EUR/USD jumps above 1.1700 on Powell's dovish words

• Dovish Federal Reserve Chair Powell's words put the US Dollar in sell-off mode.
• Wall Street rallies on fresh hopes for a September interest rate cut.
• EUR/USD regains the 1.1700 mark, aims to retest the 1.1730 level.

The US Dollar (USD) collapsed as Federal Reserve (Fed) Chair Jerome Powell delivered his speech at a Jackson Hole Symposium, with EUR/USD peaking at 1.1707, up roughly 100 pips in the last few minutes.

Powell surprised investors with a much more dovish tone than usual, as he started noting that the downside risks to the labor market are rising. But he also noted that tariff-related inflation may have a short-lived impact.

Powell also announced a new framework designed to work in a range of economic conditions, with the prior framework's emphasis on an overly specific set of economic conditions may have led to some confusion. The new one calls for a balanced approach when the central bank's goals are in tension.

Technical Outlook

The EUR/USD pair keeps pushing higher at the time of writing, trimming most of its weekly losses. The pair added over 100 pips with Powell's speech, and the near-term movement seems a bit overextended, yet there are no technical signs of upward exhaustion in the near term.

The 4-hour chart shows indicators aim north almost vertically within positive levels, while EUR/USD currently stands above all its moving averages, which anyway remain directionless.

There is room for a pullback before the close, although the sharp momentum is likely to continue. Immediate resistance comes at 1.1730, a weekly peak, with solid gains beyond the level exposing the 1.1830 level, where EUR/USD topped for 2025. Support, on the other hand, comes at around 1.1650, where the pair pivoted comfortably for most of the week.