The EUR/USD exchange rate remained relatively flat on Monday, August 19, holding around 1.1665, just a few points below last week’s peak at 1.1732. Traders were largely in wait-and-see mode ahead of the highly anticipated Jackson Hole Symposium in Wyoming, where central bankers from across the globe will provide critical policy insights.
Broker Eva Holenstein from Highmont Group offers readers a clear and practical explanation of this subject.
This cautious trading session underscores the importance of upcoming speeches from both Federal Reserve Chair Jerome Powell and European Central Bank (ECB) President Christine Lagarde, as investors position themselves for potential volatility in the world’s most traded currency pair.
Jackson Hole Symposium in Focus
The Jackson Hole Symposium remains one of the most closely watched events in the financial calendar. Market participants expect Powell to provide forward guidance on the Federal Reserve’s monetary policy trajectory, particularly on the timing and pace of interest rate cuts.
Recent US economic data has reinforced the view that the Fed could act as soon as September. The Consumer Price Index (CPI) report from the Bureau of Labor Statistics (BLS) showed headline inflation cooling slightly, with July CPI at 2.7%, below the expected 2.8%.
However, core CPI, which strips out food and energy, rose to 3.1%, highlighting persistent underlying price pressures. Meanwhile, the Producer Price Index (PPI) surged, suggesting that supply-side cost pressures remain elevated, partly reflecting the impact of US tariffs.
Weakening Labor Market
The US jobs market has shown signs of fatigue. In July, the economy created only 73,000 new jobs, following 70,000 in both June and May. At the same time, the unemployment rate ticked up to 4.2%, signaling that labor market slack is increasing.
This trend has amplified calls for policy easing. Michele Bowman, a senior Federal Reserve official, recently reiterated her view that the central bank should begin cutting rates as soon as possible. The consensus now leans toward a September rate cut, though the scope and pace of easing remain up for debate.
Upcoming US Housing Data
Before the Jackson Hole event, traders will watch the release of US housing starts and building permits. Consensus forecasts point to a decline in housing starts to 1.3 million, while permits are expected to remain steady at 1.39 million.
Since housing is a leading economic indicator, a weak report would reinforce the argument for more monetary easing. This would likely exert downward pressure on the dollar index (DXY) and support the EUR/USD exchange rate.
EUR/USD Technical Analysis
From a technical perspective, the 12-hour EUR/USD chart highlights a period of consolidation, with the pair trading at 1.1667, below last week’s high of 1.1727.
Crucially, the pair has formed an inverse head-and-shoulders pattern, a bullish reversal setup often indicating a potential breakout to the upside. This pattern suggests that the recent sideways action is more of a base-building process rather than a topping formation.
At the same time, the Awesome Oscillator (AO) remains comfortably above the zero line, signaling that bullish momentum continues to dominate. This technical alignment strengthens the case for further gains.
If buyers push the pair above the neckline resistance, the next upside target lies at 1.1835, which marks the year-to-date high. A sustained break above that level could trigger a rally toward the psychological 1.2000 handle later this year.
Market Outlook
Looking ahead, the EUR/USD pair is poised for heightened volatility. The immediate driver will be Jackson Hole, where Powell’s tone could make or break the market’s expectations for a September cut.
A dovish message could accelerate a dollar sell-off, fueling a breakout toward 1.1835 and beyond. Conversely, a hawkish surprise may trigger a temporary retracement, though the technical setup still leans bullish.
In Europe, traders will also monitor ECB commentary. Christine Lagarde’s remarks could provide insight into the bank’s stance on quantitative tightening and interest rates. However, given the eurozone’s fragile growth environment, Lagarde is unlikely to signal aggressive tightening, leaving the euro dependent on US dollar dynamics for direction.
Conclusion
The EUR/USD exchange rate is currently in consolidation, awaiting fresh catalysts from the Jackson Hole Symposium. Economic fundamentals, particularly weakening US job growth and mixed inflation data, point toward imminent Federal Reserve easing, which would favor euro strength.
At the same time, technical analysis supports the bullish case, with the inverse head-and-shoulders pattern and positive momentum indicators signaling a potential breakout. Traders should watch the 1.1732–1.1835 zone, as a move above these levels would open the path toward 1.2000.
In short, while short-term fluctuations remain tied to upcoming data releases and central bank speeches, the balance of risks suggests more gains ahead for EUR/USD in the weeks to come.
