Forex News

• EUR/USD drops after Fed delivers 25 bps cut, SEP points to another 50 bps by year-end.
• Powell stresses inflation “somewhat elevated” and labor demand “softened,” but rules out broad support for 50 bps move.
• ECB holds rates steady, signaling end of easing cycle, keeping long-term EUR/USD outlook tilted to upside.

The Euro reversed course and dropped against the US Dollar amid a perceived hawkish cut of 25 bps by the Federal Reserve on Wednesday. Traders booked profits after pushing the pair to a yearly high of 1.1918, before reversing 100 pips, towards its current price. The EUR/USD trades at 1.1812, down 0.48%.

Euro reverses from yearly high of 1.1918 as Powell signals cautious easing path

The Federal Reserve acknowledged growing downside risks to the labor market, noting that while unemployment remains low, it has edged higher. The policy decision was not unanimous, with Governor Stephen Miran voting for a larger 50-basis-point cut in line with some analysts’ expectations.

On inflation, the Fed said price pressures have “moved up” and remain “somewhat elevated,” while economic growth has moderated through the first half of 2025.

The Summary of Economic Projections (SEP) pointed to an additional 50 bps of rate cuts anticipated by year-end.

In his presser, Fed Chair Jerome Powell said labor demand “has softened” while inflation remains “somewhat elevated.” He noted that the balance of risks has “shifted” and emphasized that monetary policy is well positioned to respond as needed, though he cautioned that the labor market is “not solid.”

Addressing speculation about a larger move, Powell dismissed the notion, saying there was “no widespread support for a 50-basis-point cut today,” and stressed that the Fed is not in a rush to ease policy.

Across the pond, the latest inflation figures had reinforced the European Central Bank’s (ECB) decision to hold rates unchanged at the latest meeting, while telegraphing that the easing cycle has come to an end. Hence, further EUR/USD upside is seen as the interest rate differential between the US and the Eurozone could shrink dramatically for the foreseeable future.

Daily market movers: EUR/USD tumbles despite Fed signaling further cuts ahead

• The Fed Summary of Economic Projections (SEP) is up next as it could dictate the path for the fed funds rate toward the end of the year and 2026. So far, traders have priced in close to 125 basis points of easing toward December 2026, projecting rates to end at around the 3%-3.25% range.
• The US economy showed mixed signals in August. Housing Starts tumbled 8.5% MoM, reversing July’s 5.2% gain, and fell to 1.307 million units from 1.428 million — the lowest level since May. Building Permits also declined, dropping 3.7%.
• Contrarily, Retail Sales outperformed forecasts, climbing 0.6% MoM versus expectations of 0.2% and above July’s 0.5%. The Control Group, which feeds into GDP calculations, rose 0.7% MoM after a 0.5% increase the prior month.
• The Eurozone docket featured the Harmonized Index of Consumer Prices (HICP) for August came at 2% YoY, below forecasts and July’s 2.1% print. Core HICP was aligned with estimates and unchanged from the previous reading of 2.3%.
• The US Dollar Index (DXY), which tracks the buck’s performance against a basket of six currencies, is up 0.38% at 97.03.
• Fitch Ratings projects the Fed will deliver two 25-basis-point rate cuts this year, one in September and another in December — followed by three additional reductions in 2026. In contrast, the agency does not anticipate further easing from the ECB.

Technical outlook: EUR/USD hoovers around 1.1800, post Fed’s decision

EUR/USD consolidates with bullish momentum building as the pair approaches the 1.1900 mark. The Relative Strength Index (RSI) supports further upside, staying below overbought territory.

A break above 1.1900 would expose 1.1950 and the psychological 1.2000 level. On the downside, a move under 1.1850 would bring the prior yearly high of 1.1829 and 1.1800 into play, with further losses targeting 1.1750 and the 20-day SMA at 1.1704.

NZ GDP Overview

The latest quarterly Gross Domestic Product (GDP) growth figures from New Zealand are expected just ahead of the Thursday market rollover, at 22:45 GMT on Wednesday.

NZ GDP has struggled to impress markets recently, and the second quarter of 2025 is not expected to deliver much different. QoQ growth is expected to contract by 0.3%, while annualized growth is seen at a flat 0.0%, barely clawing back from a -0.7% contraction in the first quarter.

How could it impact NZD/USD?

It will take a significant swing in either direction to push the Kiwi into a fresh momentum swing. Markets are spent on volatility after the Federal Reserve (Fed) cautiously trimmed interest rates for the first time in almost ten months, and there are little surprises on offer from middling Antipodean growth metrics.

NZD/USD broke out of a messy descending channel on daily candlesticks, but the 0.6000 level remains a tricky barrier for price action to vault over, and bullish momentum is likely to remain capped as bids wrestle to stay above the 200-day Exponential Moving Average (EMA) near 0.5933.

NZD/USD daily chart

• Gold retreats after Fed’s measured 25-bps cut, with dissent from Miran pushing for 50 bps.
• SEP projects rates at 3.60% by year-end, signaling 50 bps easing despite elevated inflation.
• Powell highlights softer labor demand, balanced risks, and limited support for larger cuts, keeping policy flexible.

Gold price tumbles after the Federal Open Market Committee (FOMC) decided to cut rates by 25 basis points, signaling that further easing is expected in 2025. At the time of writing, XAU/USD trades at $3,660 down 0.78%.

Bullion falls after Fed delivers 25 bps cut, SEP projects 50 bps more by year-end, Powell cautious on pace

The day arrived and the Fed defined that it shifted towards the maximum employment mandate, even though inflation remains high. By majority, they reduced rates as expected, with Stephen Miran being the lone dissenter as he opted for a 50-bps reduction.

Regarding inflation, the central bank said that it has moved up, remaining “somewhat elevated.” The Fed noted that economic growth has moderated over the first half of 2025.

Meanwhile, the Summary of Economic Projections (SEP) revealed that 50 bps of cuts are expected towards the year’s end as the median estimated the fed funds rate will reach 3.60%.

In his press conference, Fed Chair Jerome Powell said that labor demand “has softened,” and that inflation remained “somewhat elevated.” He added that the balance of risks “shifted,” that policy is well positioned to respond in a timely manner and that the labor market is not solid. When asked about discussions about a 50-bps cut, he said “No widespread support for 50 bps cut today,” adding that they are not in a rush to ease policy.

Daily market movers: Gold plunges in US Dollar comeback

• The US Dollar Index (DXY), which tracks the buck’s performance against a basket of six currencies, is up 0.42% at 97.00.
• US Treasury yields are rising steadily with the 10-year Treasury note up four and a half bps at 4.079%. US real yields—calculated by subtracting inflation expectations from the nominal yield—surged four bps at 1.70% at the time of writing.
• The US economic docket featured Housing Starts in August, which fell to its lowest level since May. Starts plunged by 8.5% MoM last month, after an increase of 3.4% in July and dropped from 1.429 million to 1.307 million. Building Permits also decreased by 3.7%.
• On Tuesday, the US Commerce Department announced that Retail Sales for August exceeded market expectations of 0.2%, rising by 0.6% MoM. Sales for the Control Group, used to calculate Gross Domestic Product (GDP) figures, expanded by 0.7% MoM, up from July’s print of 0.5%.
• After the US economic data release, the Atlanta Fed GDP Now dipped to 3.3% from 3.4% on Tuesday, after adding housing data to its calculations.
• Banks like the Deutsche Bank expect the Fed to cut interest rates by 25 bps in all three meetings this year, meaning that the Fed funds rate will reach the 3.50%-3.75% range.

Technical outlook: Gold price hovers near $3,690 as bulls target record high

Gold briefly surged to a new record of $3,703 on Tuesday before paring gains, consolidating at around the $3,680 area on Wednesday. The precious metal remains well-positioned to retest the all-time high, with scope to extend toward $3,750 and $3,800.

The Relative Strength Index (RSI) continues to flash overbought signals, hinting at limited near-term upside, yet the broader bias is bullish.

In the event of a 'buy the rumor, sell the fact' event on the Fed, which could push Gold prices lower, the first support would be $3,650. Once cleared, the next stop would be the September 11 low at $3,613, slightly above the $3,600 figure.

The US Dollar (USD) challenged the area of multi-week troughs before attempting a marked bounce, ending the day with decent gains as investors assessed the interest rate cut by the Federal Reserve.

Here's what to watch on Thursday, September 18:

The US Dollar Index (DXY) confronted the region of multi-week lows near 96.50 on Wednesday, all before staging an acceptable rebound following the Fed’s decision to lower its interest rates. The weekly Initial Jobless Claims will be in the spotlight, alongside the Philly Fed Manufacturing Index, the CB Leading Index, and TIC Flows.

EUR/USD set aside four consecutive daily advances, coming down after hitting yearly peaks near 1.1920 earlier in the session. The EMU’s Current Account results are due, seconded by Construction Output data. In addition, the ECB’s Lagarde, De Guindos and Buch are all due to speak.

GBP/USD traded in an inconclusive fashion around 1.3650, reversing the post-Fed move to 1.3700 and beyond. The BoE is largely anticipated to leave its bank rate unchanged.

USD/JPY flirted with six-week lows near the 146.00 neighbourhood, just to reverse that move afterwards and end the day near the 147.00 hurdle. Machinery Orders will be the only data release on the Japanese docket.

AUD/USD came under renewed selling pressure, trimming part of the recent move to fresh yearly highs just below the 0.6700 barrier. All the attention in Oz will be on the release of the labour market report.

WTI prices left behind three daily advances in a row, briefly breaching below the $64.00 mark per barrel as traders remained focused on supply risks stemming from Russia.

Gold prices eased from recent record highs past $3,700 per troy ounce after the Fed lowered its interest rates as expected. Silver prices sold off to four-day lows, approaching the $41.00 mark per ounce.

At the post-meeting press conference, Fed Chair Jerome Powell explained the decision to lower the Federal Funds Target Range (FFTR) to 4.00%–4.25% after the September meeting and fielded questions from reporters.

Powell's press conference takeaways

Inflation has risen recently and remains somewhat elevated.

Moderation in GDP growth largely reflects consumer spending slowdown.

Payroll job gains have slowed significantly, reflecting lower immigration and lower participation.

Labour demand has softened.

Job gains are running below the breakeven rate.

Inflation has eased from mid-2022 highs, but somewhat elevated.

Total PCE prices likely rose 2.7% in August from a year ago, core PCE rose 2.9%.

Inflation for goods has picked up, disinflation for services continuing.

Beyond next year, most inflation-expectation measures are consistent with the 2% goal.

Changes to policy evolve; effects on the economy are uncertain.

Overall effect of tariffs on inflation remains to be seen.

Risk of persistent inflation from tariffs needs to be managed and assessed.

Balance of risks has shifted.

Well-positioned to respond in a timely way.

Possible tariffs are a reason for some slowing in the labour market.

Increase in goods prices accounts for most of the inflation increase this year.

Expect tariff-driven price increases to continue this year and next.

Labour market changes are mostly from immigration changes.

Demand for labour is down a little more sharply than supply of labour.

Over this year policy has been at a restrictive level.

Can no longer say labor market is solid.

Risks are moving toward equality.

Change in balance of risks suggests need to move in direction of neutral.

No widespread support for 50 bps cut today.

Don't feel need to move quickly on rates.

Could think of today's cut as a risk management cut.

A very different picture of risks to the labour market since the last Fed meeting.

The labour market is cooling off, which tells you it's time to take that into account in policy.

We need to remain fully committed to restoring 2% inflation.

At the same time, we need to weigh risks to two Fed goals.

Risk of higher inflation is less than it was in April.

Not all of what is happening in the labour market is due to immigration; there's a clear slowing in demand.

See inflation rising this year as goods prices rise from tariffs; expect it to be a one-time rise.

Our job is to make sure it is a one-time rise in inflation, and we will do that job.

Cases for there being a persistent inflation outbreak are fewer.

Time to acknowledge the risks to the employment mandate have grown.

The only way for one voter to move things around is to be persuasive, based on the data.

That's how it is going to work.

We are going to do everything we can to use tools to achieve goals.

There's a wide assessment that the situation has changed with respect to the labour market.

New data suggest there is meaningful downside risk to the labour market; that's broadly accepted.

Almost everyone wrote down support of this cut.

It's not a bad economy.

From a policy standpoint it's challenging to know what to do.

It's not incredibly obvious what to do.

Need to keep an eye on two equal goals.

This speedy decline in both supply and demand for labour has got everyone's attention.

Gratifying to see that economic activity is holding, a good bit like consumption.

It's the risks to the labour market that were the focus of today's decision.

This section below was published at 18:00 GMT to cover the Federal Reserve's policy decisions and the immediate market reaction.

At its September meeting, the Federal Reserve lowered the Federal Funds Target Range (FFTR) by 25 basis points to 4.00%–4.25%, a move that came squarely in line with market expectations.

Highlights from the FOMC statement

Projections show additional 50 bps of cuts by year end, another 25 bps of cuts in each of the next two years.

Job gains have slowed, unemployment has edged up but remains low.

Inflation has moved up and remains 'somewhat elevated'.

Economic growth moderated over first half of this year.

Says it is attentive to both sides of dual mandate.

Maintains current pace of balance sheet drawdown.

Officials' median view of Fed funds rate at end-2025 3.6% (prev 3.9%).

Officials' median view of Fed funds rate at end-2027 3.1% (prev 3.4%).

Officials' median view of Fed funds rate at end-2026 3.4% (prev 3.6%).

Officials' median view of Fed funds rate at end-2028 3.1%.

Officials' median view of Fed funds rate in longer run 3.0% (prev 3.0%).

Projections imply additional 50 bps of rate cuts in 2025, 25 bps in 2026 and 25 bps in 2027.

Projections show 9 of 19 officials see two additional cuts in 2025, two see one cut, six see no more reductions.

Policymakers see 4.5% unemployment rate at end of 2025 versus 4.5% in June projections.

Projections show one policymaker estimated the appropriate policy rate for year end at 4.25%-4.50%, one saw it at 2.75%-3.00%.

Policymakers see end-2025 PCE inflation at 3.0% versus 3.0% in June; core seen at 3.1% versus 3.1%.

Policymakers see 1.6% GDP growth in 2025 versus 1.4% in June, see longer-run growth at 1.8% vs 1.8% in June.

Market reaction to Fed policy announcements

The Greenback sells off to fresh lows, dragging the US Dollar Index (DXY) to the 96.20 region.

This section below was published at 10:00 GMT as a preview of the Federal Reserve's policy announcements.

• The US Federal Reserve is expected to cut the policy rate for the first time in 2025.
• The revised Summary of Economic Projections, which includes the dot plot, could offer key clues about the policy outlook.
• The US Dollar faces a two-way risk on potential changes to the market pricing of the rate outlook.

The United States (US) Federal Reserve (Fed) will announce monetary policy decisions and publish the revised Summary of Economic Projections (SEP), the so-called dot plot, following the September policy meeting on Wednesday. 

Follow our live coverage of the Fed rate decision and the market reaction.

Market participants widely anticipate the US central bank to cut the policy rate for the first time since last December, lowering it to the range of 4%-4.25%.

The CME FedWatch Tool shows that investors see only about a 6% chance of a bigger rate cut, while pricing in about an 80% probability of a total of 75-basis-point (bps) reduction for the remainder of the year. This means markets are expecting the Fed to slash interest rates by 25 bps in every meeting until year-end, barring an unexpected larger-than-usual cut.  

The revised Summary of Economic Projections (SEP), published in June, showed that policymakers’ projections implied 50 bps of rate cuts in 2025 – less than what markets currently expect –, followed by 25 bps reduction in both 2026 and 2027. Seven of 19 Fed officials pencilled in no cuts in 2025, two of them saw one cut, while eight of them projected two and two of them forecast three cuts this year.

The new dot plot could bring significant changes for several reasons. First, since June, disappointing employment data and relatively stable inflation readings caused investors to lean toward a more dovish policy outlook. In his last public appearance at the annual Jackson Hole Symposium on August 22, Fed Chair Jerome Powell acknowledged that downside risks to the labor market were rising and noted that a reasonable base case was to expect that the inflation effects of tariffs will be short-lived.

Meanwhile, the US Bureau of Labor Statistics (BLS) reported that Nonfarm Payrolls rose by only 22,000 in August, while the Unemployment Rate edged higher to 4.3% from 4.2%. Furthermore, the BLS’ preliminary benchmark revision to the employment data showed that total Nonfarm employment for March 2025 was 911,000, or 0.6%, less than initially reported. 

All these data suggest that the Fed mandate of supporting maximum employment may prevail over that of price stability even as inflation inches further away from its target.

“Future guidance is likely to lean dovish as a result of the recent weak labor reports, but not overly so given an inflation overshoot remains a key risk in the near to medium term,” said analysts at TD Securities. “We believe the SEP will reflect this, continuing to show two cuts in 2025 while shifting data projections in a slightly hawkish direction,” they added.

Another reason to expect some changes in the dot plot is political.  Senate Republicans confirmed White House economic adviser Stephen Miran to join the Federal Reserve Board on Monday. Miran, who is seen as a dove with a potential to prefer a 50 bps cut, will be able to vote at the upcoming meeting. 

Additionally, Fed Governors Michelle Bowman and Christopher Waller – a candidate to replace Chair Powell next year – could look to send a message by reflecting a dovish stance, as they did in July’s meeting. On the flip side, Governor Lisa Cook is expected to participate in the meeting after an appeals court rejected President Donald Trump’s bid to oust her.

When will the Fed announce its interest rate decision and how could it affect EUR/USD?

The Fed is scheduled to announce its interest rate decision and publish the monetary policy statement, alongside the revised SEP, at 18:00 GMT. This will be followed by Fed Chair Jerome Powell's press conference starting at 18:30 GMT. 

There are several different scenarios to consider that could influence the US Dollar’s (USD) valuation in a significant way. 

In case the Fed surprises markets with a 50 bps rate cut, the USD could come under heavy selling pressure with the immediate reaction. However, the USD could rebound right away if the reasoning behind such a decision suggests that the Fed wants to frontload the rate cut to buy time to analyze more inflation and employment data before taking another policy step. That, basically, would sharply decrease the chances of subsequent rate cuts. 

In a different scenario, the Fed could go for a 25 bps cut as expected, but the USD could still weaken if the dot plot points to a dovish shift in the policy outlook, highlighting multiple rate cut projections next year. 

Conversely, the USD could gather strength if the SEP shows only one or two rate cuts are forecast by Fed officials next year. 

Market participants will also pay close attention to comments from Chair Powell in the post-meeting press conference. A concerned tone about the labor market outlook and growth prospects could be bearish for the USD, while a reiteration of inflation risks could support the currency.

Deutsche Bank analysts think that the median dot of the updated SEP will likely show 75 bps of total reductions for 2025, 25 bps more than in June. 

“However, there is likely to be differing views within the committee. On the dovish side, there could be three calling for a 50bp cut and possibly one or two voting for no change. It has the potential to be the first meeting where three governors dissent since 1988, and the first with dissents on both sides since September 2019,” they add.

Eren Sengezer, European Session Lead Analyst at FXStreet, provides a short-term technical outlook for EUR/USD:

“EUR/USD clings to a slightly bullish stance in the near term. The Relative Strength Index (RSI) indicator on the daily chart holds above 50 as the pair trades above the 20-day and the 50-day Simple Moving Averages (SMAs).”

“On the upside, the first resistance level is located at 1.1830 (July 1 high) before EUR/USD could test 1.1900 (static level, round level) and 1.2000 (round level). Looking south, 1.1680-1.1660 (20-day SMA, 50-day SMA) aligns as a support region before 1.1540 (100-day SMA)."

• After nine months of waiting, the Fed has finally delivered markets a much-desired interest rate cut.
• The Dollar Index hit a 43-month low after the Fed trimmed rates by 25 basis points, with eyes on more rate moves.
• Fed Chair Powell warns that future rate cuts aren't guaranteed, sending the US Dollar back up.

The Federal Reserve (Fed) announced a gentle quarter-point interest rate cut, something many market watchers had anticipated. This marks the Fed's first rate cut in nine months, and now investors are eager to see how many more rate cuts might happen through the end of the year.

The Fed's Summary of Economic Projections (SEP) also indicated that Fed policymakers foresee more rate adjustments in the near future. The dot plot suggests that most policymakers anticipate interest rates will reach about 3.5-3.75% by the end of the year, with the possibility of two more rate cuts through December.

The US Dollar Index (DXY) has hit its lowest valuations in almost four years post-Fed, with the US Dollar (USD) basket tumbling into the 96.30 region for the first time since February of 2022. However, a cautionary appearance from Fed Chair Jerome Powell bolstered the US Dollar back into the high end after he reminded markets that Fed rate cuts aren't on a predetermined path, and can only continue if the economic data supports it.

Read more Powell comments: No widespread support for 50 bps cut

DXY 5-minute chart

• After months of betting on "the next meeting", markets finally nailed down the Fed's first rate cut in nine months.
• The Fed's SEP implies Fed policymakers have agreed with rate markets that two additional cuts will be required by the end of the year.

The Federal Reserve (Fed) delivered a quarter-point interest rate cut, in line with market expectations. With the Fed moving to make its first rate cut since last December, investors are immediately pivoting to focus on how many rate cuts the Fed is expected to deliver through the remainder of 2025.

The Federal Reserve's Summary of Economic Projections (SEP) also indicates that Federal Reserve policymakers anticipate additional interest rate adjustments in the foreseeable future. According to the dot plot, most policymakers foresee interest rates stabilizing at approximately 3.5-3.75% by the end of the year, suggesting the potential for two further rate reductions through December.

The Dow Jones touched chart territory north of 46,250 for the first time ever following the Fed's rate announcement and SEP adjustment. However, Fed Chair Jerome Powell cautioned during his post-rate call press conference that the Fed is still tracking data from one release to the next, warning that the SEP is not a "preset course". US equities gave up the day's bullish gains and backslid back below 46,000 on reaction.

Fed Chair Powell noted that despite the appearance of odds of another 50 bps in rate cuts before the end of the year, the support for two more cuts isn't widespread throughout the Fed, limiting the potential dovishness of the Fed.

Read more Powell comments: No widespread support for 50 bps cut

Dow Jones 5-minute chart

• US Treasury yields eased following the Fed's decision to deliver its first rate cut in nine months.
• The 10-year Treasury yield briefly dipped below 4.0% as investors pile into risk-on bets that lower rates will fix everything.
• Yields whiplashed back into the high side after Fed Chair Powell warned that the SEP isn't a preset course.

US Treasury yields eased after the Federal Reserve (Fed) delivered its first interest rate cut since December of last year, prompting a broad-market dog-pile into risk assets, lowering Treasury yields as investors bank on lower interest rates supporting the US economy, specifically the lagging labor sector.

The Fed's Summary of Economic Projections (SEP) showed the majority of Fed policymakers expect to make two more rate cuts through the remainder of the year, falling in-line with rate market forecasts. However, Fed Chair Jerome Powell cautioned during his post-rate call press conference that the Fed is still tracking data from one release to the next, warning that the SEP is not a "preset course".

Fed Chair Powell noted that despite the appearance of odds of another 50 bps in rate cuts before the end of the year, the support for two more cuts isn't widespread throughout the Fed, limiting the potential dovishness of the Fed.

Read more Powell comments: No widespread support for 50 bps cut

US 10-year Treasury yields, via CNBC

The Federal Open Market Committee’s (FOMC) latest dot plot indicates that interest rates will average 3.6% by the end of 2025, below the June projection of 3.9%.

If this forecast comes true, the Federal Reserve (Fed) could implement two additional 25 basis point (bps) rate cuts or a single 50 bps cut in 2025, after trimming the interest rate by 25 bps on Wednesday.

In 2026, rates are projected to drop to 3.4% from the previous 3.6% and to 3.1% in 2027, below the 3.4% projected in the June dot plot. The longer-term forecast remains at 3%.

The Fed also revised its economic projections. US Gross Domestic Product (GDP) is now projected at 1.6% this year, up from the previous forecast of 1.4%. For 2026, the economy is expected to grow by 1.8%, above the 1.6% estimated in June.

The unemployment rate is expected to keep at 4.5% by the end of 2025, matching the previously estimated figure. For 2026, unemployment is likely to fall to 4.4%, below the June projection of 4.5%.

Finally, the Personal Consumption Expenditures (PCE) Price Index is estimated to rise 3% by the end of the year, matching the last forecast. In 2026, PCE inflation is expected to ease to 2.6%, slightly higher than the 2.4% projected in June. By 2027, the PCE index is expected to reach 2.1%.