For the second consecutive day, the EUR/USD pair is attracting buying interest as it attempts to reach August's high. Meanwhile, the U.S. dollar remains near the year's early low, reached last week, with traders anticipating a more aggressive easing of Federal Reserve policy.

These expectations are the primary factor driving the currency pair upward. Markets currently price in a more than 75% chance that the US Central Bank will lower borrowing costs by an additional 50 basis points in November. Furthermore, disappointing U.S. macroeconomic data and prevailing risk conditions have weakened the US dollar.

Recent reports indicate a sharp deterioration in September's Consumer Confidence Index from the Conference Board, falling to 98.7 from August's 105.6. The Current Situation Index also dropped to 124.3 from the previous 134.6. Additionally, the Richmond Fed's survey indicated sluggish manufacturing activity, with the Composite Manufacturing Index declining to -21 in September from -19 the prior month.

China's recent stimulus measures have raised hopes for a recovery in the world's largest economy, enhancing investor appetite for riskier assets. This enthusiasm has driven capital outflows from the dollar, helping to offset concerning data from the Eurozone. According to Monday's preliminary Purchasing Managers' Index data, Eurozone business activity contracted sharply in September. Germany's IFO Business Climate Index also fell to 85.4 from 86.6, and the Current Economic Assessment Index dropped to 84.4 from 86.4.

Traders are cautious about taking long positions in the EUR/USD pair, with focus remaining on upcoming speeches by key FOMC members and Federal Reserve Chair Jerome Powell, scheduled for Thursday. Additionally, Friday's release of the US Personal Consumption Expenditures (PCE) Price Index, the Fed's preferred inflation gauge, will significantly influence market expectations about the Fed's rate-cutting trajectory, which will determine the next directional phase for the US dollar and the currency pair.

From a technical standpoint, sustained strength above the 1.1200 mark will act as a new trigger for bulls, paving the way for further growth. Given that the oscillators on the daily chart are in positive territory and far from overbought, the EUR/USD pair could accelerate toward its July 2023 high. The next target is 1.1300, above which bullish momentum may extend further.

On the other hand, the 1.1160 level now provides immediate support, ahead of the 1.1135 level and the round level of 1.1100. Below this, the weekly low around 1.1080 looms, under which the pair might drop to the 50-day Simple Moving Average (SMA). Any subsequent selling that breaks below the psychological level of 1.1000 would indicate that bears are attempting to take control.