Powell’s Dovish Tone Steadies Euro, Lifts Metals (08.25.2025)

The week opened with mixed moves across major assets as traders digested Powell’s dovish Jackson Hole remarks and incoming data risks.

EUR/USD steadied near 1.1700 with support from PMI strength and rising bets on a September Fed cut, while USD/JPY hovered around 147.40 as BoJ Governor Ueda signaled conditions for further tightening with July core CPI at 3.1%. Gold consolidated below $3,365, supported by easing expectations, and silver traded near $38.80 after a three-day rally, still underpinned by Fed policy bets and solar demand.

Euro Supported by PMI Strength

EUR/USD hovered around 1.1700 in Monday’s Asian session, easing after a 1% surge in the previous day. The downside remains limited as the US Dollar stays under pressure, with markets increasingly betting on a Fed rate cut in September. Speaking at the Jackson Hole symposium, Fed Chair Jerome Powell flagged rising labor market risks while stressing that inflation is still elevated and policy decisions are not preset. He noted the Fed may avoid tightening based on uncertain assumptions about employment levels. Following his comments, CME FedWatch showed an 85% chance of a 25 bps cut next month, up from 75% before the speech. Focus now shifts to US Q2 GDP and July PCE inflation data, which could guide dollar moves and EUR/USD direction.

Resistance is at 1.1740, with support at 1.1645.

Yen Strengthens as Ueda Signals Rate Hike Conditions

USD/JPY traded near 147.40, recovering from a 1% fall last session. Upside momentum may be capped, however, as hawkish commentary from BoJ Governor Kazuo Ueda lends support to the yen. At Jackson Hole, Ueda suggested conditions for another rate hike are taking shape, with wage gains spreading beyond major firms and likely to accelerate in Japan’s tight labor market.

July core CPI slowed for a second month but remained above the BoJ’s 2% target, rising 3.1% year-on-year versus forecasts of 3.0%. This reinforced market expectations that further BoJ tightening could come in the months ahead.

Resistance is at 148.80, with support at 146.70.

Gold Consolidates Below $3,365

Gold retreated below $3,365 on Monday, reversing part of Friday’s sharp gains. Volatility followed Powell’s dovish tone at Jackson Hole, which boosted the likelihood of a September rate cut. CME FedWatch placed those odds at 88%, up from 75% before his remarks.

Downside risks for gold remain limited, with easier Fed policy expectations weighing on the US Dollar and keeping the non-yielding metal supported.

Resistance is at $3,374, with support at $3,352.

Pound Near $1.35 as Dollar Recovers

GBP/USD hovered around 1.3495, pressured by fresh US Dollar demand. Losses were limited, however, after Powell’s dovish remarks at Jackson Hole fueled speculation that the Fed could cut rates as soon as September. He flagged a “challenging situation” with inflation risks on the upside and employment risks on the downside, raising easing expectations. Traders now await US New Home Sales and the Chicago Fed National Activity Index for fresh direction. While short-term pressure weighs on sterling, Fed-driven policy expectations may offer support and prevent deeper losses.

Resistance is at 1.3620, with support at 1.3340.

Powell’s Dovish Remarks Keep Silver Elevated

Silver traded near $38.80 in Monday’s Asian session, ending a three-day rally after nearly 2% gains in the prior session. Powell’s Jackson Hole remarks boosted Fed cut expectations for September, which continue to support silver despite the pullback. He noted risks to the labor market but warned inflation remains volatile, stressing that no decision is finalized. While silver’s rally paused, policy easing expectations and strong industrial demand, including from the solar sector, keep sentiment positive and downside risks limited.

Resistance is at $39.50, with support at $38.40.