Euro Slips Below 1.1650 as Inflation Data Boosts Dollar Ahead of Jackson Hole

The euro extended its decline against the dollar on Thursday, trading around 1.16456. Strong U.S. inflation data released on Wednesday provided solid support for the dollar, weighing on the euro. Markets are closely monitoring the upcoming Jackson Hole global central bank symposium for further clues on the Federal Reserve's future rate path.

**Inflation Data Bolsters Rate Hike Expectations**

Signs of rising U.S. inflation have reinforced market expectations that the Fed will maintain its tightening policy. According to the CME FedWatch tool, market participants are pricing in roughly a 38.4% probability of a 25-basis-point rate hike in September, a shift that has directly boosted the dollar. Meanwhile, reports citing three sources indicate that European Central Bank policymakers are also preparing to raise rates at their September meeting, though they may avoid signaling further tightening afterward.

**Jackson Hole Symposium Takes Center Stage**

Market attention is rapidly shifting to the Fed Chair's speech at the Jackson Hole symposium. This venue has historically served as a window for signaling major policy moves, with traders looking to glean clear clues on the near-term U.S. interest rate outlook. Ahead of the key event, the euro is trading with a weak bias within a range against the dollar. Analysts note that if subsequent core U.S. inflation data exceeds expectations, a dollar rebound could further pressure the euro's gains; conversely, if the Fed delivers dovish signals, the euro could test resistance levels to the upside.

**Technical Battle Between Bulls and Bears**

From a technical perspective, market analysts believe the euro-dollar pair is at a delicate tug-of-war between bulls and bears. Previously, UOB analysts noted that the euro's movement had negated their consolidation range expectations, acknowledging "early signs of upward momentum." Despite the current pullback, a break above resistance near 1.1705 could pave the way for a push toward higher levels, while losing key support could trigger a more significant correction.