The financial markets experienced increased volatility following Governor of The Fed Jerome Powell’s speech at Jackson Hole last weekend, which reignited expectations for interest rate cuts. Powell emphasized that although the U.S. economy continues to show resilience, the risks of a recession are becoming more apparent while inflationary pressures loom large. This situation creates a delicate balance regarding monetary policy direction.
With interest rates already at elevated levels, Powell indicated the potential for a more cautious approach going forward. The market is increasingly convinced that an interest rate cut could occur during the Fed’s meeting in September, marking a significant turning point for the global economy and risk asset movements. In addition to these sentiments, business climate data from Germany is anticipated to be a primary driver in today’s European trading session.
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Here is the data from Trading Central:
- Germany’s Business Climate Index for August at 15:00 WIB; forecast 87 compared to the previous 88.6
GOLD
Gold prices saw a correction to $3,359 during the opening session on Monday (25/8/25) after a significant rally last week driven by market optimism surrounding possible interest rate cuts in September, spurred by comments from Fed Chair Jerome Powell.
This correction is expected to be limited, given the uncertainty surrounding the ongoing peace negotiations between Ukraine and Russia, which could boost demand for Gold. These two factors still provide opportunities for Gold to strengthen during the midday session.
OIL
Oil prices closed higher last Friday, marking a third consecutive day of gains. The main sentiment continues to be influenced by the uncertainty surrounding the Russia-Ukraine peace talks, which have not shown significant progress.
The slow negotiation process is anticipated to trigger buying action in oil during today’s midday trading.
EURUSD
EURUSD opened lower on Monday, declining to 1.16934 due to profit-taking after a sharp increase on Friday. Selling pressure may persist, particularly if the German business climate data comes in weaker than expected.
However, the outlook for Fed interest rate cuts remains a barrier to the strengthening of the U.S. dollar. This factor may once again provide support for EURUSD, and volatility for this pair is expected to remain high during the midday session.
GBPUSD
Selling pressure is also evident on GBPUSD during Monday’s trading opener (25/8/25), amid profit-taking by market participants. Previously, GBPUSD surged sharply on Friday due to dovish Fed expectations that weakened the U.S. dollar.
This dovish sentiment still has the potential to support buying action in GBPUSD during today’s midday trading.
USDJPY
USDJPY saw slight strengthening in this morning’s Asian session, reaching 147.525 after experiencing significant pressure during Friday’s trading. The dovish Fed expectations for September have become a primary driver behind the U.S. dollar’s weakness.
According to CME FedWatch, the probability for a 25 basis point rate cut in September has risen to about 87%. This could potentially trigger further selling action on USDJPY in the market.
NASDAQ
After a significant surge on Friday to a daily high of 23,649, the Nasdaq is trading more steadily this morning. Jerome Powell’s speech at Jackson Hole, interpreted by the market as a strong signal for potential interest rate cuts in September, continues to support Nasdaq’s upward trajectory into the midday session.
