COMMENT-Diverging econ views increasingly favor EUR/USD gains

March 5 (Reuters) - EUR/USD hit a 4-month high Wednesday on economic hopes raised by a massive German spending proposal, but the dollar side of the equation is also playing a role and could help the euro extend its rally.

Private U.S. payrolls growth slowed sharply in February, according to ADP, with a total of 77k jobs added versus estimates for 140k and the upwardly revised 186k.

The report will focus investors on weekly jobless claims on Thursday and February non-farm payrolls data on Friday to assess whether weaker jobs growth has indeed taken hold.

Inflation expectations are coming in as well as investors appear increasingly to be expecting slower U.S. growth.

Drops in U.S. 2-year USBEI2Y=RR and 5-year USBEI5Y=RR break even inflation were also weighing down the dollar =USD and U.S. interest rate complex.

Investors are now expecting deeper Fed cuts SRAM26 and shallower ECB easing FEIZ5, eroding the dollar's yield advantage over the euro by tightening spreads US2DE2=RR

The euro may be getting an added boost from China whose economy Europe is dependent upon. Plans to increase fiscal stimulus in China could spur economic growth and in turn boost Europe's economy.

Should these influences remain in place, EUR/USD could extend its rally towards November's monthly high and possibly the 2024 yearly high.