EURUSD is climbing after the payrolls revision, attempting to open the path toward 1.20. Markets expect a Federal Reserve rate cut in September and at least one more before year-end, with cuts continuing into 2026 for a total of five by the end of that year. While the Fed appears to be entering a rate-cutting cycle, the ECB is already at the end of its own cycle or just 25 basis points away from it. The divergence in policy direction, combined with differences in growth and inflation expectations, could give EURUSD room for a final push toward 1.20. 

Bessent and Trump are pushing for greater control over the Fed for faster and deeper cuts. If Powell were to step down from board and at the same time with chair position, Trump would have the opportunity to appoint two Fed members and potentially steer policy toward a more dovish stance. This could remain an ongoing risk factor for the dollar. 

However, the rally from 1.02 to 1.18 may have happened too quickly, suggesting that some profit-taking could be due in the near future. 

(Germany-US 10 Year Bond Yield Spread) 

The 10-year bond yield spread between Germany and the United States is rising, and it has a strong correlation with EURUSD. This move could give the currency the potential to make one final push to the upside. 

(EURUSD) 

The EURUSD rally from 1.02 to 1.18 has unfolded with multiple small corrections, each resembling a flag pattern. Another such pattern is now forming and being tested. If the white trendline which is currently at 1.1755 is broken to the upside, EURUSD may begin its final push toward the 1.20 level. 

The 1.20 mark could serve as a strong psychological resistance and potentially trigger a bearish short- to medium-term trend. However, it first needs to be reached. 

On the downside, the first bearish signal would emerge if EURUSD falls below the 50-day moving average, while the definitive signal would come with a break of the 100-day moving average. Until that happens, the uptrend toward 1.20 is likely to remain intact.