EUR/USD steadies below 1.1650 as markets await Powell's Jackson Hole speech

• EUR/USD holds around 1.1640, consolidating losses as traders await Powell's speech on Friday.
• Fed cut bets split: CPI fueled talks of 50 bps easing, but hot PPI trimmed expectations back to 25 bps or even a hold.
• Euro's boosted by peace efforts advance as Trump pushes for a Zelenskiy-Putin meeting.

EUR/USD consolidates during the North American session above the 1.1600 figure as traders await the Federal Reserve (Fed) Chair Jerome Powell's speech at Jackson Hole, alongside the outcome of the Ukraine-Russia conflict solution. The pair trades at around 1.1640, down 0.12% at the time of writing.

The economic docket in the United States (US) featured housing data on Tuesday, which was mainly ignored by investors. Last week's inflation figures on the consumer and producer side generated a two-way pricing for a Fed rate cut.

Initially, after the Consumer Price Index (CPI) release, some traders speculated with a 50 basis points (bps) rate cut --sparked by Bessent's interview on Fox Business-- as figures mainly remained unchanged. Nevertheless, the jump in the Producer Price Index (PPI) triggered a shift in the other direction, with most markets reflecting a 25 bps rate cut, and some players expecting the central bank to hold rates.

Therefore, the Fed Chair Powell's speech on Friday could set the interest rate path towards the second half of 2025.

Aside from this, upbeat news regarding a possible de-escalation of the conflict in Eastern Europe between Ukraine and Russia could boost the Euro, on a positive outcome. Meanwhile, US President Donald Trump is pushing for a meeting between Zelenskiy and Putin, so they can solve their differences and reach peace.

A scarce economic docket in the European Union (EU) leaves traders adrift to the release of inflation figures in the EU, HCOB Flash PMIs for August, and Germany's Gross Domestic Product (GDP) figures.

Daily digest market movers: EUR/USD dives as the Greenback strengthens

• The recovery of the US Dollar has capped Euro's advance. The US Dollar Index, which measures the buck's performance against a basket of peers, is up 0.14% daily to 98.27.
• The direction of EUR/USD is influenced by haven demand and monetary policy divergence between the Fed and the European Central Bank (ECB). Expectations that the Fed will reduce rates at the September meeting remain high at around 86%. Across the Atlantic, the ECB is expected to hold rates unchanged, with odds standing at 92% for the central bank to keep rates unchanged, and a slim 8% chance of a 25 basis points (bps) rate cut.
• Economic data in the US showed mixed signals in housing activity in July. Housing Starts jumped 5.2%, rising from 1.321 million to 1.428 million and defying expectations for a drop to 1.3 million. However, Building Permits fell during the same period, slipping from 1.393 million to 1.354 million, hinting at potential softness in future residential construction.

Euro's technical outlook: EUR/USD tumbles below 1.1700, sellers eye 1.1600

EUR/USD seems to have peaked, having hit a low of 1.1646 over the past three trading days, which indicates that buyers are losing steam. From a momentum standpoint, the Relative Strength Index (RSI) remains bullish, but is approaching its neutral line. Once crossed, this would be an indication that sellers are overtaking buyers.

If EUR/USD reclaims 1.1700, the next resistance would be the July 24 high of 1.1788, the psychological 1.1800 handle, and the year-to-date peak of 1.1829. Conversely, a drop below the confluence of the 50- and 20-day Simple Moving Average (SMA) at 1.1639/27, sponsors a move towards 1.1600 ahead of the 100-day SMA at 1.1460.