Bybit x FXStreet TradFi Report: All eyes on Jackson Hole as dollar traders await Powell
Key Highlights:
Event focus: The Jackson Hole Economic Policy Symposium takes place August 21–23, 2025, with Fed Chair Jerome Powell’s speech set for Friday at 14:00 GMT.
Rate cut expectations: Markets see an 83% chance of a 25 bps rate cut on September 17, down from 94% last week.
Dollar impact: Lower interest rates tend to weaken the dollar and boost risk assets, such as stocks and crypto.
Powell's tone matters: A dovish Powell could fuel an EUR/USD breakout; a hawkish tone might trigger profit-taking.
EUR/USD setup: The EUR/USD pair is up 13% year-to-date, and is trading near 1.168, just below key resistance at 1.182.
Neutral technicals: A flat MACD and RSI at 50 reflect market indecision ahead of Powell’s remarks.
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Macro context
The Jackson Hole Symposium, hosted annually by the Kansas City Fed in Wyoming, has evolved into one of the most watched macroeconomic events of the year. While the gathering includes global central bankers, economists and academics, the market’s spotlight this year is firmly on one figure: Federal Reserve Chair Jerome Powell, who will speak on Friday at 14:00 GMT.
The stakes are high. With the Fed’s next rate decision coming on September 17, investors are eager for forward guidance. The US interest rate currently sits at 4.5%, and markets are pricing in an 83% chance of a cut to 4.25%. That probability was 94% just a week ago, highlighting the rising uncertainty.
Why does this matter for traders? Lower interest rates reduce the appeal of dollar-based savings and Treasury yields. That often causes capital to flow into riskier assets, such as tech stocks, cryptocurrencies and non-dollar currencies like the euro, yen and franc. Conversely, higher rates bolster the dollar and weigh on equities and commodities.
Beyond interest rates, the Jackson Hole event will likely touch on broader macro themes:
Trade policy: Ongoing tariff uncertainty involving Europe, Japan and China
Geopolitics: Peace negotiations between the US and Russia regarding Ukraine
Labor market: A weakening jobs picture, with the latest NFP data showing slower hiring and rising unemployment
Markets have reacted strongly to Powell’s tone in past years:
On Aug 26, 2022, Powell struck a hawkish tone, signaling higher rates. The dollar surged and the S&P 500 sold off.
Source: TradingView
On Aug 23, 2024, Powell was dovish, prompting a rally in stocks and a broad dollar sell-off.
Source: TradingView
Given the current level of uncertainty, the stage is set for another outsized move this Friday.
Technical analysis: EUR/USD
The EUR/USD currency pair is a key barometer of dollar sentiment. When the dollar weakens, the EUR/USD ratio tends to rise, and vice versa.
So far in 2025, EUR/USD has gained 13%, supported by expectations of looser US monetary policy and a more active fiscal stance in the eurozone. Increased military investment across the EU, combined with tariff-driven supply chain shifts, have also supported the euro.
Currently, the pair is trading near 1.168 after peaking at 1.182 on July 1. The short-term outlook depends heavily upon Powell’s tone:
Dovish scenario: A breakout above 1.182 could quickly target the psychological 1.2 level.
If 1.2 breaks, next targets include the May 2021 high at 1.227 and the January 2021 peak at 1.235.
Hawkish scenario: If Powell suggests no imminent rate cuts, the dollar could strengthen.
A drop below 1.16 may open the door to 1.14, a key support from earlier this year.
Momentum indicators currently offer no clear bias:
RSI is at 50, indicating a neutral stance, often the “calm before the storm.”
MACD is flat, with no crossover or momentum divergence, confirming the indecision.
In order for the RSI to reach overbought or oversold levels, the EUR/USD pair would need to move strongly, because the RSI is exactly neutral at 50. Its resistance is precisely placed at 70 on the daily chart. Therefore, to revisit that level, the EUR/USD will most likely need to break above the July 1 resistance at 1.182. The downside movement toward RSI 30 is much more aggressive on the daily chart, showing levels well below 1.14. Technically, a decline could extend as far as 1.10.
This technical picture aligns with the fundamental uncertainty, as traders are sidelined, waiting for a signal.
Traders should also note the following:
Volatility setup: With tight technical ranges and a known macro catalyst, the potential for a sharp breakout is elevated.
Leverage sensitivity: EUR/USD trades are often leveraged, making even modest moves highly profitable (or risky), depending upon positioning
Profit-taking risk: A hawkish surprise could trigger broad dollar buying and liquidation of profitable EUR/USD longs from earlier in the year.
Source: TradingView
Jackson Hole vs. previous cycles
What makes this year’s event unique is the divergence between data and sentiment. Inflation is softening and the job market is cooling, which typically argues for easier policy. However, geopolitical risks and trade disruptions are adding inflationary pressures, and the Fed may be reluctant to cut interest rates too quickly.
That’s why Powell’s guidance on Friday is critical. Even subtle hints about how the Fed views tariffs, unemployment and/or global growth could tilt rate expectations for the remainder of the year.
Markets are currently split between the following possibilities:
Two rate cuts by year end, bringing the Fed rate to 4.0%
Three cuts, ending 2025 at a rate of 3.75%
Only one cut if inflation and/or geopolitics worsen
The more dovish Powell sounds, the more likely it is that the dollar will weaken. But if he emphasizes risks and patience, traders may rush back to the dollar.
Conclusion
The Jackson Hole Symposium is always important, but this year it could be decisive for the US dollar and global markets.
Traders should watch for:
Powell’s tone at 14:00 GMT Friday
EUR/USD moves above 1.182 or below 1.16
Shifts in September rate cut probabilities
Cross-asset reactions, particularly in crypto, stocks and gold
With momentum indicators showing neutrality, positioning remains light. However, once Powell speaks, volatility is likely to surge. Traders should prepare for range breakouts, dollar volatility and headline-driven price action that could set the tone for the rest of 2025.