EUR/USD extended last week’s break above the 1.1460–1.1470 resistance band, rising for a fifth consecutive session on Monday and pushing beyond the mid-1.1500s to its highest level since 17 June in Asian trading. The move coincided with a softer US Dollar, as the USD Index (DXY) continued to retreat from its year-to-date high. A drop in crude oil prices also weighed on the Greenback, after US President Donald Trump said he would order US forces to hold off on new strikes against Iran and pointed to parameters for ending a five-month-old war, while OPEC+ agreed on Sunday to increase production in September.
Brown Brothers Harriman revised its view to see DXY moving back into a 96.00–100.00 range, linking the shift to policy concerns around the Federal Reserve’s inflation response. The Dollar was also pressured by follow-through short-covering in the Japanese Yen. The euro drew support from resilient Eurozone inflation data and a solid 2Q26 GDP print, which together reinforced expectations for another European Central Bank rate rise in September. Focus now turns to US data at the start of the month, beginning with the ISM Manufacturing PMI later on Monday.
Trading Strategies For EUR/USD, DXY, And Oil
We advise derivative traders to capitalize on the EUR/USD breakout above the 1.1460-1.1470 barrier by establishing long positions through call options or futures contracts. With spot prices climbing past 1.1550 today on Monday, August 3, 2026, the technical setup suggests a clear path toward the 1.1700 level in the coming weeks. Historically, similar breakouts above key multi-month horizontal resistance levels have led to sustained momentum, making near-term EUR/USD call options highly attractive.
We should also look to short the US Dollar Index (DXY) using put options, targeting a retreat back into the 96.00 to 100.00 range. The DXY has lost its upward momentum as softer oil prices reduce the likelihood of aggressive Federal Reserve interest rate hikes. This shifting interest rate outlook makes selling USD futures against stronger major currencies a high-probability setup for the rest of August.
In the energy space, we recommend trading the downside in oil futures as OPEC+’s September production hike and easing Middle East tensions drag Brent crude lower. Recent market data shows Brent struggling to hold key support levels, with projections pointing to a potential drop toward the $70-per-barrel mark. Buying put options on crude oil can hedge against further declines as the market adjusts to increased supply and diminished geopolitical risk premiums.
Macro Trends And Monetary Policy Divergence
On the macroeconomic front, resilient Eurozone inflation—which recently stabilized near 2.6% alongside a solid Q2 2026 GDP print—signals that the European Central Bank is highly likely to raise rates in September. We suggest taking positions in short-term interest rate derivatives to profit from these hawkish expectations. This monetary divergence between a tightening ECB and a pausing Fed will continue to fuel the Euro’s strength in the near term.
