The U.S. dollar index has blown through the 55- and 100-day moving averages overnight, leading the way for a USD decline that should now see EUR/USD also extend its run higher through those two averages.
While Fed Chair Powell reiterated that the Federal Reserve is in "no rush" to raise rates nL1N20L0TS, the market is still looking for the next move in U.S. rates to be lower, with the Click here pricing a near 20 percent chance of a rate cut at the Fed's December meeting.
The DXY now targets the 200 DMA at 95.63 and if EUR/USD follows suit, it would target 1.1510, which also lines up with the highs from one month ago.
The EUR/USD move will be confirmed on a close above the 61.8 Fibo at 1.1407.
Despite the recent softer economic data from the euro zone, particularly the manufacturing engine of Germany, the European Central Bank's incoming chief economist Philip Lane maintains that the data is within the limits of the current policy settings nL5N20L3D5.
This contrasts with the market's view that the Fed has reached the end of its tightening cycle and will be cutting rates next.