EUR: Focus on Fed Signals and Jackson Hole Meeting — Deutsche Bank

EUR/USD is trading near 1.16447, with market attention shifting to the Jackson Hole global central bank symposium. Deutsche Bank strategists note that Fed Chair Warsh's speech could alter market expectations for the September Fed meeting, with the euro's short-term direction depending on his policy signals.

**Jackson Hole Becomes Key Variable**

The Jackson Hole symposium, hosted by the Kansas City Fed, is held annually in late August in Wyoming and has historically been a key venue for Fed chairs to signal monetary policy. According to Deutsche Bank analysis, Warsh may choose to discuss the Fed's five working groups or the economic impact of artificial intelligence, or he could revert to tradition by focusing on monetary policy decisions between September and December. If the latter, he might revisit ambiguities left from the July press conference and clarify his assessments of inflation and financial conditions.

**September Expectations Remain Divided**

Market divergence over the Fed's next move remains pronounced. According to the CME FedWatch tool, futures currently show roughly a 38% probability of a September rate hike. Wells Fargo believes Warsh has avoided articulating his short-term reaction function and is unlikely to abandon this approach just months into his tenure; Societe Generale also expects Warsh to prioritize advancing his reform agenda and the five working groups over offering explicit guidance on the rate path. MUFG, meanwhile, outlines three possible scenarios, with a balanced approach combining structural themes with macro commentary best matching Warsh's strategy to date.

**Euro May Stay Range-Bound**

Ahead of Warsh's speech, EUR/USD lacks clear direction. If the speech offers no definitive September signal, market volatility could be limited; if it provides clearer rate clues, the euro could react swiftly. Deutsche Bank strategists advise watching Warsh's remarks on inflation and financial conditions, which will be key to gauging expectations for the September meeting.