The Syrian Democratic Forces have spent months closing in on the Islamic State group's bastion Raqa and entered the city's east and west for the first time last month.
On Thursday, the US-backed Arab-Kurd alliance sealed off the jihadists' last escape route by capturing territory on the southern bank of the Euphrates.
"Today, they entered Raqa's south for the first time and seized the Al-Hal market," Rami Abdel Rahman, head of the Syrian Observatory for Human Rights, said on Sunday.
"The market is fully under SDF control but IS is waging a counter-attack," Abdel Rahman said.
The SDF's Operation Wrath of the Euphrates also announced it had captured the Al-Hal market on Sunday.
Backed by the US-led coalition bombing IS, SDF fighters first broke into Raqa on June 6.
They have since seized a handful of neighbourhoods in the east and west but are facing fierce resistance by IS as they push closer to the city centre.
Al-Senaa is key for both the SDF and IS because it is adjacent to the city centre, where most IS fighters defending Raqa are thought to be holed up.
IS pushed the SDF out of Al-Senaa on Friday, using dozens of jihadists disguised in SDF uniforms as well as a slew of car bombs.
After two days of a counter-offensive, the SDF had retaken about 70 percent of it by Sunday, the Observatory said.
"We are combing the area and destroying tunnels to prevent any new infiltrations towards our positions," Shaker told AFP.
According to the coalition, an estimated 2,500 IS jihadists are defending the northern city.
IS overran Raqa in 2014, transforming it into the de facto Syrian capital of its self-declared "caliphate," which it declared three years ago.
The city became infamous as the scene of some of the group's worst atrocities, including public beheadings, and is thought to have been a hub for planning attacks overseas.
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