EUR/USD Breaks Above 1.1600 as Dollar Slides to 4-Month Lows

EUR/USD surged through the 1.1600 psychological level on Thursday, marking a 0.5% gain as the US dollar index tumbled to its lowest level since July at 105.80. The pair's bullish momentum accelerated after breaking above Wednesday's high of 1.1580, with buyers now eyeing the next resistance at 1.1650. Dollar weakness stems from growing expectations that the Federal Reserve may pause its tightening cycle, following softer inflation indicators and signs of economic cooling. The euro found additional support from better-than-expected Eurozone services data, which offset manufacturing sector concerns. Technical analysis shows strong buying interest above the 20-day moving average at 1.1520, establishing a firm support base. The weekly chart suggests EUR/USD could extend gains toward 1.1700 if the dollar index breaks below the critical 105.50 support. Traders should monitor Friday's US PCE inflation data for potential volatility.