EUR/USD Volatility Spikes After Powell's Dovish Fed Comments

EUR/USD experienced significant intraday volatility, initially surging 0.6% to 1.0920 following Fed Chair Powell's unexpectedly dovish rhetoric on Friday, before retracing to 1.0865 as markets digested the implications. Powell's speech markedly increased market expectations for a September rate cut, with futures now pricing in a 75% probability of a 25 basis point reduction. The pair whipsawed between 1.0850 and 1.0920 as traders repositioned, with implied volatility measures jumping to two-month highs. Technical indicators show EUR/USD consolidating above the key 1.0850 support level, while resistance emerges at 1.0920 (Friday's high). The dovish Fed pivot could provide medium-term support for EUR/USD, particularly if ECB officials maintain their relatively hawkish stance. Traders should expect continued volatility ahead of this week's US economic data releases, which could either reinforce or challenge current rate cut expectations.