EUR/USD hit a one-month high Friday as U.S. employment data indicated job growth slowed massively in August nL1N2Q42I7, adding to Fed and ECB influences that could fuel a significant rally.
The jobs data drove eurodollar futures prices higher, with the December 2022 contract hitting a one-month high as investors pushed back rate-hike expectations, which can also be a proxy for Fed taper expectations.
The drop in rates helped drive the dollar lower against all the major and most emerging markets currencies.
EUR/USD rallied to 1.1909 on EBS and matched the July monthly high as well as the June 30 daily high.
ECB expectations should also underpin the euro, with rising euro zone inflation leading to hawkish rhetoric from policy makers calling for a reduction in bond purchases.
ECB President Lagarde reinforced investors' expectations for reduced bond buys on Wednesday, calling for "surgical" stimulus nS8N2MM03B.
That increases focus on the Sept.
9 ECB meeting for hints about reduced bond purchases.
The possibility of the Fed pushing back tapering combined with possible initiation of ECB tapering could propel EUR/USD above 1.2000.
Technicals highlight upside risks.
Monthly and daily RSIs are rising, August's bull hammer candle is followed by a rally in September and the 10-DMA will soon cross above the 50-DMA.
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