Employment, Fed risks may see EUR/USD above 1.1200
Aug 19 (Reuters) -EUR/USD struck an 8-month high Monday as investors leaned on the possibility the Fed's rate cutting cycle will have to be more aggressive than the central bank has indicated, which may see 1.1235/75 tested.
Drops in U.S. Treasury yields US2YT=TWEB weighed down the U.S. currency and helped erode some of its yield advantage over the euro as German-U.S. spreads US2DE2=RR tightened slightly.
EUR/USD bulls are leaning on two key factors due later this week.
The U.S. Bureau of Labor Statistics will release its preliminary estimate for benchmark revisions to non-farm payrolls Wednesday. Though not always a big mover, there is market talk of potentially hefty downward revisions. If that's the case, and the adjustments are large enough, it might lead investors to price in more significant Fed rate cuts.
Fed Chair Jerome Powell is scheduled to speak Friday at the Kansas City Fed's Jackson Hole Economic Symposium.
Investors appear to be leaning towards Powell indicating policy is too restrictive and that rate cuts can begin.
Bigger downward revisions to the payrolls data could lead investors to expect an even more dovish delivery by Powell, further diminishing support for the dollar.
Reinforcing the upside view for EUR/USD are techs highlighting bullish risks.
Daily and monthly RSIs imply upward momentum, EUR/USD is holding above a slew of daily moving averages and the trend line off 2023's yearly high has been broken.
For more click on FXBUZ
(Christopher Romano is a Reuters market analyst. The views expressed are his own)
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