Forex News
- Gold price edges lower to around $4,285 in Wednesday’s early Asian session.
- The US 10-year Treasury yield hits its highest level since 2007.
- Fed is expected to raise the interest rate at its September meeting on Wednesday.
Gold price (XAU/USD) declines to near $4,285 during the early Asian session on Wednesday. The precious metal remains under selling pressure amid elevated US Treasury yields as surging crude oil prices fueled inflation worries and bolstered expectations that the US Federal Reserve (Fed) would raise interest rates later on Wednesday.
The benchmark 10-year US Treasury yield note rose to its highest since 2007, reaching 5.041%. The yield later came off its high, last up more than 3 basis points (bps) to 5.00%. Higher Treasury yields raise the opportunity cost of holding non-yielding bullion, weighing on Gold price.
Additionally, oil prices moved higher after Saudi Arabia shuttered a key pipeline that bypasses the Strait of Hormuz. “Higher energy prices cause more inflation. More inflation could cause higher interest rates. That’s not good for gold ... gold is in kind of a range-bound area. It could actually sell off more if rates continue to move higher,” said Daniel Pavilonis, senior market strategist at StoneX.
Traders await the Fed interest rate decision on Wednesday. Financial markets expect that the US central bank will raise the benchmark overnight interest rate by 25 bps to the 3.75%-4.00% range and signal further tightening ahead.
Markets are now pricing in nearly 92.4% odds that the Fed will raise interest rates by a quarter of a percentage point at its September policy meeting on Wednesday, according to the CME FedWatch tool. Higher interest rates typically weigh on gold because the precious metal does not pay interest, making yield-bearing assets relatively more attractive.
US yields hover near 5% as Commerzbank warns on tighter conditions
Analysts at Commerzbank highlight that the recent move in longer-dated US rates saw the "US 10Y briefly rose above 5% before closing 2bp higher at 4.99%." The bank cautions that "sustained yields above this level would further tighten financial conditions," underscoring the risk that persistently elevated borrowing costs could exert additional pressure on the broader market environment.
Technical Analysis: Gold remains capped below the 100-day SMA
In the daily chart, XAU/USD holds below the 100-day simple moving average (SMA) and the Bollinger middle band, keeping the near-term tone bearish as price remains capped by these overhead trend and volatility references. The Relative Strength Index (14) at about 44 leans slightly to the downside, suggesting lingering downside pressure rather than an imminent bullish reversal.
On the topside, initial resistance appears at the 100-day SMA around $4,330, with the Bollinger middle band near $4,455 acting as a subsequent barrier, while the upper Bollinger band up by $4,685 defines a more distant cap if a stronger rebound develops. On the downside, the latest Bollinger lower band at approximately $4,225 offers the first notable support, and a clear break beneath this volatility floor would reinforce the prevailing bearish bias and open the door to deeper losses.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
- AUD/USD softens as risk aversion keeps Dollar demand firm.
- Fed hike pricing leaves Aussie vulnerable before Wednesday’s decision.
- Bullock speech could reshape RBA expectations after FOMC.
The Aussie Dollar loses 0.11% against the Greenback on Tuesday as risk appetite remains negative amid calls from AI company CEOs to slow development, while the FOMC monetary policy meeting looms. Expectations for a Fed rate hike undermine the AUD/USD, which trades at 0.7130.
AUD/USD slips as US-Iran conflict boosts the US Dollar
Major US equity indices finished the session in the red, while the US Dollar posted gains for the second straight day, according to the US Dollar Index (DXY). The DXY, which measures the performance of the Greenback against six currencies, is up 0.15% at 99.61.
Geopolitical developments pushed energy prices higher, as Saudi Arabia notified EU Oil refiner companies of shipment delays, following attacks from the Houthis that damaged the East-West crude pipeline.
US economic schedule light, ahead of FOMC
Data-wise, the US economic docket featured the ADP Employment Change 4-week average, which surpassed the previous week's revised figures. Later, the New York Fed Empire State Manufacturing Index dropped 13 pts to 7.6, due to a fall in new orders and shipments.
In the meantime, most G8 FX currency pairs pegged with the US Dollar are expected to trade subdued as investors await the Fed’s decision. Money markets had almost fully priced in a 25-basis-point rate hike, while investors eyed the update to the Summary of Economic Projections (SEP), the “dot-plot,” and Fed Chair Kevin Warsh's press conference.
In Australia, the docket remains empty, but most traders will be glued to the screen, digesting the Fed’s decision. After the FOMC, Aussie traders will digest a speech by the Reserve Bank of Australia (RBA) Governor Michelle Bullock on September 17.
AUD/USD Price Forecast: Technical Outlook
In the daily chart, AUD/USD trades at 0.7130. The pair holds above the cluster of simple moving averages (SMA) around 0.7074 and within a broader sequence of upward-sloping trend-line supports, which together suggest a still constructive underlying tone despite the recent pullback. Momentum has cooled, with the 14-day Relative Strength Index slipping toward the neutral 50 line, hinting that upside pressure is moderating rather than collapsing.
On the topside, initial resistance is seen at the horizontal barrier near 0.7198, where a clear break would reopen the way toward the recent highs along the broader descending trend structure. On the downside, immediate support is now implied by the 0.7130 area itself, with stronger technical demand expected around the SMA cluster near 0.7074, where it coincides with multiple rising trend-line supports that would need to give way to signal a deeper corrective phase.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Australian Dollar FAQs
One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD.
The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive.
China is Australia’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs.
Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD.
The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.
- EUR/USD edges lower to close near 1.1540, down 0.1%, its fourth loss in four sessions
- The ECB's move to 2.50% takes effect on Wednesday, the day the Fed votes at 18:00 GMT
- Eurozone ZEW sentiment fell to 25.8 against a 39.9 forecast, with banking the one sector up
EUR/USD closed Tuesday near 1.1540, down 0.1%. It fell on the day the European Central Bank (ECB) raised its deposit rate to 2.50% and in each of the three sessions since. That increase takes legal effect on Wednesday, the same day the Fed is expected to raise its own rate for the first time since July 2023. Wednesday's Asian and London hours are the last before it does, and the Euro arrives with its own central bank's second hike of the year already in hand. It has not helped.
Two hikes from Frankfurt, none yet from Washington, and a lower Euro
A currency pair prices the gap between what two central banks are expected to pay. The ECB has raised its deposit rate twice since June, to 2.50%, and the Fed's range still tops out at 3.75%. Wednesday takes that ceiling to 4.00%, which widens the gap to a point and a half on the day the ECB's quarter-point becomes official. Futures then have the Fed at 4.25% or higher by March and, more likely than not, at 4.50% or higher by June, while investors see the ECB's next move in December at the earliest.
Both banks are raising rates for the same reason, a barrel of Crude Oil above $100.00 after Saudi Arabia shut its pipeline around the Strait of Hormuz, and the two economies sit on opposite sides of it. The United States is a net exporter of petroleum and the Euro area imports nearly all of its Crude Oil. The same price that lets the Fed raise rates into a growing economy makes the ECB raise them into an import bill. The Dollar Index sits just under 100.
The ECB President called last Thursday's decision an easy one, the vote was unanimous, and the Council's own forecasts have inflation at 3.0% this year and 2.5% next, with growth upgraded to 0.9% this year and 1.4% next. EUR/USD traded near 1.1600 on June 11, the day the ECB's first hike landed. It closed at 1.1538 on Tuesday, and the Fed has yet to raise anything.
Higher rates lifted one sector in the survey, and it was the banks
The Centre for European Economic Research (ZEW) survey of Eurozone investor sentiment fell to 25.8 in September against a forecast of 39.9 and 31.4 in August, and the German reading came in at 34.7 against 42.5. Current conditions improved, to -13.9 from -21.5 for the Eurozone and to -47.1 from -61.1 for Germany, so the economy looks better than it did and the outlook worse. The survey's authors blame energy prices tied to the war and what they call hybrid attacks. Germany's 10-year yield has traded at its highest since 2011 since the ECB decision, which is the bond market pricing the hikes that the survey says the economy is not ready for.
The one sector the survey found improving was banking, up 8.2 points to 52.9, which is the sector that collects the rate everyone else pays. Cars sat at -22.6 and steel at -16.7. A survey like that is the constraint on the ECB delivering the December hike investors expect, which puts the Euro's rate path, not the Dollar's, at risk of being trimmed.
Frankfurt gets the hour before Washington
Eurozone industrial production for July lands at 09:00 GMT on Wednesday, forecast down 0.2% after a flat June, and two Governing Council members speak at 12:15 GMT and 13:00 GMT. The ECB President speaks at 17:00 GMT, one hour before the Fed decides. The Council said on Thursday that it will not commit to a path in advance, and its President said it did not discuss what comes next. It has had six days.
The Fed's decision comes at 18:00 GMT, with the quarter-point priced at 92.5%, a second hike by December and a third by March. The press conference follows at 18:30 GMT, after American retail sales at 12:30 GMT, forecast up 0.8%. On Thursday the ECB's chief economist speaks at 07:00 GMT, final August inflation lands at 09:00 GMT with the core rate forecast steady at 2.4%, and the Bank of England decides at 11:00 GMT. Eurozone finance ministers meet on Friday.
Levels and bias
Resistance: Monday's high just under 1.1600 is the first hurdle. The 50-day and 200-day Exponential Moving Averages (EMA) sit just above 1.1550, within 11 pips of each other, and Tuesday's close beneath both was the first since the mid-August breakout. The September highs just under 1.1650 sit behind them.
Support: Tuesday's low sits 27 pips above 1.1500, and 1.1500 itself is the mid-August base, the last place the pair found buyers before the August rally. The late-July low near 1.1450 is the next level beneath it.
Bias: Bearish while the moving averages just above 1.1550 cap, with 1.1500 the first objective and 1.1450 the second. The daily Stochastic Relative Strength Index (Stoch RSI), a momentum gauge, reads near 16, beneath the 20 line where the late-July selling stopped. A daily close back above 1.1600 voids the case.
EUR/USD daily chart
Euro FAQs
The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
- GBP/JPY recovers as RSI climbs away from oversold territory.
- Break above 209.58 could reopen the path toward 210.00.
- Bulls need 213.22 reclaimed to challenge broader bearish trend.
The GBP/JPY edges higher by about 0.29% on Tuesday, even as risk appetite has shifted to the sour side due to geopolitical developments that are driving global bond yields higher amid inflation fears. At the time of writing, the cross-pair trades at 209.02 after bouncing off daily lows of 208.25.
GBP/JPY Price Forecast: Technical Outlook
Price action in the daily chart shows that the cross is trending lower, following two interventions in the FX markets. This sent GBP/JPY tumbling from around yearly highs near 220.00 to current spot prices, for a loss of over 1,300 pips.
The Relative Strength Index (RSI) remains bearish, though momentum tilted modestly upwards after the index crossed from below 30 to nearly 34. Hence, in the short term, GBP/JPY could aim higher, challenging key resistance levels.
If GBP/JPY crosses the August 3 daily low of 209.58, it opens the door to test 210.00. Even though that is positive for bulls, to change the trend, they must surpass the 200-day Simple Moving Average (SMA) at 213.22, paving the way towards the 215.00 mark.
GBP/JPY Price Chart – Daily
Japanese Yen Price Today
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.06% | 0.16% | 0.50% | 0.14% | 0.12% | 0.30% | 0.16% | |
| EUR | -0.06% | 0.11% | 0.43% | 0.08% | 0.06% | 0.26% | 0.11% | |
| GBP | -0.16% | -0.11% | 0.29% | -0.05% | -0.05% | 0.13% | -0.01% | |
| JPY | -0.50% | -0.43% | -0.29% | -0.34% | -0.35% | -0.16% | -0.31% | |
| CAD | -0.14% | -0.08% | 0.05% | 0.34% | -0.01% | 0.18% | 0.02% | |
| AUD | -0.12% | -0.06% | 0.05% | 0.35% | 0.01% | 0.19% | 0.03% | |
| NZD | -0.30% | -0.26% | -0.13% | 0.16% | -0.18% | -0.19% | -0.14% | |
| CHF | -0.16% | -0.11% | 0.00% | 0.31% | -0.02% | -0.03% | 0.14% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).
- GBP/USD drifts lower to close near 1.3470, down 0.2%, ahead of the Fed's first hike since 2023
- UK CPI lands at 06:00 GMT on Wednesday, forecast at 3.1% from 2.9%
- Futures price four Bank of England hikes by mid-2027 and a 15% chance the first comes Thursday
GBP/USD closed Tuesday near 1.3470, down 0.2%. Wednesday's Asian and London hours are the last before the Fed is expected to raise its rate for the first time since July 2023. By the New York close its ceiling should sit a quarter-point above Bank Rate. The Bank of England votes on Thursday on whether to keep up, and is expected to let it.
Four hikes priced on each side, and only one side has a date
A currency pair prices the gap between what two central banks are expected to pay, not the level either sits at. Bank Rate is 3.75%, the Fed's range tops out at 3.75%, and Wednesday takes the American ceiling to 4.00%. Futures then have the Fed at 4.25% or higher by March and, more likely than not, at 4.50% or higher by June. Britain's rate futures, according to Trading Economics, fully price four Bank of England hikes by the middle of next year, which is the same number. Of the three big central banks, the European Central Bank (ECB) has raised its rate twice since June, the Fed raises on Wednesday, and the Bank of England has not moved in 2026.
The difference is the calendar. The Fed's first hike is Wednesday. The Bank of England has held at 3.75% at five straight meetings. The July vote was 6-3, with three members wanting a quarter-point, a desk expects the same three and the same split on Thursday, and futures give the meeting about a 15% chance of a move. The market has four Bank of England hikes by next summer and gives Thursday a 15% chance of being the first. Wednesday widens the gap a quarter-point in the Dollar's favour, and Thursday is expected to leave it there.
Inflation reaches the Bank's forecast peak a quarter early
UK consumer prices land at 06:00 GMT on Wednesday, twelve hours before the Fed. The forecast is 3.1% for the year to August, from 2.9% in July, with the core rate steady at 2.6% and the retail price index at 3.5%. July's rise came from the household energy price cap. The Bank of England's own August projection had inflation peaking near 3.2% in the fourth quarter, so Wednesday's forecast is the peak arriving a quarter early, and the release is the one scheduled item that can lift the Pound before the Fed does the opposite.
Tuesday's labour data went the other way. The claimant count rose 27.8K in August against a forecast of 8.3K and a fall of 11.8K in July, payrolled employees fell 26K on the month and 145K on the year, and unemployment held at 4.9% against a forecast of 5.0%. Regular pay is rising 3.5%, which splits into 2.9% in the private sector and 6.3% in the public sector. The committee sets one rate for both. A hot inflation number over a soft jobs number is the argument the committee already has, and it is the Pound's one route higher on Wednesday morning.
Gilts pay the most since 2007, and Sterling is not collecting
The 10-year gilt yield traded near 5.4% last week, its highest since 2007, and GBP/USD closed Tuesday at the bottom of its 30-day range. Yields help a currency when the central bank is the one raising them, because the extra return is a policy. When the market raises them on its own, the extra return is the price of holding the debt, and the currency does not collect it. Goldman Sachs argues the gilt market's move toward pricing hikes may have gone too far. The Governor said last week that another hike was not inevitable. The market has four of them.
The Fed decides at 18:00 GMT on Wednesday, with the quarter-point priced at 92.5% and the press conference at 18:30 GMT, after August retail sales at 12:30 GMT, forecast up 0.8%. The Bank of England follows at 11:00 GMT on Thursday, with Bank Rate forecast to stay at 3.75% and the vote forecast at six to hold, three to hike and none to cut. British retail sales at 06:00 GMT on Friday are forecast down 0.2% for August after a 0.5% fall.
Levels and bias
Resistance: The 1.3500 area is the first hurdle, where Tuesday's high and the 50-day Exponential Moving Average (EMA) sit together, and Tuesday's close beneath that average was the first since early August. The 1.3550 area capped every session from September 3 to September 10 and is the one that matters. The late-August highs near 1.3600 sit behind it.
Support: Tuesday's low just above 1.3450 is the first floor, and it is where the pair turned on September 2. The 200-day EMA and the early-August base share the 1.3400 area, and the late-July low near 1.3300 is the next level below.
Bias: Bearish while the 1.3500 area caps, with the 1.3400 area the first objective and 1.3300 the second. The daily Stochastic Relative Strength Index (Stoch RSI), a momentum gauge, reads near 16, beneath the 20 line where the early-August selling stopped. A daily close back above 1.3550 voids the case.
GBP/USD daily chart
Pound Sterling FAQs
The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, also known as ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).
The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.
Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.
Another significant data release for the Pound Sterling is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought-after exports, its currency will benefit purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
- USD/MXN rebounds from 17.10 as US Dollar demand strengthens.
- Hot PPI and strong jobs cement the case for Fed tightening.
- Banxico’s 6.50% rate keeps Peso carry support intact.
The Mexican Peso (MXN) loses some ground against the US Dollar (USD) on Tuesday, with USD/MXN rising by over 0.09% amid a sour market mood and a stronger Greenback, ahead of the FOMC monetary policy decision on Wednesday. The exotic pair trades at 17.15, after hitting a daily low of 17.10.
USD/MXN gains momentum as markets nearly lock in September Fed hike
The latest inflation report on the producer and consumer front in the United States pushed investors to price in a Federal Reserve (Fed) rate hike on Wednesday. Even though most of the data was in line with forecasts, the jump in headline PPI to 5.4% may have driven the market's move.
This, alongside a strong August Nonfarm Payrolls report and Fed Chair Kevin Warsh putting inflation at the forefront and confirming that the labor market is “consistent with full employment,” cemented the case for moving the Fed funds rate to 3.75%-4%.
In addition, the escalation of the Middle East conflict, which pushed energy prices higher and Oil above the $100 milestone, could be among the reasons the Fed is considering a pre-emptive rate hike.
Earlier, the US ADP Employment Change 4-week average continued to improve, exceeding the previous week's upwardly revised print of 16.25K, up from 12.25K, indicating labor market strength.
In Mexico, the Bank of Mexico (Banxico) has kept interest rates at 6.50% since May 2026, in a meeting in which the central bank announced that the easing cycle was practically over. Although Banxico acknowledged that the risks of inflation are tilted to the upside, last week’s 12-month inflation print was below estimates of 3.3%, coming in at 3.26%, but near the central bank’s 3% plus or minus 1% objective.
Ahead, Mexico’s economic docket will feature Retail Sales on September 22, followed by inflation readings for the first half of September on September 23, before Banxico’s meeting.
USD/MXN Price Forecast: Technical Outlook
In the daily chart, USD/MXN trades at 17.1498. The pair remains below the latest simple moving average from the 50/100/200-day triple set at roughly 17.18, keeping the near-term bias capped despite the recent bounce from sub-17.00 levels. The Relative Strength Index (14) has recovered toward 60, hinting at improving momentum, but with price still trading under the main moving average and within the context of broader descending resistance lines, rallies look vulnerable to selling pressure.
On the topside, immediate resistance is seen at the simple moving average near 17.18, with the broader downward trend-line structure reinforcing supply higher up. On the downside, initial support is located at the horizontal level around 16.89; a break below this floor would reopen the path toward the prior cycle lows, whereas holding above it would keep the pair consolidating beneath the 17.18 cap.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Mexican Peso FAQs
The Mexican Peso (MXN) is the most traded currency among its Latin American peers. Its value is broadly determined by the performance of the Mexican economy, the country’s central bank’s policy, the amount of foreign investment in the country and even the levels of remittances sent by Mexicans who live abroad, particularly in the United States. Geopolitical trends can also move MXN: for example, the process of nearshoring – or the decision by some firms to relocate manufacturing capacity and supply chains closer to their home countries – is also seen as a catalyst for the Mexican currency as the country is considered a key manufacturing hub in the American continent. Another catalyst for MXN is Oil prices as Mexico is a key exporter of the commodity.
The main objective of Mexico’s central bank, also known as Banxico, is to maintain inflation at low and stable levels (at or close to its target of 3%, the midpoint in a tolerance band of between 2% and 4%). To this end, the bank sets an appropriate level of interest rates. When inflation is too high, Banxico will attempt to tame it by raising interest rates, making it more expensive for households and businesses to borrow money, thus cooling demand and the overall economy. Higher interest rates are generally positive for the Mexican Peso (MXN) as they lead to higher yields, making the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken MXN.
Macroeconomic data releases are key to assess the state of the economy and can have an impact on the Mexican Peso (MXN) valuation. A strong Mexican economy, based on high economic growth, low unemployment and high confidence is good for MXN. Not only does it attract more foreign investment but it may encourage the Bank of Mexico (Banxico) to increase interest rates, particularly if this strength comes together with elevated inflation. However, if economic data is weak, MXN is likely to depreciate.
As an emerging-market currency, the Mexican Peso (MXN) tends to strive during risk-on periods, or when investors perceive that broader market risks are low and thus are eager to engage with investments that carry a higher risk. Conversely, MXN tends to weaken at times of market turbulence or economic uncertainty as investors tend to sell higher-risk assets and flee to the more-stable safe havens.
(This story was corrected on September 15 at 21:41 GMT to say “The exotic pair trades at 17.15, after hitting a daily low of 17.10” not a yearly low of 17.10.)
- NZD/USD has extended its decline toward the bottom of its recent range, pressured by a broadly stronger US Dollar.
- Higher US yields and Wednesday's expected Fed rate hike are driving the move.
- New Zealand Q2 GDP, due late Wednesday and seen slowing sharply, is the next risk factor for the kiwi.
NZD/USD trades close to the 0.5760s, extending a run of losses that has dragged it toward the lower end of its recent range. A broadly firmer US Dollar (USD) is behind the slide, with the greenback supported by climbing United States (US) yields and rate-hike expectations.
Markets are expecting the Federal Reserve (Fed) to raise rates on Wednesday, with investors leaning toward a 25 basis points (bps) hike to 3.75%-4.00%, and the risk-off tone has weighed on growth-sensitive currencies like the New Zealand Dollar (NZD). On another note, the 10-year US Treasury yield has climbed to its highest level since 2007, topping 5%, as a more than 3% jump in oil revived inflation worries.
New Zealand's Q2 Gross Domestic Product is due late on Wednesday, with growth expected to slow sharply to 0.1% on the quarter from 0.8%.
Short-term technical analysis:
On the 4-hour chart, NZD/USD trades at 0.5757. The pair remains under clear downside pressure as it trades below both the 20-period and 100-period Simple Moving Averages (SMAs), which now cap the upside around 0.5787 and 0.5877 respectively. The Relative Strength Index (RSI) hovers near 30, hinting at stretched but persistent bearish momentum rather than a confirmed reversal.
On the topside, initial resistance is seen at the 20-period SMA near 0.5787, followed by the 100-period SMA at 0.5877. Above there, horizontal barriers emerge at 0.5907, 0.5930 and 0.5965, forming a dense supply zone that would need to be reclaimed to ease the broader bearish tone. No nearby structural supports are defined by the current indicator set, leaving the pair vulnerable to further declines unless buyers step in to establish a new floor below the market.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Quek Ser Leang at UOB notes USD/CNH remains directionless, trading narrowly around 6.71 with little change in momentum. Intraday, the pair is expected to hold between 6.7060 and 6.7160. On a 1–3 week horizon, UOB still sees potential for the Dollar to edge higher, but any advance should stay contained within a broader 6.7040–6.7290 range.
Chinese Yuan holds tight trading band
"24-HOUR VIEW: USD traded within a 6.7060/6.7146 range last Friday and closed little changed at 6.7093 (-0.09%). Yesterday, we indicated that “there has been no shift in either downward or upward momentum,” and we expected USD “to trade in a range of 6.7040/6.7120.” USD then traded between 6.7045 and 6.7143, closing unchanged at 6.7096. The price action provides no fresh clues. Today, USD could trade between 6.7060 and 6.7160."
"1-3 WEEKS VIEW: Last Friday (11 Sep, spot at 6.7140), we highlighted “the increasing upward momentum suggests USD could edge higher, but currently, any advance should stay within a 6.7040/6.7290 range.” Although upward momentum has slowed somewhat since then, we continue to hold the same view for now."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
Forex Market News
Our dedicated focus on forex news and insights empowers you to capitalise on investment opportunities in the dynamic FX market. The forex landscape is ever-evolving, characterised by continuous exchange rate fluctuations shaped by vast influential factors. From economic data releases to geopolitical developments, these events can sway market sentiment and drive substantial movements in currency valuations.
At Rakuten Securities Hong Kong, we prioritise delivering timely and accurate forex news updates sourced from reputable platforms like FXStreet. This ensures you stay informed about crucial market developments, enabling informed decision-making and proactive strategy adjustments. Whether you’re monitoring forex forecasts, analysing trading perspectives, or seeking to capitalise on emerging trends, our comprehensive approach equips you with the insights needed to navigate the FX market effectively.
Stay ahead with our comprehensive forex news coverage, designed to keep you informed and prepared to seize profitable opportunities in the dynamic world of forex trading.
