Currencies Latest Market News: US Dollar Plunges on Powell’s Dovish Jackson Hole Remarks
Estimated reading time: 5 minutes
- Powell’s dovish remarks at Jackson Hole triggered a sharp dollar sell-off.
- Major currencies rallied against the dollar, reflecting a risk-on environment.
- The probability of a September rate cut increased significantly.
- US Treasury yields fell, reinforcing the pro-risk sentiment.
- Market volatility is expected to continue.
Contents
- Currencies Latest Market News: US Dollar Plunges on Powell’s Dovish Jackson Hole Remarks
- Sharp Dollar Sell-Off After Powell Hints at September Rate Cut
- What to Watch Next
Sharp Dollar Sell-Off After Powell Hints at September Rate Cut
At approximately 18:00 UTC on August 22, 2025, the US dollar experienced a significant sell-off following Federal Reserve Chair Jerome Powell’s address at the Jackson Hole Economic Symposium. Powell’s comments, signaling a potential interest rate cut as early as the September FOMC meeting, triggered a dramatic shift in market sentiment and impacted major currency pairs. The unexpected dovish tone surprised markets anticipating a more hawkish stance from the Fed, leading to a broad-based decline in the greenback. This development, related to the query “Currencies latest market news“, sent shockwaves through the global FX market.
The immediate impact was a sharp drop in the US Dollar Index (DXY). The DXY fell as much as 0.7% within minutes, breaking below key support at 97.90 and moving towards 97.70. Further declines to 96.80 were predicted by some analysts if the momentum continued. Source The USD/JPY pair experienced an even more dramatic plunge, falling sharply from the upper end of its two-week range. The pair tested support at 146.00–145.00, representing an intraday move estimated at over 250 pips or approximately 1.7%. Source
Conversely, major currencies rallied against the dollar, reflecting a risk-on environment. EUR/USD surged past 1.1700, reaching a high of 1.1742—its highest level in recent weeks—before consolidating. Source GBP/USD, USD/CHF, and AUD/USD all registered gains of between 0.5% and 1% intraday, mirroring the broader improvement in risk sentiment across asset classes. Source
Powell’s remarks explicitly mentioned the possibility of a rate cut as early as the September FOMC meeting, citing concerns about the labor market. This dovish stance significantly altered market expectations. Fed Funds futures contracts reflected this shift, with the probability of a rate cut jumping from 75% to between 89% and 91%. Source This change in expectations contributed to a sharp decline in US Treasury yields. Both 2-year and 10-year Treasury yields fell significantly, further reinforcing the pro-risk sentiment driving the dollar lower. Source This classic “dollar-down/risk-up” rotation was underscored by a 1.5% rally in the S&P 500 index. Source
It is important to note that the market moves were primarily driven by the Fed’s policy signal; no major data surprises or interventions were reported. Source Multiple reputable news sources corroborated the market reaction to Powell’s speech. Reuters, Bloomberg, FT, WSJ
What to Watch Next
- September FOMC Meeting: The upcoming September FOMC meeting will be crucial to monitor, given Powell’s explicit indication of a potential rate cut. The market will closely scrutinize any further comments or hints regarding the Fed’s policy path.
- US Economic Data Releases: Upcoming US economic data releases, particularly those related to inflation and employment, will provide additional insights into the strength of the economy and the Fed’s future actions.
- Market Reaction and Volatility: The volatility triggered by Powell’s comments will continue to be observed as markets assess the implications of the potential rate cut and adjust their positions accordingly.
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FAQ
What caused the dollar sell-off?
