades near 1.0850, showing modest gains as dollar sentiment weakens on political uncertainty surrounding the Federal Reserve. The upcoming PCE deflator, the Fed's preferred inflation gauge, could significantly impact rate expectations and dollar strength. Additionally, Nvidia earnings later this week add another volatility catalyst, potentially affecting risk sentiment across currency markets. S&P 500 futures indicate gap risk at the open, which typically correlates with dollar movements. Technical analysis shows EUR/USD testing resistance at 1.0875, with support holding at 1.0820. A break above resistance amid weak PCE data could propel the pair toward 1.0900-1.0920. Traders should prepare for increased volatility and consider tighter risk management as multiple high-impact events converge, potentially creating sharp directional moves in major currency pairs.