EUR/USD rose to around 1.1200 amid Powell's dovish remarks

In Asia on Monday, the euro expanded its gains against the dollar for the second consecutive trading day, rising to around 1.1190. EUR/USD's gains were attributed to the dollar (USD) falling following Federal Reserve Chairman Jerome Powell's dovish speech at the Jackson Hole symposium on Friday.

Federal Reserve Chairman Powell said: "Now is the time to adjust policy." Although Powell did not specify when he would start cutting interest rates or the possible extent of the rate cuts, the market expects the Fed to announce a 25 basis point interest rate cut at its September meeting.

In addition, Philadelphia Federal Reserve Bank President Patrick Harker emphasized on Friday that the U.S. central bank needs to gradually lower interest rates. At the same time, Chicago Federal Reserve Chairman Austan Goolsbee pointed out that monetary policy is currently the most restrictive and the Fed's current focus is on achieving employment tasks.

According to Bloomberg, European Central Bank (ECB) Governor Oli Rehn said that due to lower inflation and economic weakness, the euro zone has good reasons to lower interest rates next month. In particular, the sluggish economic outlook for the manufacturing industry further supports the rationality of an interest rate cut in September.

Meanwhile, Jane Foley, senior FX strategist at Rabobank, predicts that the euro is likely to trade in a range around 1.1200 against the dollar over the next three months. She pointed to the euro's recent breakout against the dollar and the start of a new Federal Reserve policy cycle as signs that a new trading range is forming. However, she also warned that the euro could fall to around 1.1000 against the dollar if important U.S. economic data released in early September exceed market expectations.