Fed rhetoric keeps EUR/USD downside risks viable

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Feb 8 (Reuters) -EUR/USD traded lower Wednesday after a brief overnight rally and risks to the downside remain from Fed rhetoric and technicals.

New York Fed President Williams said the job market is extraordinarily strong right now and also said the Fed will need to maintain restrictive rates for a few years nN9N30X018.

Fed Governor Lisa Cook echoed other policymakers by saying the central bank is not done with raising rates and will stay the course until inflation is contained nW1N33R03C.

Eurodollar futures EDZ3 prices turned lower on the comments while U.S. Treasury 2-year yields US2YT=TWEB rallied toward the session highs.

Risk soured as investors sought safer assets. Equities and commodities fell while broad based U.S. dollar buying took hold.

EUR/USD dropped, which generated bearish daily tech signals.

Daily RSI turned lower and a daily gravestone doji candle formed, reinforcing bearish signals from the falling monthly RSI and monthly inverted hammer candle in place for February.

Current Fed rhetoric seems unlikely to alter EUR/USD's current path so downside risks remain until U.S. January CPI data is released Feb. 14.

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(Christopher Romano is a Reuters market analyst. The views expressed are his own)


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