Talking Points:

– Last week finished with fireworks as the Euro popped-higher after ECB President Mario Draghi’s comments, which seemingly avoided any topics around monetary policy.

– EUR/USD pushed up to a fresh 2.5 year high while DXY dropped down towards 2.5 year lows.

Last week closed with a bang as the Euro posted a firm topside rally on the heels of ECB President Mario Draghi’s comments at Jackson Hole. This also led to another move of weakness in the U.S. Dollar, as ‘DXY’ sold-off to another fresh one-year low ahead of last week’s close. After gapping lower to start this week, the U.S. Dollar and, in turn, EUR/USD, quickly filled those gaps and continued in the prior trend-side direction.

There are a considerable number of drivers on the horizon that can continue to push volatility into each of these markets, as this week’s calendar is loaded with a heavy emphasis on USD news. There are high-impact US announcements each day of this week: Monday brings Trade Balance and Tuesday brings Consumer Confidence. Wednesday has the second read of Q2 GDP, Thursday brings PCE, and Friday closes with the ‘big one’ of Non-Farm Payrolls. The U.S. isn’t the only economy with workable news releases, as Europe sees German CPI on Wednesday, Employment on Thursday and an hour later – Euro-Zone Inflation for the month of August.

Dollar Tanks on Yellen/Draghi at Jackson Hole

The Dollar sell-off on Friday got started early, just as comments from Fed Chair Janet Yellen were coming in from Jackson Hole. While Chair Yellen artfully avoided any comments that could be construed to carry any element of bearing on monetary policy, traders pushed the Dollar below prior points of support that had showed-up earlier in August (this area is shown in the red box below). This left USD on the ropes as Mr. Draghi took the mic at 3PM, just ahead of US market close. And as Mr. Draghi spoke, that bullish burst in the Euro showed-up, driving the Dollar below the prior yearly low at 92.55 (shown in orange below).