August 24th Chart of the Week: PCE report, Jackson Hole, and USD/JPY technical analysis

• PCE data & economic releases: The core PCE price index report, scheduled for release on Wednesday, August 26, alongside key GDP and spending metrics¹, may serve as a pivotal indicator of market expectations for Federal Reserve policy decisions.
  
• Jackson Hole symposium: Federal Reserve Chair Kevin Warsh’s inaugural keynote address on August 28 at the Jackson Hole Economic Policy Symposium¹ will be scrutinized for clarity on monetary strategy amid persistent inflation and a split FOMC.
  
• Global carry trade impact: Unexpected shifts in PCE inflation metrics² threaten to
  compress yield differentials between the US dollar and low-yielding funding currencies like the JPY and CHF, potentially destabilizing global carry trade positions.
  
• USD/JPY technical levels: USD/JPY trades within an ascending channel/rising wedge, encountering technical resistance between 159.20 and 160.20, with key support levels situated at 158.93 and 158.08.

The upcoming core Personal Consumption Expenditures (Core PCE) price index report, the Fed’s preferred inflation gauge, scheduled for release by the Bureau of Economic Analysis on Wednesday, August 26², is a pivotal indicator for investors evaluating the Fed’s next policy moves.

According to the Bloomberg economic calendar¹, a major wave of key United States economic releases is scheduled for Wednesday, August 26, 2026, beginning at 7:00 AM EST with MBA Mortgage Applications and followed by a dense series of critical indicators at 8:30 AM EST. Highlights of this upcoming data batch include the Personal Income and Spending metrics, the PCE and Core PCE Price Indexes, as well as Durable Goods Orders, Cap Goods Orders, and the second-quarter GDP, Personal Consumption, and GDP price Index figures.

Consensus estimates according to Bloomberg’s economic calendar¹ project July headline PCE inflation to tick down slightly to 3.6% year-over-year (from 3.7% in June), while core PCE (excluding volatile food and energy costs) is anticipated to remain steady at 3.3% annually. This print will be closely scrutinized to determine whether underlying price pressures are abating or remaining stubbornly elevated, directly impacting market expectations for future interest rate decisions.

The inflation report is due to be released a day before the Jackson Hole Economic Policy Symposium, a prestigious annual conference hosted by the Federal Reserve Bank of Kansas City. It brings together global financial leaders and monetary authorities to evaluate macroeconomic trends, potentially signal shifts in monetary policy, and provide guidance on critical economic metrics like economic growth, inflation targets, and interest rates.

At the August 2026 Jackson Hole Economic Policy Symposium, market participants will be paying close attention to the Federal Reserve Chair Kevin Warsh’s inaugural keynote address on August 28¹. Having taken office in May 2026, Warsh’s first Jackson Hole appearance as Fed Chair arrives amid a rare 9–3 FOMC vote split, persistent above-target inflation³. Market participants are seeking clarity on the central bank’s strategy to address persistent inflation pressures.

Deviations in PCE price index metrics from consensus forecasts, alongside shifting central bank policy trajectories, induce heightened volatility across key funding currencies -notably the Japanese yen (JPY) and Swiss franc (CHF). This directly destabilizes global carry trade structures predicated on stable yield differentials and compressed volatility regimes. Softening inflation prints accelerate market pricing of Federal Reserve monetary easing, narrowing U.S. yield premiums relative to lower-yielding funding currencies; the resulting spread compression precipitates short-covering in funding pairs, driving rapid currency appreciation and catalyzing an unwinding of existing carry-trade positions. Conversely, persistent inflation readings reinforce a prolonged restrictive rate posture, sustaining yield differentials and preserving carry positioning.

• Following a breakout above a downtrend in mid 2025, price action has been trading within an ascending channel marked by the blue lines on the chart. The pattern can also be seen as a rising wedge.
  
• Within the pattern, and as the war in the Middle East began, a sharp uptrend (marked TL1) emerged, followed by a major bearish engulfing candle after the FOMC meeting on April 29th, 2026. As the war dragged on, the US dollar continued to strengthen, negating the April bearish engulfing candle as marked by the second black trendline (marked TL2).
  
• Following the surprise Bank of Japan intervention in July 2026, price action broke down sharply below TL2. Multiple pullback attempts are marked on the chart; however, it continues to encounter resistance below the breakout-level extension line.
  
• An immediate resistance lies above price action, represented by the intersection of the EMA9 and SMA9 near 159.20, and a second resistance level within the range of 159.57 - 160.20, represented by the intersection of the monthly PP of 159.57, the weekly R1 of 159.83, and the broken rising wedge lower boundary extension line.
  
• Immediate support lies below price action, with the weekly PP at 158.93 and the weekly S1 at 158.08.
  
• Following the steep drop into oversold territory, RSI has remained in line with price action and has recovered to the neutral 50.00 level.
  
• MACD remains in line with price action, with the MACD line attempting to move higher but remains coiled with its signal line as of the second week in August. MACD values stand at 0.065, -0.595, and -0.660, with its histogram just turning positive (green) after deep negative territory in early August.

The upcoming Core PCE price index release on August 26 and Fed Chair Kevin Warsh’s inaugural address at the Jackson Hole Economic Policy Symposium on August 281 serve as the primary macro catalysts driving near-term market volatility. An upside surprise in inflation data risks widening US-Japan yield differentials, reinforcing a higher-for-longer policy trajectory, potentially stabilizing the USD, and sustaining foreign-exchange carry-trade structures. Conversely, a softer inflation print could trigger rapid yield-spread compression, prompting short-covering in funding currencies like JPY and accelerating the unwind of high-yield asset positions. Market participants may consider monitoring key technical parameters - specifically, the 159.20-160.20 resistance corridor and the 158.93 support pivot - for definitive breakout or breakdown validation amid heightened macroeconomic uncertainty.

Footnotes

¹https://www.bloomberg.com/markets/economic-calendar

²https://www.bea.gov/data/personal-consumption-expenditures-price-index

³https://www.federalreserve.gov/newsevents/pressreleases/monetary20260729a.htm