Breaking News: Powell’s Keynote Speech at Jackson Hole Boosts Market Confidence and Weakens USD
Last Friday, Federal Reserve Chairman Jerome Powell delivered a keynote speech at Jackson Hole that has sent shockwaves through the financial markets. Powell’s message was crystal clear – a rate cut cycle is on the horizon. While he didn’t provide specifics on the magnitude and pace of cuts, OCBC FX strategists Frances Cheung and Christopher Wong are taking note.
The focus has shifted towards supporting the labor market, with policy decisions hinging on upcoming data releases. Investors are eagerly awaiting the payrolls report on September 6th, with this week’s core PCE report also in the spotlight.
The USD was last seen at 100.84, with bearish momentum on the daily chart and RSI hovering near oversold conditions. Key support levels are at 100.60, with a clean break potentially leading to a focus on 99.60. Resistance levels are at 101, 101.50, and 102.20 (23.6% fibo).
Geopolitical tensions have also flared up over the weekend, as Israel and Hezbollah engaged in a major missile exchange. While most risk assets have remained resilient, it’s crucial to monitor the situation closely. Any further escalation in geopolitical risks could temporarily disrupt the current momentum in risk-on assets and weaken the USD, especially with RSI nearing oversold levels.
Analysis:
Jerome Powell’s speech at Jackson Hole has set the stage for a potential rate cut cycle, boosting market confidence and pressuring the USD. Investors are closely watching upcoming data releases and geopolitical developments for further cues. This shift in monetary policy could have significant implications for investment portfolios and financial markets globally. Stay tuned for more updates as the situation unfolds.