The EUR/USD pair traded close to flat on Wednesday, maintaining its position near a 13-month high as the broader uptrend took a pause. Investors are now focused on Federal Reserve Chair Jerome Powell's upcoming speech at the Jackson Hole symposium on Friday, which is expected to be a pivotal moment in determining whether the recent rally in the euro can extend further or if a reversal is on the horizon. Market participants are anticipating that Powell may signal the start of the Fed's rate cut cycle, but there is also speculation that he could provide hints about more aggressive cuts than what the central bank has currently projected.

A significant factor influencing the EUR/USD pair was the U.S. Department of Labor's preliminary estimate of the Nonfarm Payrolls (NFP) benchmark revision, which indicated that the U.S. labor market is not as strong as initially believed. The revision showed a reduction of 818,000 jobs, reinforcing concerns about the sustainability of U.S. economic growth. This data, coupled with a decline in Treasury 2-year yields to a 5-session low, has eroded some of the dollar's yield advantage over the euro. Additionally, the German-U.S. yield spreads have tightened to their closest level since August 6, further supporting the euro. Rates markets are now pricing in just over 100bps of Fed cuts for 2024, an increase from slightly above 90bps on Tuesday.

Despite these supportive factors, EUR/USD bulls remain cautious ahead of Powell’s speech. If Powell acknowledges growing concerns over labor market weakness, it could lead to further declines in U.S. yields and the dollar, potentially driving EUR/USD higher. In such a scenario, the euro could break above its December monthly high, triggering stop-loss buying and propelling the pair towards the 1.1275/1.1300 region.

Technically, the EUR/USD pair appears to be in a bullish phase, with rising Relative Strength Index (RSI) levels and the presence of bullish hammer candlestick patterns on both daily and monthly charts. These technical indicators suggest that the pair's upward momentum could continue if market conditions remain favorable. However, the upcoming economic data, including the Eurozone’s August HCOB PMIs and U.S. weekly jobless claims and August S&P Global PMIs, could introduce some volatility, especially with Powell’s Jackson Hole speech looming on Friday.

In summary, while EUR/USD is holding near its recent highs, the market’s next move will likely be dictated by Powell’s remarks at Jackson Hole. Should Powell downplay the U.S. labor market's resilience and signal a more dovish stance, the euro could extend its gains. Conversely, if Powell emphasizes strength in the economy, the dollar might recover, leading to a potential pullback in EUR/USD.