US Dollar Price Forecast: Warsh Speech Looms as EUR/USD and GBP/USD Hold Firm

Market impact: mixed, with a near-term event-risk bias rather than a confirmed dollar reversal.

The main market driver is the repricing of Federal Reserve policy expectations. Kevin Warsh’s Jackson Hole speech could produce a sharp move in the dollar if it signals a more restrictive stance for the September meeting. A hawkish message would likely lift Treasury yields and the dollar, pressuring EUR/USD below its nearby support zone. Conversely, any indication that the Fed is sensitive to bond-market stress or reluctant to tighten further would reinforce the existing dollar weakness and support a renewed EUR/USD advance.

The dollar’s recovery appears technically fragile: the DXY rebound remains below key short-term trend resistance, while EUR/USD is holding above the article’s cited support around 1.1658–1.1641. This creates asymmetric event sensitivity: a dovish or non-committal Warsh speech could trigger an upside extension toward the recent 1.1712 area, whereas a hawkish surprise could turn the current consolidation into a deeper correction toward the lower support region near 1.1624. These are conditional technical levels, not confirmed signals.

Fundamentally, the euro has some independent support from improving eurozone activity and expectations that the ECB may retain a comparatively firm policy stance. That limits the extent to which EUR/USD must rely solely on dollar weakness. However, slowing eurozone inflation could reduce expectations for aggressive ECB tightening, making the pair vulnerable if U.S. inflation or Fed guidance shifts hawkishly.

The later-week PCE inflation release is the more important confirmation risk. A stronger-than-expected reading would increase the probability of higher-for-longer U.S. rates and could validate a dollar breakout. Softer inflation would undermine the hawkish interpretation, lower yields, and favor renewed demand for EUR/USD. The initial reaction to Warsh’s speech may therefore be volatile and prone to reversal if PCE data contradicts the policy message.

What traders should monitor:

• Warsh’s treatment of September policy, inflation persistence, and financial-market conditions.
• U.S. two- and ten-year Treasury yields as the transmission channel into EUR/USD.
• Whether EUR/USD holds 1.1658–1.1641 or breaks decisively below it.
• PCE inflation and any change in Fed-rate expectations afterward.
• Eurozone data that could either reinforce or weaken the euro’s independent policy support.

Overall, the bias remains constructive for EUR/USD while support holds, but the setup is highly event-dependent. The dominant risk is a hawkish Fed repricing that converts the dollar’s tentative rebound into a broader recovery.