Forex News

The US Dollar (USD) has extended its recovery on Tuesday, climbing to new multi-week highs on the back of steady bets for extra Fed tightening, while increasing hopes of a potential deal to unlock the US-Iran-Hormuz conflict seem to have been ignored by market participants.

Here is what you need to know on Wednesday, September 23:

The US Dollar Index (DXY) climbed further north of its psychological 100.00 barrier, hitting new two-month tops amid the mixed tone in US Treasury yields across the curve. The preliminary S&P Global Manufacturing and Services PMIs for the current month will be the salient data release, seconded by the weekly MBA Mortgage Applications, the EIA’s weekly report on US crude oil inventories and the speech by the Fed’s Barr.

EUR/USD has come under extra selling pressure on Tuesday, adding to Monday’s decline and clinching fresh multi-week lows near 1.1430. The advanced S&P Global Manufacturing and Services PMIs for the month of September are due alongside the speeches by the ECB’s Vujcic and Lane.

GBP/USD has retreated to levels last seen in late July, around 1.3320, on the back of firm sentiment surrounding the Greenback. Across the Channel, market participants will closely monitor the release of the flash September S&P Global Manufacturing and Services PMIs.

USD/JPY has built on previous gains and posted gains for the third day in a row, remaining above the 157.00 hurdle. Next on tap on the domestic calendar will be the publication of the advanced S&P Global PMIs on September 24.

AUD/USD has built on Monday’s decline, briefly breaking below the 0.7100 support, or three-day troughs. Next in Oz will be the preliminary S&P Global PMIs.

Front-month WTI futures have lost further ground, breaching the key $90.00 mark per barrel to hit fresh three-week lows on the back of renewed hopes for a reopening of the Strait of Hormuz.

Gold has reversed its initial downbeat tone and traded with modest gains, always below the key $4,400 mark per troy ounce. The daily rebound in the precious metal has come despite a firmer US Dollar, always propped up by steady bets of further Fed rate hikes, and mixed US Treasury yields across the board.

United Overseas Bank (UOB) strategists Quek Ser Leang and Lee Sue Ann expect USD/CNH to edge lower intraday but stay confined to a narrow 6.6890–6.6960 range, with a clear break below 6.6890 seen as unlikely. Over one to three weeks, they see downside extending toward 6.6820 as momentum builds. On a one- to three-month view, they anticipate further gradual declines while the pair trades below the cloud near 6.7815.

Downward momentum points to lower levels

"24-HOUR VIEW: USD extended its decline from last Friday, dipping to a low of 6.6912. Downward momentum has increased, albeit just slightly. Today, we expect USD to edge lower, but it is likely to stay within a 6.6890/6.6960 range. In other words, it is unlikely to break clearly below 6.6890."

"1-3 WEEKS VIEW: In our latest update from last Friday (18 Sep, spot at 6.7035), we highlighted the following: “Downward momentum is building, and if USD breaks and holds below 6.7000, it could decline toward 6.6920. The likelihood of USD breaking clearly below 6.7000 will remain intact as long as USD holds below 6.7170 (‘strong resistance’ level).” USD subsequently broke below 6.7000 and yesterday, it declined further to 6.6912. Downward momentum continues to build, and USD could decline to 6.6820 next. On the upside, the ‘strong resistance’ level is now at 6.7020."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

• WTI Oil falls for a fifth straight day as traders assess fresh Middle East developments.
• Iran says the Strait of Hormuz could reopen within seven days if the US eases military pressure and lifts its port blockade.
• Trump’s remarks on productive talks with Iran add to expectations of a possible diplomatic breakthrough.

West Texas Intermediate (WTI) Oil extends its decline on Tuesday as traders assess fresh Middle East developments, keeping energy prices under pressure for a fifth straight day. At the time of writing, WTI trades around $89.50, near a two-week low.

Earlier on Tuesday, Oil came under heavy selling pressure after Kyodo News reported, citing a senior Iranian official, that Iran could reopen the Strait of Hormuz within seven days if Washington eases military pressure and lifts its blockade of Iranian ports.

Adding to the pressure on Oil, US President Donald Trump said on the sidelines of the UN General Assembly in New York that US officials had met with an Iranian delegation for three hours. Trump said “the Iran meeting went very well,” describing it as “very productive” and adding that another meeting is scheduled “in the near future.”

The developments have raised hopes that the Strait of Hormuz could reopen, where shipping remains heavily restricted. Only two commodity vessels crossed the waterway on Monday, down from 10 on Sunday and far below the roughly 125 large commercial vessels per day seen before the Iran war.

Brent slips as Saudi Gulf exports rise amid Iran diplomacy hopes

Analysts at Commerzbank note that “hopes for new diplomatic efforts to end the conflict with Iran and rising oil shipments from Saudi Arabia put pressure on oil prices at the start of the week,” with Brent “briefly” falling “below the USD 100-per-barrel mark for the first time in eight trading days.” According to the bank, Saudi Arabia “appears to be trying to compensate for the loss of oil shipments via the East-West Pipeline to the Red Sea,” which “was damaged following a missile attack,” by relying on “higher exports via the Persian Gulf.”

Commerzbank highlights that “approximately 14 million barrels of crude oil were loaded onto seven very large crude carriers (VLCCs) at export terminals in the Gulf on Sunday,” a move that “would continue the trend of rising Saudi Arabian oil shipments from the Gulf,” with data provider Vortexa estimating that “3.7 million barrels per day have been loaded since September 12.”

US President Donald Trump is figuring out a solution to end the war between Russia and Ukraine, after meeting with Ukrainian President Volodymyr Zelenskyy. Furthermore, he added that Russian President Vladimir Putin is willing to meet to end the war.

Regarding the Middle East conflict, he said that officials met with an Iranian delegation for three hours in a very productive meeting.

Trump added that Russia's refining capacity took a serious hit, affecting both the Russians and diesel prices. The US President added that he is considering a ban on diesel exports, which the US Treasury Secretary confirmed, saying, “We are examining that.”

Key highlights:

Zelenskyy and I are figuring out a solution to end war

Inside Russia on refining capacity is a serious hit on the Russians and a serious hit on diesel prices

Trump on ban on diesel exports: I've called for that too

Bessent on ban on diesel exports: we are examining that

Putin is willing to meet to end war

Will talk about patriot missiles with Zelenskiy

US officials met with an Iranian delegation earlier for three hours

The Iran meeting was very productive; another is scheduled in the near future

OCBC strategists Sim Moh Siong and Christopher Wong report that the Korean Won (KRW) strengthened alongside gains in tech equities, lower Oil prices and strong export data, including a surge in semiconductor shipments. They note a bearish engulfing pattern and rejection near 1388 in USD/KRW, pointing to near-term downside risk, though patchy foreign equity flows mean sustained buying is still needed for a firmer KRW footing.

Technical rejection signals softer USD/KRW

"KRW strengthened alongside gains in Korean, US tech equities and lower oil prices overnight. Domestic data was also supportive, with exports rising 78.3% YoY in the first 20 days of September, led by a 259% surge in semiconductor shipments."

"Trade surplus widened to USD23bn. But foreign flows remain patchy, with foreign investors turning net sellers of Korean equities again on Monday Asia despite gains in KOSPI."

"Near term, softer oil and slower pace of US Treasury yield increase should remain supportive of KRW, while USD/KRW’s rejection near 1388 and bearish engulfing pattern also point to some downside risk for the pair."

"Foreign equity flows remain key. A more sustained return of foreign buying would give KRW a firmer footing."

"Daily momentum remains bullish while RSI eased lower from overbought conditions. Bearish engulfing candlestick bears watching for any follow-through in downside momentum. Support at 1364 (21 DMA), 1350 levels. Resistance at 1388 levels (23.6% fibo retracement of Jul high to Sep low), 1405 (50 DMA)."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

• DXY pushes to its highest since late July on the case for another increase.
• Futures put a Fed rate increase on October 28 at 55.36%.
• Wednesday's flash services PMI is forecast at 56, after 56.5.

The Dollar Index trades near 100.70, its highest level since late July. It has climbed through five straight sessions of falling Crude Oil, the opposite of how the war has moved it for most of this year. The Fed is the reason. It raised rates on September 16, signalled at least one more increase this year, and its officials have spent the days since backing that up.

Cheaper Crude Oil is supposed to cost the Dollar

Japanese news agency Kyodo, citing a senior Iranian official, reported that Iran would let ships back through the Strait of Hormuz inside a week. The conditions are that the United States ends the blockade of Iran's ports and stops its military operations around the strait, and the offer hasn't been independently confirmed. Crude Oil fell on the report, and Brent, the global benchmark, hit its lowest price since September 8.

Crude Oil reaches the Dollar through the Fed. Cheaper Crude Oil means less inflation, which means less reason for the Fed to raise rates again. Fewer increases mean less extra interest for holding Dollars instead of Euros or Yen. The offer went to Washington through mediators on September 16 and moved Crude Oil only once it was reported.

Before the war, about a fifth of the world's Crude Oil and liquefied natural gas went through the strait. Saudi Arabia is also testing a restart of its East-West pipeline, which carries Crude Oil from its Gulf coast to the Red Sea and around the strait. More barrels getting out means a lower price, and a lower price means lower odds of another Fed increase, which is how both stories reach the Dollar Index.

A seven-week high on odds a little better than even

Crude Oil came off its low after Trump used his United Nations speech to put a deal with Iran after the November 3 midterms. The Dollar Index went to its session high after Boston Fed President Collins spoke at 15:00 GMT. She said she supported the September 16 increase and warned that inflation could stay above the Fed's 2% target. The Fed's own projections have it staying there until after 2028.

Prices in the futures market put the chance of an increase on October 28 at 55.36%, against 44.64% for no change. Those odds slipped on the Hormuz report, and the Dollar Index slipped with them. Another increase would widen what Dollars earn over the other currencies in the index. ADP's four-week average of private-sector hiring, the only American data of the session, came in at 20K against 16.75K before it, a small push in the same direction.

The case for October doesn't rest on the barrel. Minneapolis Fed President Kashkari has said inflation is too high across the whole economy rather than only in the price of Crude Oil. Chicago Fed President Goolsbee and St. Louis Fed President Musalem said much the same on Monday. That is why the Hormuz report has moved Crude Oil more than it has moved the Dollar.

The Yen fell for a third session in a row, in thin trading with Tokyo shut for public holidays through Wednesday. That came even though the Bank of Japan (BoJ) raised its rate to 1.25% on September 18. The Yen is part of the Dollar Index, so a weaker Yen means a higher index.

Wednesday's surveys are early estimates, and the odds will move on them anyway

S&P Global's flash purchasing surveys land Wednesday at 13:45 GMT, with services forecast at 56 after 56.5 and manufacturing at 53.5 after 53.9. A Purchasing Managers Index (PMI) above 50 means more firms reported growth than decline, so both are forecast to keep growing a little more slowly. The final versions come out in early October. Stronger flash numbers would add to the same October odds the Dollar Index rose and fell with on Tuesday, and weaker ones would take from them.

Jobless claims on Thursday at 12:30 GMT are forecast at 201K after 196K. Durable goods orders, which count orders for goods meant to last three years or more, follow on Friday at 12:30 GMT and are forecast at -0.4% after 1.1%.

The University of Michigan survey on Friday at 14:00 GMT carries what households expect inflation to be over the coming year, forecast at 4.6%, exactly where it was last time. That makes the week's only inflation reading one that nobody expects to change.

Levels and bias

Resistance: Tuesday's high near 100.70 is the highest since late July. Above it, 101.00, then the late-July highs just above 101.50, the level the Dollar fell from at the end of July.

Support: 100.50, where Friday's run stopped and Tuesday's went through, is the first floor. Below it, Tuesday's low near 100.30, where the dip on the Hormuz report stopped, then the Friday and Monday lows near 100.20.

Bias: Bullish above 100.50. The first objective is 101.00 and the second is the late-July highs just above 101.50. The daily Stochastic Relative Strength Index (Stoch RSI), a momentum gauge, is near 75 and rising, just short of the 80 line that marks a stretched market. The bullish case is wrong on a daily close below 100.20.

DXY daily chart

Richmond Federal Reserve (Fed) President Thomas Barkin said on Tuesday that the Federal Open Market Committee (FOMC) decided to raise interest rates last Wednesday because inflation risks outweighed those to maximum employment.

Barkin, who spoke at an event in Baltimore, said, “Last week's rate hike will help restore price stability, we'll see if more hikes are needed,” and remains unsure about further tightening needed by the Fed to tackle inflationary pressures.

Key highlights:

We raised rates last week because risks to inflation outweigh risks to maximum employment

Last week's rate hike will help restore price stability, we'll see if more hikes are needed

It is tempting to blame high inflation on a handful of categories exposed to energy costs or tariffs, but much of the personal consumption expenditures index is rising by more than 3%

Economic conditions are, if anything, firming

There is momentum outside data centers and AI, with consumer spending holding up and strength in defense and manufacturing

Passing shocks like tariffs and energy are not fading, there is a risk that high inflation today will impact future inflation

The labor market is not overheated or even particularly tight

Don't see much evidence that consumer balance sheets are stretched

Consumers will spend as long as the job market remains healthy

• GBP/USD retreats despite reports that Tehran could reopen Hormuz within days.
• Strong ADP data and hawkish Fed rhetoric lift the US Dollar.
• UK borrowing overshoot adds pressure despite November BoE hike bets.

The Pound Sterling (GBP) dives over 0.17% against the US Dollar (USD) on Tuesday amid newswire reports that Tehran intends to reopen the Strait of Hormuz if the United States meets certain conditions. At the time of writing, GBP/USD trades at 1.3343 after peaking at 1.3387.

Sterling slips as Fed tightening bets eclipse Iran de-escalation headlines

Sentiment remains upbeat after Kyodo reported that Tehran told the US administration it would open the Strait of Hormuz in seven days if Washington lifts the blockade on Iran and stops military operations.

Broad US Dollar strength, driven by growing speculation that the Federal Reserve (Fed) would raise rates once more before year-end, continues to underpin the Greenback.

The US Dollar Index (DXY), which measures the performance of the American currency against six others, is up 0.27% at 100.69, about a two-month high.

Data-wise, the ADP Employment Change 4-week average rose from 16.75K to 20K, an indication of strength in the labor market. Aside from this, Fed speakers are crossing the wires.

Boston Fed Susan Collins said in a LinkedIn post that she supported a rate hike last week because inflation could become entrenched above 2%. “With the labor market on a better footing, monetary policy can focus on a timely return to price stability, especially after five and a half years of too-high inflation,” she said.

Regarding geopolitics, US President Donald Trump reiterated that Iran can’t have a nuclear weapon and added that a deal between the US and Iran is possible after the US midterm election in November.

In the UK, Public Sector Net Borrowing in August rose to £18.26 billion, higher than expectations of £15.7 billion, which triggered a jump in the UK deficit to £77.3 billion in the first five months of the fiscal year, £8.1 billion more than the Office for Budget Responsibility forecast.

Speculation that the Bank of England (BoE) would raise rates at the upcoming November meeting is at 65% via Prime Terminal, which has kept the GBP/USD pair from weakening further below the 1.3300 level.

Nevertheless, if the interest rate differential widens between the two countries, favoring the US, it could open the door for further downside.

GBP/USD Price Forecast: Technical outlook

In the daily chart, GBP/USD trades at 1.3324, keeping a clear bearish tone as spot holds below the clustered simple moving averages (SMA) group around 1.3481 and under several broken ascending trend-line levels that now sit overhead. Price is also trading beneath the nearby descending resistance trend line, whose break reference at 1.3335 caps any immediate recovery attempts, while the Relative Strength Index (14) near 31 suggests the sell-off is stretching into oversold territory rather than signaling a sustainable base.

On the topside, initial resistance emerges at the downtrend line break around 1.3335, followed by the secondary descending barrier near 1.3449. Above there, the SMA cluster around 1.3481 aligns with the former rising support trend line turned resistance at 1.3504, before the higher broken support line near 1.3713 marks a more distant cap on any corrective bounce. On the downside, support is primarily momentum-based, with the RSI hovering close to oversold readings, hinting that while selling pressure remains dominant, the pair could soon attempt a modest pause rather than a decisive reversal unless the overhead technical levels are reclaimed.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

• DJIA drops from its highest level since September 14 as bank shares slide.
• Trump expects an Iran deal right after the November 3 midterm election.
• The Fed's next rate decision is October 28, six days before the midterms.

The Dow Jones Industrial Average (DJIA) rose on Tuesday to its highest level since September 14 before the opening bell, then turned lower once trading started in New York. It trades near 51,800, below Monday's close. The NASDAQ Composite tested record highs and the S&P 500 is barely changed. Money is moving out of financial companies and into technology, and the Dow has more of the first in it and less of the second compared to the other two indexes.

The smaller bank counts for more in the Dow

Financial shares, from banks to brokers and insurers, are falling across the market. Traders are moving the money into technology on growing interest in artificial intelligence (AI) agents, apps that carry out tasks like booking travel. JPMorgan Chase (JPM), the biggest bank in the country, is falling with the rest. JPMorgan's own analysts raised their rating on Meta Platforms (META) earlier in September because of Meta's new agent, and Meta is one of the stocks the money is going into.

The Dow is calculated from share prices alone, so a $1 change in any of its 30 shares moves the index about 6 points, whatever the size of the company. A $10 fall is 1% of a $1,000 share and 10% of a $100 share, and it takes about 60 points off the Dow either way. The S&P 500 and the NASDAQ Composite are weighted by each company's total stock market value instead, so the biggest technology companies count the most there.

Goldman Sachs (GS) shares cost more than $900, among the most expensive in the Dow, and JPMorgan's cost less than $400. JPMorgan is worth more than three times as much, but a 1% fall in Goldman Sachs takes more than twice as many points off the index. Meta isn't in the Dow at all, which is how a day of selling banks and buying technology leaves the Dow lower and the NASDAQ Composite at a record.

Crude Oil keeps falling on a deal dated after the midterms

Crude Oil is down for a fifth session in a row. Brent, the international benchmark, reached its lowest level since September 8 on reports that Iran has offered to reopen the Strait of Hormuz within seven days. The offer depends on the United States lifting its blockade of Iranian ports, and it hasn't been independently confirmed. A cheaper barrel costs Chevron (CVX), the only energy producer in the Dow, and saves the other 29 money on fuel.

Trump told the United Nations General Assembly he must choose between a deal with Iran and wiping out the Islamic Republic. He expects a deal right after the November 3 midterms and said it would push Crude Oil below its prewar price. Crude Oil rose off its low after the speech, and on his timeline, the fall he promised in fuel costs for the other 29 comes after November 3. By his account, Iran is waiting on the result of an American election before it signs.

The Fed decides six days before the midterms

The Fed raised its main reference rate, what banks charge each other to borrow overnight, by a quarter-point to 3.75-4.00% on September 16. It was the first increase since July 2023, and higher fuel prices helped drive it. JPMorgan raised its prime rate, what it charges its most creditworthy borrowers, to 7.00% on September 17, so the increase went straight into what it charges for loans.

Most Fed officials expect at least one more increase before the end of the year, and the next decision is on October 28. Goldman Sachs makes less from lending and more from arranging takeovers and share sales, which are harder to pay for when borrowing costs rise. Another increase would do more for the bank that moves the Dow less.

Levels and bias

Resistance: The index went through the September 17 and Monday highs just above 52,100 before the open and fell back under them once trading started, which makes that area the first cap. Tuesday's high just above 52,400 is the highest since September 14 and the level the rally ended at.

Support: Tuesday's low just under 51,800 matches Monday's low just above 51,750, the second session in a row the index has stopped there. Below that are the September 18 low just under 51,500 and the September 16 low near 51,200, the lowest since June.

Bias: Bearish below 52,100. The first objective is the September 18 low just under 51,500, and the second is the September 16 low near 51,200. The daily Stochastic Relative Strength Index (Stoch RSI), a momentum gauge, is near 22 and has fallen for two weeks without turning up. The bearish view fails on a daily close above 52,200.

Dow Jones daily chart

• USD/CAD gains 0.27% on Tuesday and trades around 1.4070.
• Falling Oil prices weigh on the Canadian Dollar despite improving risk appetite.
• Hopes for the reopening of the Strait of Hormuz ease geopolitical concerns.

USD/CAD gains 0.27% on Tuesday and trades around 1.4070 at the time of writing, supported by weakness in the Canadian Dollar (CAD). Falling Oil prices offset the positive impact of improving risk appetite on the Loonie, as fresh prospects for negotiations over the Strait of Hormuz ease geopolitical concerns.

West Texas Intermediate (WTI) US Oil falls 0.46% on Tuesday to around $91.20 at the time of press. The decline acts as a headwind for the Canadian Dollar, as Canada is a major Oil producer and exporter. The relationship between energy prices and the Canadian currency therefore helps keep USD/CAD tilted to the upside.

US President Donald Trump, however, maintains a firm stance toward Tehran. Speaking at the United Nations (UN) General Assembly, he called on countries to maintain pressure on Iran and said Tehran will never obtain a nuclear weapon. He nevertheless expects the United States (US) and Iran to reach an agreement after the US elections.

On the policy side, the National Bank of Canada highlights that domestic conditions argue for patience from the Bank of Canada (BoC), stating that "in Canada, we’ve pulled tightening closer on our expected timeline, but still expect the BoC to be sidelined in October as economic momentum is threatened and slack remains."

In the United States, the US Dollar (USD) also benefits from a relatively supportive monetary policy backdrop. Boston Federal Reserve (Fed) President Susan Collins said on Tuesday that she supported last week's interest-rate hike and views a somewhat more restrictive monetary policy stance as appropriate to bring inflation sustainably back toward the Fed's 2% target.

Collins notes that upside risks to inflation have increased, while labor market conditions appear somewhat stronger. Her comments reinforce the view that the Fed has some room to maintain restrictive monetary policy to contain inflationary pressures, providing additional support to the US Dollar against the Canadian Dollar.