Forex News
- US futures indices gain despite markets anticipating a 25-basis-point Fed rate hike on Wednesday.
- Tuesday's US session closed lower as surging oil prices and rising Treasury yields pressured technology stocks.
- Investors weighed AI safety concerns, though Nvidia's CEO argued against new federal artificial intelligence regulations.
Dow Jones futures gain by 0.14% to trade near 52,190 during European hours on Wednesday. Meanwhile, S&P 500 futures rise by 0.21% to trade around 7,600, while Nasdaq 100 futures advance by 0.42% to trade near 29,080.
US stock futures show modest gains ahead of the Federal Reserve’s (Fed) upcoming interest rate decision later in the day. However, trading caution remains likely as financial markets heavily anticipate a 25 basis point rate hike at September’s policy meeting. Such a move would raise the benchmark overnight rate to a range between 3.75% and 4.00%.
According to the CME FedWatch tool, market participants are pricing in nearly a 92.5% probability of this quarter-point increase, along with expectations that the central bank will signal further rate hikes in the near future.
This cautious momentum follows a downbeat Tuesday session on Wall Street, where the Dow Jones dropped 0.3%, the S&P 500 fell 0.45%, and the Nasdaq Composite led losses with a 0.78% decline. Equities came under broad pressure due to surging crude oil prices and rising Treasury yields. The sell-off hit credit-sensitive sectors particularly hard, with high-growth AI hyperscalers bearing the brunt of the market strain as borrowing costs climbed.
Traders continued to grapple with escalating safety concerns surrounding artificial intelligence development. Despite these regulatory anxieties, Nvidia CEO Jensen Huang pushed back, arguing that additional AI security regulations are unnecessary. He noted that market forces naturally incentivize technology companies to innovate safely without official government intervention.
Fed takes centre stage as markets stabilise ahead of expected hike
Analysts at Deutsche Bank observe that, after recent volatility, "markets have begun to stabilise a bit overnight," but caution that the Fed is now "set to take centre stage." They note that investors are currently "pricing in a 94% chance this morning that they deliver their first rate hike today since 2023," underscoring how firmly a move is anticipated going into the decision.
US yields briefly top fresh cycle highs as bond pressure persists
Strategists at Deutsche Bank highlight that the persistent selling pressure in longer-dated paper "kept up the pressure on bonds," with the 10-year Treasury yield rising "1.5bps" and "breaking above its 2023 intraday peak in trading, to briefly reach a post-2007 high of 5.04%, before falling back to 5.00% by the close." They note that this latest move underscores how quickly yields have reset higher as markets continue to adjust to a higher-for-longer Fed policy backdrop.
Dow Jones FAQs
The Dow Jones Industrial Average, one of the oldest stock market indices in the world, is compiled of the 30 most traded stocks in the US. The index is price-weighted rather than weighted by capitalization. It is calculated by summing the prices of the constituent stocks and dividing them by a factor, currently 0.152. The index was founded by Charles Dow, who also founded the Wall Street Journal. In later years it has been criticized for not being broadly representative enough because it only tracks 30 conglomerates, unlike broader indices such as the S&P 500.
Many different factors drive the Dow Jones Industrial Average (DJIA). The aggregate performance of the component companies revealed in quarterly company earnings reports is the main one. US and global macroeconomic data also contributes as it impacts on investor sentiment. The level of interest rates, set by the Federal Reserve (Fed), also influences the DJIA as it affects the cost of credit, on which many corporations are heavily reliant. Therefore, inflation can be a major driver as well as other metrics which impact the Fed decisions.
Dow Theory is a method for identifying the primary trend of the stock market developed by Charles Dow. A key step is to compare the direction of the Dow Jones Industrial Average (DJIA) and the Dow Jones Transportation Average (DJTA) and only follow trends where both are moving in the same direction. Volume is a confirmatory criteria. The theory uses elements of peak and trough analysis. Dow’s theory posits three trend phases: accumulation, when smart money starts buying or selling; public participation, when the wider public joins in; and distribution, when the smart money exits.
There are a number of ways to trade the DJIA. One is to use ETFs which allow investors to trade the DJIA as a single security, rather than having to buy shares in all 30 constituent companies. A leading example is the SPDR Dow Jones Industrial Average ETF (DIA). DJIA futures contracts enable traders to speculate on the future value of the index and Options provide the right, but not the obligation, to buy or sell the index at a predetermined price in the future. Mutual funds enable investors to buy a share of a diversified portfolio of DJIA stocks thus providing exposure to the overall index.
- NZD/USD recovers slightly from over a two-month low, touched earlier this Wednesday.
- A modest USD profit-taking ahead of the Fed decision offers some support to the pair.
- The bearish technical setup warrants some caution before positioning for further gains.
The NZD/USD pair bounces off an over two-month low, around the 0.5735 area touched earlier this Wednesday, though it lacks any follow-through buying. Spot prices currently trade just above mid-0.5700s, nearly unchanged for the day, as traders keenly await the highly anticipated FOMC policy decision, due later today.
Heading into the key central bank event, the US Dollar (USD) pulls back after retesting the two-week high as bulls opt to take some profits off the table, which acts as a tailwind for the NZD/USD pair. Meanwhile, oil-driven inflation risks underpin prospects for further Fed tightening and remain supportive of elevated US bond yields. This, along with escalating tensions in the Middle East, acts as a tailwind for the safe-haven greenback and caps the currency pair.
From a technical perspective, the NZD/USD pair maintains a bearish near-term tone below the 200-day Simple Moving Average (SMA) at 0.5855 and a dense Fibonacci retracement band clustered between 0.5765 and 0.5850. Moreover, the Moving Average Convergence Divergence (MACD) histogram remains negative and slightly stretched to the downside. However, the Relative Strength Index (RSI) is edging towards oversold conditions and hovering near 32.
Nevertheless, momentum indicators together hint that downside momentum persists, suggesting that the attempted recovery is more likely to be sold into and remain capped. Meanwhile, immediate resistance emerges at the 61.8% Fibo. retracement around 0.5765, followed by the 50.0% level at 0.5807. Further up, the 38.2% retracement at 0.5850 and the 200-day SMA at 0.5855 form a broader cap ahead of the 23.6% retracement at 0.5903.
On the downside, initial support is seen at the 78.6% Fibo. retracement near 0.5704, with a deeper floor coming in at the recent swing low around 0.5627, where sellers could be inclined to book profits if the decline extends.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
NZD/USD daily chart
Fed FAQs
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.
- Silver price surges to near $64.80, reflecting strength ahead of Fed’s monetary policy outcome.
- The Fed is expected to deliver at least two interest rate hikes this year.
- Investors keenly await Fed’s monetary policy statement and Chairman Warsh’s press conference.
Silver price (XAG/USD) is up 1.8% to near $64.80 during the European trading session on Wednesday. The white metal trades firmly ahead of the Federal Reserve’s (Fed) monetary policy announcement at 18:00 GMT.
The CME FedWatch tool shows traders are increasingly confident that the Fed will hike interest rates by 25 basis points (bps) to 3.75%-4.00%. Firm Fed’s interest rate hike expectations are backed by sticky United States (US) Consumer Price Index (CPI) report for August released last week.
Therefore, the market reaction would hinge upon the monetary policy statement and commentary from Fed Chair Kevin Warsh at the press conference regarding inflation and the economic outlook. Warsh is unlikely to provide so-called forward-guidance on interest rates, as he clarified in its first meeting that it isn’t appropriate under current circumstances.
The CME tool also shows an almost 79% chance that the Fed will deliver at least two interest rate hikes by the year-end.
The scenario of interest rate hikes by the Fed bodes well for US Treasury Yields, which diminishes the appeal of non-yielding assets, such as Silver.
At press time, 10-year US Treasury Yields are marginally lower at around 5%, but are close to their 19-year high at around 5.04% posted on Tuesday.
Silver Technical Analysis
In the daily chart, XAG/USD trades at $64.80, maintaining a mildly bearish near-term bias as it holds below the 20-day Exponential Moving Average (EMA) at $65.12. The metal has recently slipped back under this short-term average after failing to sustain gains above a downward resistance trend line, while the Relative Strength Index (RSI) around 49 hints at fading momentum and a lack of decisive buying pressure.
On the topside, the 20-day EMA at $65.12 forms initial resistance; a daily close above this level would be needed to ease the current downside pressure and reopen the path toward the broken descending trend line. On the downside, price action remains guided by an underlying upward support trend line stemming from the low near $62, with a clear break below that rising structure likely to expose deeper losses toward the lower $60 area.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
UOB’s Quek Ser Leang and Lee Sue Ann see USD/CHF consolidating just below major resistance at 0.8205 after trading between 0.8164 and 0.8198. They flag potential for a brief move above 0.8205, though a sustained break is uncertain, and maintain that a firm hold above this level is needed to target 0.8245, with strong support near 0.8145.
Dollar capped near key resistance
"24-HOUR VIEW: Yesterday, we expected USD to “consolidate between 0.8150 and 0.8195.” USD subsequently traded within a range of 0.8164/0.8198. While the price action did not result in any clear increase in upward momentum, USD could rise above the major resistance at 0.8205. However, based on the current momentum, it may not be able to maintain a foothold above this level. The next resistance at 0.8245 is also unlikely to come into view. Support is at 0.8175, followed by 0.8160."
"1-3 WEEKS VIEW: Yesterday (15 Sep, spot at 0.8175), we highlighted that USD “must break and hold above 0.8205 before a move to 0.8245 can be expected.” There is no change in our view. On the downside, should USD break below 0.8145 (‘strong support’ level was at 0.8130 yesterday), it would mean that the upside pressure from late last week has run its course."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- USD/CAD may test the immediate barrier at the top trendline of the ascending channel around 1.3970.
- The 14-day Relative Strength Index around 56 signals steady buying momentum.
- The immediate support lies at the 50-day EMA of 1.3915.
USD/CAD continues its winning streak for the sixth consecutive day, trading around 1.3930 during European hours on Wednesday. The technical analysis of the daily chart indicates that the price is positioned slightly below the top trendline of an ascending channel, suggesting an ongoing bullish bias.
The USD/CAD pair is holding a modest bullish bias as price sits above both the nine-period and 50-period Exponential Moving Averages (EMAs). The alignment of these EMAs below spot suggests a constructive underlying tone, while the 14-day Relative Strength Index (RSI) around 56 hints at steady, non-extreme upside momentum, reinforcing the view that recent gains remain supported rather than overstretched.
The USD/CAD pair is targeting the immediate barrier at the top trendline of the ascending channel around 1.3970. A successful break above the channel would reinforce the bullish bias and support the pair to explore the region around the 17-month high of 1.4248, which was recorded on June 24, 2026.
On the downside, the immediate support lies at the 50-day EMA of 1.3915, followed by the nine-day EMA of 1.3876. Further support lies at the lower trendline of the ascending channel around 1.3790. A break below the channel would cause a bearish reversal and put downward pressure on the USD/CAD pair to navigate the region around 1.3481, the lowest level since October 2024.
However, strategists at Scotiabank note that the Canadian Dollar continues to draw some backing from commodity and rate dynamics, with “firmer crude oil prices…providing a little cover for the CAD, as are steady front-end US-Canada yield spreads.” However, they caution that this support may prove insufficient in the face of broader Greenback strength, warning that “the CAD will struggle to resist the broader trend in the USD into and around the FOMC decision regardless.”
(The technical analysis of this story was written with the help of an AI tool. Know more.)
ING strategists Francesco Pesole and Frantisek Taborsky note that markets fully expect the Federal Reserve to raise rates by 25bp to 4.0%, with a surprise hold seen as materially negative for the Dollar. They argue the FOMC is likely aware of Treasury risks and will keep a hawkish tone, with Chair Kevin Warsh’s openness to further tightening supporting the Dollar and discouraging large USD shorts.
Fed hike and guidance in focus
"Markets are fully expecting a 25bp hike to 4.0% today, and a surprise hold or strong dovish dissent could have a materially negative impact on the dollar. But that’s a small risk, as the FOMC is likely mindful of any adverse Treasury-market implications. Openness to further hikes by Warsh can leave the dollar broadly supported."
"We expect the Fed to raise rates by a consensus 25bp to 4.0% today. Markets are pricing in 23bp for today, 52bp by year-end, and 89bp by June. A surprise hold would likely deliver a big blow to the dollar: both through the dovish repricing in front-end rates and a likely selloff in the back end."
"That, in our view, also argues for a hawkish message. A dovish hike may not be enough to convey the monetary policy discipline bond investors currently demand, particularly given the amount of tightening already priced into swaps. Recent bond market headlines may even have helped bring some FOMC members behind a hike, reducing the likelihood of visible dissent, at least for now."
"If anything, the new economic projections pose some risk of dovish disappointment. Inflation may be revised slightly lower, while our economists expect the median dot plot at 4.0% in both 2026 and 2027, well below market pricing. Even so, we think Chair Kevin Warsh’s press conference will be the key driver of the market reaction."
"Incidentally, the external picture argues against building sizeable USD shorts at this stage. Brent is aiming for $110/bbl, as Iran-Gulf negotiations are delayed again, and softness in tech stocks is weighing on overall sentiment. These conditions suggest markets are more likely to fade a negative dollar reaction to the Fed today, unless triggered by a significant dovish surprise, rather than a positive one."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
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