Euro falls to 1.1650 as markets eye Jackson Hole

EUR/USD extended its recent downtrend on Friday, dropping below 1.1650 and trading around 1.16464. The move came after U.S. inflation data beat expectations, boosting the dollar and pressuring the euro.

**Inflation data boosts dollar, euro breaks key level**

The U.S. Personal Consumption Expenditures (PCE) price index, released on August 26, came in above forecasts, reinforcing expectations that the Federal Reserve will maintain its hawkish stance. According to CME FedWatch data, the probability of a September rate hike stood at 36% as of August 27. This supported the dollar, pushing EUR/USD below 1.1650 during European trading hours and marking a weekly low. Meanwhile, Germany's GfK consumer confidence index, also released the same day, unexpectedly rose, showing improved consumer sentiment on income and economic outlook, but failed to provide meaningful support to the euro.

**Jackson Hole symposium in focus, cautious sentiment prevails**

Market attention now shifts entirely to the Jackson Hole Global Central Bank Symposium on August 28, where investors await remarks from Federal Reserve Chair Kevin Warsh to gauge the Fed's interpretation of recent economic data and the next steps for monetary policy. Analysts suggest that if Warsh strikes a hawkish tone, the dollar could strengthen further, adding more downside pressure on EUR/USD. Conversely, a dovish stance could alleviate short-term selling pressure on the euro. The European Central Bank will also release its latest monetary policy meeting minutes the same day, though analysts widely expect the September rate hike preference to be fully priced in, meaning it is unlikely to serve as a major market driver.

**Technical outlook turns bearish, key support in focus**

On the technical front, EUR/USD has retreated from the three-month high near 1.1700 hit earlier this week, with the short-term bias turning bearish. The pair is currently trading around the 1.1650 support level. A decisive break below this level could open the door for further downside. On the upside, resistance is seen at the 1.1700 handle.