EUR/USD Holds Above 1.1600 Mid-Level; Focus Shifts to US PCE Data for Fresh Impetus

EUR/USD is trading around 1.16699 in early European trading on Wednesday, failing to extend the modest rebound from the previous day's weekly low, with a negative bias prevailing. Market focus is on the upcoming US core PCE price index, the Fed's most-watched inflation gauge, which will provide key guidance for the next policy direction.

**Technical Outlook: Support and Resistance Coexist in the Near Term**

On the technical front, the pair has been oscillating between 1.1672 and 1.1760, with resistance at 1.1760 and 1.1808. Analysts note that EUR/USD maintains a bullish bias in the near term above the 200-day simple moving average and the 61.8% Fibonacci retracement of the April-to-June decline at 1.1644, meaning this level is the key support to defend.

**Dollar Factors: Fiscal Operations and Geopolitics Intertwine**

On the dollar side, the US Treasury decided to double the size of buyback operations for longer-dated securities, and reports suggest Treasury Secretary Bessent may tap nearly $1 trillion from the Treasury General Account to fund these operations, putting pressure on the dollar. Meanwhile, the US expanded secondary sanctions on entities doing business with Iran, with Bessent warning that a major financial institution could face sanctions this week, adding to geopolitical tensions and creating mixed effects on the dollar.

**Institutional View: Event Risks Point to Mild Dollar Upside Before Key Data**

Strategists at Scotiabank note that this week's calendar is packed with event risks, and the combination of key data releases and policy signals is prompting investors to reassess positions. In their view, this backdrop supports a modest near-term dollar uptick, as market participants may trim exposure ahead of risk events and adopt a more cautious stance, which tends to favor the dollar. Additionally, Fed Chair Kevin Warsh is scheduled to speak at the Jackson Hole symposium on Friday, which could provide further direction for the dollar.