Important events today:

17:30 UTC: EUR – ECB President Christine Lagarde will deliver a speech.

The EUR/USD pair continued its rally to 1.1720 in the early hours of Asian trading on Monday, supported by a weakening U.S. dollar (USD). The greenback is declining against the euro (EUR) as traders are confident that the Federal Reserve (Fed) will cut rates at the September meeting.

Data released on Friday showed that personal spending in the U.S. unexpectedly fell in May, marking the second decline this year. Meanwhile, personal income in the U.S. fell 0.4% in May, the largest drop since September 2021. Traders are betting that the U.S. central bank will cut rates more frequently and possibly sooner than previously expected, putting pressure on the dollar and providing a tailwind for the main pair.

Across the ocean, ECB Governing Council member Klaas Knot said on Friday that the current interest rate is “a good place to be,” adding that at least one more 25 basis point (bps) rate cut is expected by the end of 2025. Following this comment, the swap market continues to predict only one ECB rate cut of 25 bps over the next 12 months, with the rate expected to be at 1.75%.

Recommendations: BUY 1.1750, SL 1.1680, TP 1.1840.