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Deutsche Bank highlights a broad-based rebound in global equities following a drop in Oil prices and supportive US data. The S&P 500 and NASDAQ led gains in US stocks, while the STOXX 600 advanced in Europe and major Asian indices, including the Nikkei and KOSPI, moved higher. Semiconductor shares were a key driver of performance across regions.

Global stocks rebound as energy eases

"So that kept up the optimism around US growth, and the S&P 500 (+1.14%) bounced back after a run of 3 consecutive declines. Chip stocks led the gains, with the Philly semiconductor index (+3.14%) posting one of the biggest outperformances yesterday, but there was strength across the tech space, with the NASDAQ up +1.69%."

"Elsewhere in Europe, the picture was also one of solid gains, as the respite on energy prices lifted assets across the continent. So that meant equities rebounded, with the STOXX 600 (+0.86%) posting its best daily performance in over two months."

"The Nikkei (+1.67%) has moved higher on the back of the weaker Yen but Asia is stronger anyway following on from the global rally yesterday. The KOSPI (+2.59%) is leading regional gains, with semiconductor stocks extending yesterday’s rally."

"Meanwhile, mainland Chinese equities are posting solid advances, with the CSI 300 (+1.05%) and Shanghai Composite (+1.04%) both sharply higher, while the Hang Seng (+0.67%) is recording more modest gains. Elsewhere, the S&P/ASX 200 (-0.02%) is little changed and S&P 500 and Nasdaq futures are both +0.14% higher."

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

• NZD/USD loses ground as the US Dollar recovers daily losses following hawkish remarks from Fed Chair Kevin Warsh.
• Fed Chair Warsh stressed that prolonged high inflation and unimpressive summer data warrant a tighter monetary policy stance.
• New Zealand's August trade deficit narrowed to NZD 1.35 billion, down from July's NZD 2.12 billion but above forecast estimates.

NZD/USD depreciates after posting gains the previous day, trading around 0.5720 during the early European hours on Friday. The pair loses ground as the US Dollar (USD) recovers its daily losses due to hawkish comments from Federal Reserve Chair Kevin Warsh.

Fed Chair Warsh highlighted that inflation remains uncomfortably high and pointed out that recent economic data over the summer failed to reflect meaningful structural progress. In response to his statements, interest rate expectations adjusted quickly; the CME FedWatch tool indicates that market participants are now pricing in a 53.1% probability of a rate hike at the October Fed meeting, up from 44% a day earlier.

Dollar momentum cools as oil steadies and markets eye Trump’s Gulf talks

Strategists at ING note that “moderating oil prices have taken the edge off the Dollar’s post-FOMC momentum,” with energy markets appearing to draw some support from political developments. ING points out that energy markets “may be gaining some optimism that Tuesday’s reported meeting between US President Donald Trump and the Gulf States during the UN General Assembly could yield some clarity about plans for the region.” The bank adds that media speculation “also points to Trump nearing a major decision on whether to escalate military operations or pursue an end to the conflict,” a binary outcome that could prove pivotal for regional risk sentiment and, by extension, near-term Dollar dynamics.

However, the New Zealand Dollar may gain tailwinds as investors price in a 60% chance that the Reserve Bank of New Zealand will lift its official cash rate to 3.0% at its upcoming October policy review.

On the economic data front, New Zealand's monthly trade balance posted a deficit of NZD 1.35 billion in August. While this represents a narrow improvement over July's NZD 2.12 billion gap, it missed expectations of a smaller NZD 1.275 billion shortfall. August exports climbed 15.4% year-on-year to reach NZD 6.66 billion, improving on July's downwardly revised 10.8% expansion. Simultaneously, imports increased 13.1% annually to NZD 8.0 billion, moderating from a sharp 28.4% jump in the prior month.

Commerzbank’s Volkmar Baur notes that EUR/USD stabilized after the Federal Reserve’s hawkish surprise, with markets now fully pricing another Fed rate hike in December and no cuts until late next year. The bank has adjusted its forecast, expecting EUR/USD to hold near 1.15 through year-end before gradually rising, targeting 1.18 by end-2027 as US policy and politics weigh on the Dollar.

Fed path keeps Dollar supported

"Following Wednesday’s hawkish surprise, EUR-USD stabilized somewhat yesterday. The market hence reacted positively to the Fed meeting also at second glance. Despite higher policy rates and slightly increased interest rate expectations for the Fed over the next 12 months, long-term interest rates tended to fall yesterday."

"Following the interest rate decision, our economists have adjusted their expectations regarding the Fed and now also anticipate another rate hike in December, with the first rate cuts not expected until the fourth quarter of next year. Such a scenario would be in line with market expectations, just as our expectation of another key interest rate hike by the ECB (also in December) is already fully priced into the market."

"As a result, we have also adjusted our forecast and now expect the EUR/USD exchange rate to remain virtually unchanged at 1.15 through the end of the year."

"Although two further rate hikes by the ECB are also priced in for next year, as soon as it becomes clear next year that the Fed’s next move is likely to be a cut, the US dollar should come under slight pressure again against the euro."

"In addition, the US dollar is likely to continue suffering from the US government’s erratic policies next year, which justifies a slight risk premium. We therefore see the EUR/USD exchange rate at 1.18 by the end of 2027."

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

ING’s Frantisek Taborsky reports that the Bank of Japan delivered a 25bp hike to 1.25% in a split decision, acknowledging persistent inflation risks but with notable dissent. The Yen weakened after the dovish statement, and ING continues to see upside risks for USD/JPY, with a move towards 157–160 possible in coming weeks if elevated Oil prices persist and the Federal Reserve hikes again.

Dovish BoJ and Fed support Dollar

"The Bank of Japan has raised its key rate by 25bp to 1.25% in a split vote, with Toichiro Asada and Ayano Sato dissenting. Japan’s core inflation measure remained above 2% throughout 2025, and the BoJ expects inflation to stay above target in the coming years. The decision therefore acknowledges persistent upside inflation risks."

"However, Friday’s data showed inflation easing slightly in August, partly because of subsidy-related distortions. The two dissenting board members, appointed by Prime Minister Sanae Takaichi, argued that without a renewed pick-up in inflation, a rate hike at this meeting was unnecessary. Their dissent could make it harder for the board to reach consensus on another hike this year."

"The yen weakened to 157.11 against the dollar, around one yen above its pre-decision level, as the statement offered little additional hawkish guidance to support bullish JPY positions. The dissent from Asada and Sato points to resistance against the fastest pace of rate increases in more than three decades and suggests they may increasingly act as a brake on further tightening."

"Today’s dovish surprise also underscores the high bar set by the Fed this week. We continue to see upside risks for USD/JPY, with a move back towards 157-160 possible in the coming weeks if oil prices remain elevated and the Fed hikes again as early as October."

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

• USD/JPY maintains a strong bid tone in the wake of the BoJ’s dovish rate hike on Friday.
• BoJ Governor Ueda’s readiness to raise interest rates further fails to impress JPY bulls.
• The Fed’s hawkish outlook revives USD demand, providing an additional boost to the pair.

The USD/JPY pair trims a part of strong intraday gains to a two-week high, though it holds comfortably above mid-156.00s during the post-meeting Bank of Japan (BoJ) press conference.

The immediate market reaction to a surprisingly dovish decision seems to be fading after Governor Kazuo Ueda reiterated that the central bank will keep raising rates in response to the economy and prices. However, the BoJ's rate hike earlier today was accompanied by two dissenters, who argued for patience in pushing up borrowing costs.

Yen under pressure as BoJ hike exposes board divisions on inflation path

Analysts at ING note that the Bank of Japan has raised its key rate “by 25bp to 1.25% in a split vote, with Toichiro Asada and Ayano Sato dissenting.” They highlight that Japan’s core inflation measure “remained above 2% throughout 2025,” and that the BoJ “expects inflation to stay above target in the coming years,” meaning the latest move “acknowledges persistent upside inflation risks.”

However, ING also underscores the policy tensions on the board. The two dissenting members, “appointed by Prime Minister Sanae Takaichi,” argued that “without a renewed pick-up in inflation, a rate hike at this meeting was unnecessary.” ING cautions that this stance “could make it harder for the board to reach consensus on another hike this year,” reinforcing the sense that, despite the rate increase, the BoJ’s path toward further tightening remains contested.

Adding to this, data released earlier today showed that Japan's National Consumer Price Index (CPI) held steady in August and core inflation remained below the BoJ’s 2% annual target. This, in turn, tempered expectations of a more aggressive tightening, which continues to undermine the Japanese Yen (JPY) and support the USD/JPY pair.

Meanwhile, the US Dollar (USD) attracts some dip-buyers following the previous day's modest pullback from the highest level since late July in the wake of the Federal Reserve's (Fed) hawkish outlook. In fact, the US central bank raised interest rates for the first time in over three years on Wednesday and projected one more rate increase by this year.

Moreover, inflation risks stemming from persistently higher energy prices underpin prospects for further Fed tightening. This, along with escalating tensions in the Middle East, keeps the geopolitical risk premium in play and turns out to be another factor underpinning the safe-haven Greenback, which further contributes to the USD/JPY pair's bid tone.

USD/JPY 4-hour chart

Technical Analysis

The USD/JPY keeps a bullish near-term bias following an intraday breakout above the 156.60 confluence – comprising the 100-period Simple Moving Average (SMA) and the 50.0% Fibonacci retracement. Further up, resistance is seen at the 61.8% Fibo. at 157.48, followed by the 78.6% level at 158.74, ahead of the cycle high at 160.35.

On the downside, immediate support is located at the 50.0% retracement at 156.60, closely backed by the 100-period SMA at 156.42; a deeper pullback would expose the 38.2% retracement at 155.71, then the 23.6% level at 154.62, before the structural Fibonacci anchor near 152.85.

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

• USD/CAD gains ground to near 1.3995 in Friday’s early European session. 
• The pair retains a positive outlook above the 100-day SMA, with bullish RSI momentum. 
• The initial support level is seen at 1.3945; the first upside barrier emerges at 1.4080. 

The USD/CAD pair trades in positive territory around 1.3995 during the early European trading hours on Friday. The US Dollar (USD) extends its rally against the Canadian Dollar (CAD) on a hawkish tone from the US Federal Reserve (Fed). Traders will take more cues from Fed Governor Michelle Bowman’s speech later on Friday. 

The US central bank raised the interest rates by a quarter-percentage point at its September meeting on Wednesday and flagged more hikes in the coming months. Fed Chair Kevin Warsh joined a unanimous decision to lift interest rates, while officials validated a hawkish path and projected one more increase later this year. Hawkish stance from the Fed could provide some support to the Greenback against the CAD in the near term. 

Meanwhile, ongoing tensions in the Middle East could boost crude oil prices and lift the commodity-linked Loonie. It is worth noting that Canada is a major oil-exporting country, and high crude oil prices generally have a positive impact on the CAD. 

Iran's Islamic Revolutionary Guard Corps (IRGC) said on Thursday that a Togo-flagged oil ‌tanker was struck ‌while attempting to make an “illegal passage” through the Strait of ‌Hormuz, Arab news reported. US President Donald Trump stated on Thursday that he was approaching a major decision on whether to resume large-scale attacks on Iran, as Washington weighs how to bring the months-long war to an end, according to Axios.

CAD underperforms as Fed–BoC gap widens and USD/CAD holds near 1.40

Strategists at Scotiabank note that the “CAD slide following the FOMC Wednesday has steadied in overnight trade,” but stress that the currency “has failed to improve, unlike most of its major currency peers, leaving it a clear underperformer on the session.” They point out that “with the Fed/BoC policy rate differential back to 175bps, where it spent much of last year, wider front-end spreads account for the CAD’s softness and underperformance.”

Scotiabank adds that its fair value framework shows “an equilibrium exchange rate of 1.3894, indicating that there is a degree of USD overvaluation in current spot rates but, with little prospect of that gap narrowing anytime soon, the CAD may find it hard to recover meaningfully for now.”

Technical Analysis: USD/CAD maintains a constructive outlook in the near term

In the daily chart, USD/CAD holds a bullish near-term bias as spot remains above the 100-day simple moving average (SMA) and is well supported by the Bollinger Bands (20) midline. Price is pressing against the upper Bollinger band, indicating a strong topside extension, while the Relative Strength Index (14) around 61 suggests firm but not yet overbought momentum that could allow the pair to probe higher while dips stay contained.

On the downside, the immediate support level is located at the 100-day SMA at 1.3945, with deeper demand seen at the Bollinger mid-band near 1.3872. The next contention level is seen at the lower band around 1.3750. As long as USD/CAD holds above the 100-day SMA, the technical tone favors further upside. 

On the bright side, the August 5 high of 1.4080 acts as an immediate resistance level for the pair. Any follow-through buying above this level could pave the way to the July 7 high of 1.4226, en route to the June 24 high of 1.4248. 

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

Bank of Japan (BoJ) Governor Kazuo Ueda is addressing the press conference, explaining the reason behind raising the key interest rate by 25 basis points (bps) to 1.25% from 1.00% at the September meeting. 

BoJ press conference key highlights

Japan's economy recovering moderately albeit with some weakness.

Japan's economy likely continue growing moderately.

Must pay attention to impact of Middle East situation, AI-related demand expansion and FX on Japan's economic activity, prices.

Japan's financial conditions have been accommodative.

There is risk of underlying inflation overshooting 2% price target given firms' wage, price setting behavior becoming more aggressive, mid- and long-term inflation expectations rising.

To keep raising rate in response to economy, prices.

Middle East situation continues to be uncertain.

Stage for policy conduct has changed.

Short-term objective has changed significantly.

No comment about short-term market moves.  

We want to see whether trend inflation stays at 2% after reaching it around end of FY2026 into FY2027.

Rate hikes have gradually tightened financial conditions.

Not mulling board member change next year for policy.

BoJ flags risk of inflation overshoot, keeps door open for further Yen-supportive hikes

FXS Speechtracker shows the BoJ press conference score at 8.2, exactly in line with the speaker’s historic average, signaling a consistent tone but with a clear hawkish tilt versus earlier “transitory” narratives. The emphasis on Japan’s economy “recovering moderately” and the risk of underlying inflation overshooting the 2% target, amid more aggressive wage and price setting and rising inflation expectations, reinforces a bias toward continued rate hikes that should be supportive for the Yen.

The BoJ highlighted that the “stage for policy conduct has changed” and that the short-term objective has “changed significantly,” underscoring a shift away from ultra-accommodative settings even as financial conditions remain broadly easy. By stressing the intention “to keep raising rate in response to economy, prices” while watching Middle East risks, AI-related demand, and FX effects, the remark confirms a cautious but ongoing normalization path that markets can interpret as mildly Yen-positive, especially if trend inflation stays near 2% into FY2026–FY2027.

The section below was published on September 18 at 2:50 GMT to cover the Bank of Japan's monetary policy announcements and the initial market reaction.

The Bank of Japan (BoJ) board members decided to raise the short-term interest rate by 25 basis points (bps) to 1.25% from 1.00%, following the conclusion of its two-day monetary policy review meeting on Friday.

The decision aligned with the market expectations.

Summary of the BoJ’s Monetary Policy Statement

BoJ makes rate policy decision by 7-2 vote.

BoJ board members Asada, Sato dissented to decision on rates.

Underlying inflation approaching 2%.

Financial conditions are accommodative.

Will continue to raise interest rates in response to economic and price developments as well as financial conditions.

Will consider timing, pace of rate hikes while examining likelihood of realising baseline scenario and risks.

Will scrutinise impact of Middle East developments, AI demand and FX on economy, prices, in setting policy.

Will conduct monetary policy as appropriate from perspective of sustainably, stably achieving inflation target.

Accommodative financial environment will be sustained after policy rate change, thereby supporting economic activity.

It is becoming important to stabilise underlying inflation around 2%.

Japan's economy recovering moderately.

Financial conditions are accommodative.

Inflation expectations are heightening moderately.

Japan's economy to continue growing moderately.

Necessary to pay attention to impact of Middle East situation on financial, forex markets, economy, prices.

Underlying inflation likely to gradually accelerate, reach level consistent with 2% target from latter half of fiscal 2026 through fiscal 2027.

Necessary to pay attention to effects of global ai-related demand, forex on Japan's economy, prices.

Must avoid underlying inflation from overshooting 2% target.

Wholesale inflation remains elevated due to impact of oil, FX, AI-demand.

Price pressures in B-to-B trade spreading to consumer prices.

Firms continue to pass on cost from rising wages.

Inflation expectations continue to heighten, underlying inflation approaching 2%.

Economy, prices moving in line with baseline projection of our outlook report.

Must be vigilant to risks, particularly Middle East developments, AI demand, FX volatility and their impact on economy, prices.

CPI has been moderately rising recently, being in the range of 1.5-2.0%.

Effects of a rise in import prices have been emerging, with moves to pass on wage increases to selling prices continuing.

Recent depreciation of the yen likely to lead to an increase in prices.

There is risk underlying inflation could overshoot 2% target.

Udged that it was necessary to adjust degree of monetary support from perspective of sustainably, stably acheiving price target.

BoJ flags inflation risks as yen weakness and ai demand fuel rate-hike bias

The 8.2/10 FXS Speechtracker score is exactly in line with the speaker’s historic average, but the emphasis on underlying inflation approaching 2% and the risk of overshooting marks a clear hawkish tilt. Repeated references to accommodative financial conditions alongside a commitment to continue raising interest rates as the economy recovers moderately signal a gradual normalization bias that supports a stronger YEN narrative.

The focus on Middle East developments, AI-related demand and recent YEN depreciation feeding into wholesale and consumer prices reinforces upside inflation risks and justifies adjusting the degree of monetary support. By stressing the need to stabilise inflation around 2% while keeping conditions accommodative, the statement underpins a controlled but persistent tightening path that is likely to be interpreted as mildly YEN-supportive over the medium term.

Market reaction to the BoJ policy announcements

The Japanese Yen (JPY) attracts some sellers following the Bank of Japan’s rate hike decision. At the press time, the USD/JPY pair is up 0.49% on the day to trade at 156.73.

This section below was published on September 17 at 22:00 GMT as a preview of the Bank of Japan Interest Rate Decision.

• The Bank of Japan is set to hike interest rates to 1.25%, the highest level in 31 years.
• Higher inflation, strong GDP data and pressure from the US administration are pushing the BoJ to step up its tightening pace.
• The US Dollar has pared some losses this week, fuelled by the Fed’s hawkish monetary policy stance.

The Bank of Japan’s (BoJ) monetary policy meeting will close a week packed with central bank decisions on Friday, with markets particularly interested in confirming expectations of a hawkish shift that has boosted a strong Japanese Yen (JPY) recovery in September.

Futures markets are practically fully pricing a quarter-point rate hike this time, which would push the BoJ’s benchmark interest rate to its highest level in about 31 years, amid higher inflation, rising wages, and pressure from US Treasury Secretary Scott Bessent.

The Japanese central bank will follow the Federal Reserve (Fed) and the European Central Bank (ECB) in tightening monetary policy as the war in the Middle East fuels global inflation. The Strait of Hormuz remains practically closed, and recent developments threaten the Red Sea alternative route, pushing Brent Oil prices above $100 and spurring serious concerns about supply disruptions.

What to expect from the BoJ interest rate decision?

Barring a highly unlikely surprise, the Bank of Japan will raise its benchmark interest rate from 1% to 1.25% on Friday, drawing monetary policy closer to levels the bank considers neutral for the Japanese economy. The decision is likely to obtain the support of the broad majority of the Policy Board, with recently appointed committee member Toichiro Asada likely to dissent, as he did at June’s meeting.

Rising inflationary pressures, among other reasons, have prompted the BoJ to accelerate its monetary tightening pace. So far, the bank has kept a semi-annual hiking pace, while September’s rate increase, if confirmed, would follow a previous one in June. Markets have speculated on a half-point rate hike, but considering the cautious approach to monetary policy of the Japanese central bank, that option seems out of the question.

Japan’s Consumer Price Index (CPI) data from July revealed that prices grew at their fastest pace in the last seven months, reaching 1.9%, just below the BoJ’s 2% target for price stability. Beyond that, wages have continued rising, which hints at stronger price pressures in the near-term, altogether heightening the risk that the central bank might fall behind the inflation curve if it sticks to the gradual tightening path seen hitherto.

Japan’s broader economic outlook remains supportive too. The Gross Domestic Product (GDP) beat expectations in the second quarter, with a 1.4% annualised growth, providing fairly favourable conditions for some monetary tightening.

Against this backdrop, investors are waiting for the bank to deliver a clear message outlining a firmer monetary policy normalisation cycle ahead. This would come after less-than-subtle pressures from the US administration, following an exceptional coordinated intervention between the US and Japan in Forex markets that halted a long-lasting Yen decline in late July.

Analysts at ING, however, warn that the market might be overestimating BoJ’s hawkishness, arguing that Japan’s “aggressive pro-growth strategy” will act as a brake on any rapid shift to tighter policy by the BoJ. They note that the government “will no doubt express its views against a more aggressive tightening cycle,” adding that it is “hard to see government officials backing a much faster tightening cycle of either a 50bp hike in September or back-to-back hikes in September and October.”

How could the Bank of Japan's monetary policy decision affect USD/JPY?

USD/JPY is showing a 2.5% decline in September so far, as a series of hawkish comments by BoJ officials has prompted traders to ramp up bets on a steeper BoJ tightening cycle. This has triggered a massive short covering in Japanese Yen, with large speculators flipping their net positioning to long JPY for the first time since February.

The US Dollar (USD) has managed to regain some ground this week. The Federal Reserve (Fed) provided a fresh boost to the Greenback on Wednesday by hiking interest rates and pointing to further tightening in coming months, but the broader near-term bias remains bearish.

The USD/JPY pair has returned above the neckline of a bearish Head & Shoulders (H&S) pattern, following a post-Fed rally, but is struggling to get past a previous support-turned-resistance at the 156.75 area, which keeps the broader bearish structure in place. Momentum indicators on the daily chart endorse the bearish view, as the Relative Strength Index (RSI) remains below the 50 level and the Moving Average Convergence Divergence (MACD) is below zero, suggesting rallies are likely to find sellers.

Bulls should confirm above the mentioned H&S neckline at 155.20 and the September 4 high at 156.76 to clear the path towards the area between the previous support zone around 158.00 and the 200-day Simple Moving Average (SMA), at 158.41.

A reversal below 155.20, on the contrary, would confirm the H&S formation, adding pressure towards the 2026 lows near 152.00. The H&S’s measured target lies around the October 2025 lows, at 146.60.

United Overseas Bank’s (UOB) Quek Ser Leang highlights that GBP/USD remains under pressure after four consecutive daily declines, though short-term momentum has not intensified. Intraday, the British Pound (GBP) is expected to range between 1.3335 and 1.3390. Over 1–3 weeks, risks stay skewed lower toward 1.3350 and possibly 1.3300, while strong resistance is now marked at 1.3435.

Pound-Dollar downside risk but constrained

"24-HOUR VIEW: Following the sharp drop in GBP to 1.3375 on Wednesday, we highlighted the following yesterday, when GBP was at 1.3385: “The sharp decline appears excessive, but there is a chance for GBP to test 1.3350 before stabilisation can be expected. We do not expect the next support at 1.3300 to come into view. On the upside, any recovery should hold below 1.3435, with minor resistance at 1.3410.” We were not wrong, as GBP initially rose to 1.3407 and then plummeted to a low of 1.3337 before closing at 1.3358 (-0.16%). Despite the decline, there has been no further increase in downward momentum, and instead of continuing to decline, GBP is more likely to range-trade between 1.3335 and 1.3390."

"1-3 WEEKS VIEW: Yesterday (17 Sep, spot at 1.3385), we highlighted that the recent “price action continues to suggest further GBP weakness, likely toward 1.3350.” We also highlighted that “a break below this level is not ruled out, but given the deeply oversold short-term conditions, it remains to be seen whether GBP has sufficient momentum to reach the next technical target at 1.3300.” GBP subsequently fell and exceeded 1.3350 with a low of 1.3337. While the risk remains on the downside, conditions remain deeply oversold, and it is unclear whether GBP has sufficient momentum to reach 1.3300. On the upside, a breach of the ‘strong resistance’ at 1.3435 (level was at 1.3460 yesterday) would indicate that the weakness in GBP is stabilising."

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

• Silver price rises further to near $66.80 as both US Treasury Yields and oil prices correct.
• Hawkish repricing of Fed’s interest rate expectations has weighed on US bond yields.
• Oil prices have corrects as Saudi Arabi confirms exploring ways to ship energy.

Silver price (XAG/USD) extends its upside on Friday, trading 2.26% higher at around 66.80 during the European session. The white metal strengthens due to correction in oil prices and United States (US) Treasury Yields.

The WTI Oil price has corrected to near $95.30 from an almost four-month high of $102.11 as Saudi Arabia confirms mulling ways to export energy. Lower oil prices ease fears of high inflation expectations, a scenario that diminishes fears of interest rate hikes from central banks, which improves the appeal of non-yielding assets, such as Silver.

Additionally, some relief from rising US Treasury Yields due to a pause in the oil rally and hawkish repricing of Federal Reserve (Fed) interest rate expectations has also strengthened the Silver price.

According to TD Securities, a combination of "already-hawkish Fed pricing, increased inflation-fighting credibility, and worries about higher rates impacting growth, should help keep 10-year yields contained."

As of writing, 10-year US Treasury Yields trade close to ongoing week’s low near 4.94% after hitting a 19-year high of 5.04% on Tuesday.

Meanwhile, a firm US Dollar due to a sharp increase in hawkish Fed bets could limit the upside in the Silver. At press time, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, is flat but close to its over six-week high of 100.37 posted this week.

Technically, a higher US Dollar makes the Silver price an unfavorable risk-reward bet for investors.

Silver Technical Analysis

In the daily chart, XAG/USD trades at $66.72, holding a bullish near-term bias as price remains above the 20-day Exponential Moving Average (EMA) at $65.15. The location of spot above this key trend metric suggests underlying demand is still in control, while the Relative Strength Index (RSI) at 54.97 stays in neutral-to-positive territory, hinting that bullish momentum is constructive but not overstretched.

On the downside, immediate support is seen at the 20-day EMA around $65.15, which reinforces the recent breakout area and would be expected to attract buyers on shallow pullbacks. On the upside, the white metal needs a decisive break above the September 9 high of $68.33 to revisit the three-month high at $71.12.

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

• British Pound advances after UK August Retail Sales beat expectations with a 0.5% monthly gain.
• High German Producer Price Index failed to offset stronger consumer spending momentum in the UK.
• German producer prices grew 4.6% YoY in August, marking five months of inflation and the fastest rise since April 2023.

EUR/GBP inches lower after three days of gains, trading around 0.8590 during the Asian hours on Friday. The currency cross is facing downward pressure as the British Pound (GBP) gains momentum following stronger-than-expected United Kingdom (UK) Retail Sales data.

According to the UK Office for National Statistics, Retail Sales expanded by 0.5% month-over-month (MoM) in August, successfully rebounding from a matching 0.5% decline in July and comfortably beating market forecasts for a 0.2% drop. On an annual basis, Retail Sales surged 2.4%, surpassing both the projected 1.9% growth rate and the prior month's downwardly revised figure of 1.2%.

Meanwhile, economic data out of Germany highlighted intensifying wholesale inflation pressures. German producer prices increased 4.6% year-on-year in August, topping the consensus estimate of 4.1% and accelerating from July's 3.0% gain. This marked the fifth consecutive month of producer price inflation and the fastest annual pace recorded since April 2023. On a monthly basis, producer prices climbed 1.1%, matching July's rate to maintain the sharpest expansion in three months while well exceeding the 0.4% increase expected by analysts.

Eurozone industry shows resilient recovery despite global headwinds

ING economists highlight that, after a weak start to the year, “eurozone industrial production grew for four months in a row despite the Middle East crisis and higher energy prices.” They argue that the rebound has been underpinned by “a boost from European industry's relative comparative advantage over Asia,” which has “helped a surprisingly resilient production recovery.” In addition, ING notes that “extra defence spending efforts are helping certain manufacturing sectors more structurally,” reinforcing the improvement in output alongside earlier signs of resilience in capital goods and energy and tentative gains in manufacturing sentiment.