Dollar Rises as Markets Eye FOMC Minutes and Jackson Hole

The EUR/USD pair retreated for a second consecutive day on Tuesday as traders await Federal Reserve Chair Jerome Powell’s speech at Jackson Hole and monitor developments in the Ukraine-Russia conflict.

US economic data, including housing activity, had little market impact. Recent inflation reports sparked mixed Fed rate cut expectations—initially a 50-basis-point cut after the CPI, then trimmed to 25 bps or a hold following a PPI increase. Powell’s Friday speech could clarify the Fed’s rate path for H2 2025.

Meanwhile, optimism over a possible de-escalation of the conflict in Eastern Europe has supported the Euro.US President Donald Trump has advocated for a meeting between Zelenskiy and Putin to negotiate peace, adding to market speculation that progress could benefit the Euro.

US housing data showed mixed signals in July. Housing Starts rose 5.2% to 1.428 million, beating expectations of 1.3 million, while Building Permits fell from 1.393 million to 1.354 million, hinting at potential softness in future residential construction.

With limited economic data from the Eurozone this week, investors are also eyeing upcoming EU inflation figures, HCOB Flash PMIs for August, and Germany’s GDP figures for further guidance on the Euro’s direction.

Gold prices edged lower on Tuesday, weighed down by a firmer U.S. dollar, as investors positioned themselves ahead of Federal Reserve Chair Jerome Powell’s upcoming speech at the annual Jackson Hole symposium.

The Fed’s annual symposium in Jackson Hole, Wyoming, is scheduled for later this week, with Powell set to address the economic outlook and the central bank’s policy framework on Friday. Non-yielding gold typically benefits from low-interest-rate environments and geopolitical uncertainty. Wyckoff noted that any dovish signals from Powell would likely support gold and silver prices.

Meanwhile, U.S. President Donald Trump has continued to call for deeper rate cuts from the Federal Reserve. He also expressed hope that Russian President Vladimir Putin would move toward ending the war in Ukraine, though near-term prospects for a peace treaty remain uncertain. On the data front, minutes from the Federal Reserve’s July meeting, due Wednesday, are expected to provide further insight into the U.S. economic outlook.

Gold showed limited movement in Asian trade on Wednesday, remaining steady after recent losses. Despite a broader market risk-off sentiment, traders favored the dollar over gold as uncertainty over the Fed’s next rate move lingered.

Market focus also remained on U.S.-brokered efforts to negotiate a peace settlement between Russia and Ukraine. Despite pledges of security guarantees to Kyiv, Moscow continued its military actions, leaving the timing and likelihood of a ceasefire unclear.

Oil prices gained in Asian trading on Wednesday, supported by larger-than-expected declines in U.S. crude inventories and cautious optimism over a possible Russia-Ukraine peace initiative that could influence sanctions and global supply.

Data from the American Petroleum Institute (API) showed U.S. crude oil stocks fell by 2.4 million barrels in the week ending August 15, exceeding analyst expectations of a 1.2 million-barrel decline. This follows a 1.5 million-barrel build the previous week. The stronger-than-anticipated draw lent support to oil prices, highlighting continued demand pressure in the U.S. market.

Market attention also turned to potential diplomatic developments. President Donald Trump said on Tuesday that he had spoken with Russian President Vladimir Putin after hosting Ukrainian President Volodymyr Zelenskiy and European leaders at the White House. Trump indicated he was facilitating a meeting between Moscow and Kyiv, potentially followed by a trilateral summit with the United States.

Traders are closely monitoring whether any peace framework could lead to easing of Western sanctions on Russian crude, a key factor given Russia’s role as a major global oil supplier. Sanctions have restricted some flows into Western markets since the invasion of Ukraine.

Investors are also seeking clarity on the secondary 25% U.S. tariffs on Indian imports, which were imposed due to India’s purchase of Russian oil and are set to take effect on August 27.

U.S. equities closed mostly lower on Tuesday, with technology stocks taking the brunt of losses, as investors positioned ahead of this week’s Federal Reserve Jackson Hole Symposium. Money appears to be rotating out of tech after strong year-to-date gains fueled by the AI boom, while market participants monitored broader shifts in investor sentiment. NVIDIA Corporation fell 3.49% ahead of its highly anticipated earnings report on August 27.

All eyes are on the Federal Reserve’s Jackson Hole event, where Chair Jerome Powell is expected to discuss labor market trends, demographics, productivity, and macroeconomic policy.

Economists anticipate Powell adopting a slightly more dovish tone, without explicitly committing to an imminent rate reduction.

Investors are also digesting the implications of a White House meeting between Ukrainian President Volodymyr Zelensky, European leaders, and U.S. President Donald Trump.

Corporate earnings continue to shape market sentiment. Home Depot reported 1% growth in comparable sales for its fiscal second quarter, though consumer caution on large purchases persists.

Palo Alto Networks surged following a bullish fiscal 2026 revenue and profit forecast, driven by AI-related solutions. Investors are also awaiting results from Lowe’s, Walmart, Target, Baidu, Workday, and Analog Devices, which could offer fresh insights into U.S. consumer trends in the second half of the year.