Danske Research discusses EUR/USD outlook after last week's Fed Powell speech and ahead of this week's US jobs report of Friday.
"As we have seen time and time again, getting past an event can by itself be a catalyst for risk-on and Powell's speech at Jackson Hole proved little different. In line with our expectation, Powell was slightly to the dovish side and EUR/USD rallied a tad but tapering is a 'done deal' at some point during this year. This week, focus will thus turn to US payrolls," Danske notes.
"The unlikely scenario is a weak number (below 200k, say) which postpones expectations to tapering in to Q1 22 and rallies EUR/USD towards 1.20 but we see such as unlikely. Rather, we expect US jobs continue being decent and for dollar to strengthen further over coming quarters," Danske adds.