Fundamental analysis of EUR/USD

The EUR/USD pair is in correction, trading at 1.07110.
On Friday, during the Asian session, the pair found momentum for purchases, compensating for a significant part of losses. This development was mainly influenced by a slight decline in the US dollar, especially against a basket of other major currencies. Also, the final data on inflation in Germany for August played a role, which came out in line with expectations - a decline in the annual inflation rate from 6.2% to 6.1%, which is not a significant reason to change views on the position of the European Central Bank with regard to monetary policy. 

The broader macroeconomic scenario suggests a recession, but surprisingly, an ECB rate hike in September is not ruled out. If the preliminary inflation data is revised upwards, this will encourage hawkish policy advocates at the ECB. The consequences of higher interest rates are manifold: higher borrowing costs could force companies to reduce headcount, which would weaken the labor market. This effect could reduce consumer spending and reduce demand-driven inflationary pressures. 
On the other side of the Atlantic, market participants are closely watching the speeches of FOMC members. As expectations grow that the Fed will leave current rates unchanged, hawkish sentiment will increase in the coming months. This is evidenced by data from the CME FedWatch tool, which shows that the probability of a 25 basis point rate hike in November is rising and now stands at nearly 40%. These factors continue to support the US dollar's position. 
The strong economic backdrop appears to be encouraging the Federal Reserve to pursue a hawkish policy stance. In contrast, European Central Bank (ECB) officials are sending mixed signals regarding future interest rate hikes. While the Governor of the National Bank of Slovakia , favors further interest rate hikes as inflation remains high, others, such as the Governor of the Central Bank of Italy, argue that the ECB is getting closer to the limit of interest rate hikes. 
Despite periodic bounces, EUR/USD seems to be on a bearish trajectory for the eighth consecutive week. Prevailing fundamentals suggest that EUR/USD may meet resistance in the uptrend, especially ahead of next week's key ECB meeting.
Technical analysis and scenarios:

Price is currently in a lower range, very close to the middle band. The direction of the band is pointing downwards and the narrowing of the price range suggests a decrease in volatility. Historically, a narrowing of the Bollinger Band often precedes a significant price move. With a value of 71.4894 above the 55.5152 signal, the Stochastic indicates that the pair is approaching an overbought zone. This usually warns of a possible short-term price reversal. The value of the MACD line (-0.002412) above the signal line (-0.002789) indicates bullish momentum. This is a weak positive sign. 
Main Scenario (SELL)
Recommended entry level: 1.06700.
Take Profit: 1.06200.
Stop loss: 1.07000. 
Alternative scenario (BUY)
Recommended entry level: 1.08090.
Take Profit: 1.08700.
Stop loss: 1.07870.