In the foreign currency market for the week that ended on August 24th, traders maintained a wait-and-see attitude as Federal Reserve Bank (FRB) Chair Jerome Powell's speech at the Jackson Hole Economic Policy Symposium approached. Powell's speech triggered a sell-off of the dollar, causing the USDJPY to experience a significant fall. Meanwhile, the euro and the pound strengthened against the dollar.

August 18 (Mon)

The foreign exchange market started the weekly trading session as the dollar strengthened against major currencies amid a lack of significant news. The USDJPY rose to the 147.9 yen range. Meanwhile, the EURUSD fell to the 1.165 range, and the GBPUSD nearly broke below the 1.35 level.

August 19 (Tue)

Standard & Poor's (S&P) Global Ratings reaffirmed its AA+/A-1+ credit rating for the U.S. Following this announcement, the USDJPY rose above the 148 yen level but then fell back to the upper 147 yen range. The EURUSD reached the 1.169 range but then declined to the 1.164 range. The GBPUSD followed suit, dropping to the 1.347 range after reaching the 1.353 range.

August 20 (Wed)

As the Jackson Hole Symposium approached, a wait-and-see atmosphere dominated the market. Traders' risk-off stance and the increase in Japanese bond yields triggered buying of the yen, sending the USDJPY below the 147 yen level.

Meanwhile, the EURUSD rebounded to touch the 1.167 range. The GBPUSD recovered to the 1.35 range before falling to the 1.344 range.

August 21 (Thu)

The stronger-than-predicted U.S. preliminary PMI for August lowered speculation about a U.S. rate cut.

Consequently, the dollar was bought back, and the USDJPY rose to the 148.4 yen range. Conversely, the EURUSD almost broke below the 1.16 level, and the GBPUSD fell near the 1.34 level.

August 22 (Fri)

Soon after FRB Chair Powell indicated at the Jackson Hole Symposium that the central bank would cut interest rates soon, the dollar sell-off intensified. The USDJPY dropped by about two yen before his speech to the 146.5 yen range.

Both the euro and the pound strengthened against the dollar. The EURUSD jumped to 1.174, and the GBPUSD rebounded to the 1.354 range to close the weekly trading session.

August 25 (Mon)

• 14:00 U.S.: July new home sales

August 28 (Thu)

• 11:30 Europe: European Central Bank (ECB) Governing Council meeting minutes
• 12:30 U.S.: April-June quarterly real Gross Domestic Product (revised GDP)

August 29 (Fri)

• 12:30 U.S.: July Personal Consumption Expenditures (PCE deflator)
• 12:30 U.S.: July Personal Consumption Expenditures (PCE core deflator, excluding food and energy)

The following currency pair charts are analyzed using an overlay of the ±1σ and ±2σ standard deviation Bollinger Bands, with a 20-period moving average.

Powell's speech increased the likelihood of an interest rate cut by the FRB in September. However, it is also pointed out that the Trump tariffs may prolong inflation. Whether the inflation will last will be indicated by the U.S. PCE core deflator, to be announced on August 29th.

Next is an analysis of the USDJPY daily chart.

Last Friday, the pair touched +1σ but then closed the weekly trading session by touching -1σ. Overall, the pair has been fluctuating within a range. Although the higher low trend is confirmed, if the pair clearly breaks below 145.85 yen, it would be better to consider the pair to be in a downtrend.

We continue with an analysis of the USDJPY weekly chart.

On the weekly chart, the pair is hovering on the downward +1σ, indicating mounting selling pressure. It would be better to follow the trend. If the pair rises above 149.18 yen, it will enter an uptrend. Conversely, if it crosses below 145.85 yen, a downtrend will begin.

Powell's speech increased the likelihood of a U.S. interest rate cut and triggered a dollar sell-off. If this trend continues, the euro will strengthen against the dollar. However, there is also a risk of a sudden decline due to developments in U.S. tariff policies, the situation in Ukraine, and other geopolitical risks.

Next is an analysis of the EURUSD daily chart.

After fluctuating between +1σ and the middle line, the pair broke a recent high last Friday. If it breaks above 1.1788, it will continue to rise.

We continue with an analysis of the EURUSD weekly chart.

On the weekly chart, three consecutive positive candlesticks appeared. The latest candlestick has a long lower wick, indicating strong buying pressure. Since the middle line is trending upward, it is safe to say that the pair's uptrend will likely continue.

At the end of last week, speculation about a U.S. interest rate cut triggered a dollar sell-off. It halted the decline of the pound. It will be important to watch whether the pair breaks above 1.36. The U.S. PCE deflator, to be announced on August 29th, will signal the trend of U.S. inflation.

Next is an analysis of the GBPUSD daily chart.

The pair dropped after reaching 1.36. Then, just before the pair broke below the middle line, the pound was bought back. It will be important to watch whether the pair can break above the resistance line located at around 1.36. Unless the pair falls below 1.3139, it is safe to say that it will likely continue to rise.

We continue with an analysis of the GBPUSD weekly chart.

The pair continues to rally after hitting 1.3139. The upward middle line on the weekly chart indicates an ongoing uptrend. It will now be important to watch whether the pair can break above the 1.36 level.