EUR/USD came under pressure as Wednesday's modest bounce from support at the 200-DMA (1.0802) wilted in the face of below-forecast U.S. jobless claims data, ensuring another rally attempt proved shallow, but bulls still may have reason to hope for a reprieve from Fed Chair Jerome Powell.
Heading into Powell's highly anticipated Jackson Hole speech at 1005 EDT on Friday, EUR/USD has fallen to 2-month lows, while U.S. yields have edged higher, hitting fresh cycle highs.
The price action suggests traders are gearing for a hawkish event, which could stem from talk about the neutral rate of interest and whether the Fed chair signals that it has indeed increased.
That could lead markets to price out 2024 rate cuts.
However, Powell has previously downplayed the significance of the neutral rate.
As such, should the focus lie on the importance of current data, while acknowledging that recent inflation reports have supported the disinflation narrative, this may prompt a pullback in the dollar, providing some relief for EUR/USD.
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