Currencies Latest Market News: Powell’s Dovish Jackson Hole Speech Triggers Broad USD Weakness
Estimated reading time: 5 minutes
- Powell’s dovish speech triggered a sharp USD sell-off.
- Major currency pairs experienced significant volatility.
- Market anticipates a near-certain September rate cut.
- The Fed’s shift highlights the impact of central bank communication.
- Investors should monitor upcoming economic data and Fed statements.
Contents
- Currencies Latest Market News: Powell’s Dovish Jackson Hole Speech Triggers Broad USD Weakness
- Fed Chair Signals Imminent Rate Cuts, Sending Shockwaves Through FX Markets
- What to Watch Next
Fed Chair Signals Imminent Rate Cuts, Sending Shockwaves Through FX Markets
At approximately 14:10 UTC on Friday, August 25, 2025, Federal Reserve Chair Jerome Powell delivered a dovish speech at the Jackson Hole Economic Symposium that sent shockwaves through global foreign exchange markets. Powell’s remarks, strongly suggesting a willingness to cut interest rates at the upcoming September Federal Open Market Committee (FOMC) meeting, triggered a sharp and immediate sell-off in the US dollar (USD) against major currencies. The unexpected shift in the Fed’s apparent policy stance led to significant volatility across key currency pairs, including the DXY, EURUSD, GBPUSD, and USDJPY.
The immediate impact was dramatic. The US Dollar Index (DXY), a measure of the dollar’s value against a basket of major currencies, dropped 0.7% within minutes following Powell’s address, falling from approximately 98.80 to 98.10. Daily Price Action — Post-Powell FX price moves The USDJPY pair experienced an even more pronounced decline, plunging from around ¥147.90 to below ¥146.10, representing a significant intraday drop of over 170 pips (approximately 1.15%). DailyForex — USDJPY plunges after Powell Conversely, the EURUSD and GBPUSD pairs saw notable gains, with the EURUSD rising above 1.0900 and the GBPUSD surpassing 1.2800, reflecting the broad-based USD weakness. Daily Price Action — Post-Powell FX price moves
Powell’s statement that “it may be time for a policy change” signaled a significant departure from the more data-dependent approach previously communicated by the Fed. IG Market Navigator — Jackson Hole & Powell’s dovish pivot This implied that concerns regarding the U.S. labor market are now outweighing inflation worries in the Fed’s decision-making process, leading to a reassessment of its monetary policy path. The market’s immediate reaction underscored this interpretation. Bloomberg and Reuters reported that market-implied probabilities for a September rate cut surged from around 75% to between 89% and 91% in the aftermath of Powell’s speech. IG Market Navigator — Jackson Hole & Powell’s dovish pivot DailyForex — USDJPY plunges after Powell
The absence of any fresh economic data releases prior to Powell’s address highlighted the sheer impact of his statement. The speech itself constituted a major shift in central bank guidance, contrasting sharply with previous FOMC communications that emphasized a more data-driven approach to future interest rate decisions. This unexpected pivot towards a more dovish stance effectively altered market expectations regarding the Fed’s future trajectory, instantly impacting not only currency markets but also broader financial assets. The 2-year U.S. Treasury yield fell approximately 11 basis points to around 4.32% following the speech, reflecting the reduced expectations for future interest rate hikes. IG Market Navigator — Jackson Hole & Powell’s dovish pivot This move also coincided with a notable increase in risk appetite, as evidenced by a 1.5% surge in the S&P 500 on Friday. IG Market Navigator — Jackson Hole & Powell’s dovish pivot
The market’s reaction suggests a widespread anticipation of a September Fed rate cut as a near certainty. The significant USD weakness and the outperformance of higher-beta FX pairs underscore the dramatic shift in investor sentiment. Option pricing data further illustrates a spike in volatility across G10/USD crosses, reflecting the uncertainty and heightened trading activity triggered by Powell’s announcement. The unexpected shift in the Fed’s stance and the subsequent market reaction highlight the considerable influence of central bank communication on global currency markets.
What to Watch Next
- The upcoming September FOMC meeting and any accompanying statements from the Fed.
- Further releases on US employment data and its potential impact on the Fed’s policy decisions.
- Market reaction and volatility in major currency pairs following the anticipated rate cut.
