Jackson Hole Frenzy, But Was It Overblown?
By Andrew Lockwood, Head of Trader Education
Well, last week sure lit a fire under the markets. Fed Chair Jerome Powell used his Jackson Hole stage to open the door to a possible rate cut at the September 17th meeting — and traders went absolutely wild.
- Futures? Shot up to 87% odds of a cut, from 72% just that morning.
- Stocks? Straight to the moon — the S&P and friends ripped into fresh all-time highs.
- Dollar? Dumped 1.5% in a heartbeat before finding its feet.
- Gold? Rocketed 1.6% higher.
And here’s the thing — I’m scratching my head. None of this is shocking. A rate cut has always been expected, and to a big extent already priced in. Let’s not forget:
- The S&P 500 is up 35% since Trump’s so-called “Liberation Day.”
- The dollar has bled 15% lower this year in anticipation of exactly this scenario.
So why the fireworks? My read: Powell’s slightly more dovish tilt caught traders leaning the wrong way. Shorts got squeezed, and once the herd starts chasing, you get the kind of wild Friday session we just lived through.
But here’s the kicker — I don’t buy the idea that these moves stick. As the dust settles this week, I wouldn’t be surprised to see some retracement of that overreaction.
Indices: NASDAQ & DAX – Too Much, Too Soon?
The US indices loved Powell’s words. The NASDAQ ripped higher, breaking into uncharted territory. Tech has been the market’s favorite index all year, but Friday’s spike felt more like panic buying than smart positioning. If anything, a bit of profit-taking and a retrace wouldn’t be the worst thing before the next leg.The German DAX followed the US lead, pushing higher as rate-cut fever spread across the Atlantic. But let’s be real: the eurozone has its own challenges, and the DAX isn’t immune to global slowdown risks. Just like the NASDAQ, chasing highs here feels risky with so much uncertainty still hanging over the macro picture.
Roadblock Resistance in EURUSD
One concept I hammer home in the PropIQ course is what I call roadblock resistance — those key technical levels where price just doesn’t move easily through without a serious catalyst.
Right now, the EURUSD is marching toward a major roadblock around 1.1800. In my view, it’s going to take a really soft PCE print this week and an absolute disaster NFP number next week for that level not to hold.
From a risk-to-reward standpoint, this is exactly the kind of area where I’ll be hunting for potential reversal setups — leaning on my Boomerang reversal strategy to time entries. (If you’ve studied it in PropIQ, you’ll know why it works so well in these stretched, emotional market conditions).
The Fed’s Dilemma
Let’s zoom out. The Fed has a two-part job:
- Keep employment strong.
- Keep inflation hovering around 2%.
And right now, they’re stuck between a rock and a hard place.
- Last month’s massive revisions to Non-Farm Payrolls painted a much weaker jobs market than anyone thought.
- At the same time, CPI came in hotter than expected.
So inflation is sticky, but the labor market is looking fragile. Not exactly an easy call for Powell and team.
This week, the spotlight falls on Friday’s Personal Consumption Expenditure (PCE) release — the Fed’s favorite inflation gauge. It’s the one number they don’t ignore when debating cuts. (We dive deep into why PCE matters so much in the PropIQ course — fundamentals made simple and tradable).
What’s Next?
With little else on the calendar, the market is likely to spend the next few days digesting last week’s fireworks. My personal bias? Some of those sharp Jackson Hole moves unwind as cooler heads prevail.
- Stocks: Don’t chase highs — a pullback wouldn’t surprise me.
- Dollar: Overextended lower, could see a bounce.
- Gold: Riding the dollar wave, but watch out if the greenback snaps back.
- NASDAQ & DAX: Frothy after Friday’s rip; room for retracement.
EURUSD: Roadblock resistance looms at 1.1800 — high odds of rejection unless data comes in very soft.
Final Thought
Friday was fun, no doubt. But trading isn’t about chasing knee-jerk reactions — it’s about reading the bigger picture and managing risk. With the Fed caught between inflation and jobs, the next few weeks will be all about the data.
And when that PCE print drops Friday, I’ll be live streaming the release with charts, setups, and a free prop account assessment giveaway. See you there.
Disclaimer: This market commentary is provided for educational and informational purposes only. It reflects the opinions of the author at the time of writing and should not be taken as financial or investment advice.
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