This article is a rewritten and expanded version of the original analysis published by XTB, available at: https://www.xtb.com/en/market-analysis/powell-at-jackson-hole-live-eurusd-hikes-1. All credit for the original content goes to the XTB research team.
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Jackson Hole Symposium: Powell Comments Fuel EUR/USD Upsurge
The annual Jackson Hole Economic Symposium, hosted by the Federal Reserve Bank of Kansas City, is among the most highly anticipated central banking events on the global financial calendar. Each year, the symposium attracts economists, policymakers, and market participants from around the world, with particular focus placed on the keynote address delivered by the Chair of the Federal Reserve.
This year’s speech from Federal Reserve Chair Jerome Powell was closely watched, and markets reacted decisively. The euro strengthened against the U.S. dollar, with EUR/USD climbing substantially following Powell’s comments. The market’s response came in the context of elevated inflation rates, mixed economic data, and ongoing uncertainty regarding the Fed’s monetary policy trajectory over the coming months.
Below is a detailed breakdown of the key themes explored in Jerome Powell’s Jackson Hole address and the subsequent market movements, particularly in relation to the forex market and the EUR/USD currency pair.
Key Highlights from Jerome Powell’s Jackson Hole Address
Jerome Powell’s speech did not deliver any major surprises, but the tone and content had several notable implications for monetary policy and currency markets.
Here are the main takeaways:
• Inflation remains the top priority for the Federal Reserve. Powell re-emphasized the Fed’s commitment to restoring price stability and affirmed that inflation is still running above the central bank’s 2% target.
• Powell stated that inflation had shown signs of cooling compared to previous months but warned that the job of bringing it back to 2% was “not yet done.”
• The Chair noted that recent data had been mixed. Some inflation indicators had moderated, but others remained persistently high. This creates a more uncertain path ahead for further monetary tightening.
• Powell did not explicitly suggest a rate hike in September but said that the Fed is prepared to raise rates further if appropriate. He emphasized again that decisions will remain data-dependent.
• Importantly, Powell indicated that the U.S. central bank will proceed “carefully,” reflecting a more cautious and measured approach to future rate moves. Markets interpreted this as a slightly dovish tone compared to previous statements by Powell this year.
• The concept of “restrictive monetary policy for longer” was maintained. Powell repeated that keeping rates at elevated levels may be necessary to fully tame inflation, suggesting that rate cuts were not yet under consideration.
Market Reactions: EUR/USD Surges Following Powell’s Comments
Financial markets were quick to react following Powell’s speech, particularly in currency markets. The euro gained strength against the U.S. dollar, with EUR/USD jumping higher in the immediate aftermath of the address.
• Following Powell’s remarks, EUR/USD broke through the 1.08 psychological resistance level, and continued to climb toward 1.0830.
• The move was fueled in part by investors interpreting Powell’s speech as less hawkish than expected. While he did not rule out future hikes, the measured tone suggested the Fed was nearing the peak of its tightening cycle.
• Meanwhile, expectations for the European Central Bank’s monetary policy remained relatively firm. Despite signs of economic softness in the Eurozone, the ECB has maintained a clear message on inflation and may have room for one more rate hike.
• The monetary policy divergence narrative, which had previously supported a strong U.S. dollar, weakened in the wake of Powell’s cautious stance.
Currency Pair Technical Analysis: EUR/USD Outlook
The breakout in EUR/USD offered a fresh technical perspective. Prior to Powell’s speech, the currency pair had been trending lower due to dollar strength and broader risk-off sentiment in markets.
• The recovery in EUR/USD lifted the pair off recent lows near 1.0760, forming a bullish reversal pattern on the
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