Forex News

• The Euro remains sideways at around 1.1640 against the US Dollar ahead of the ECB’s interest rate announcement.
• The ECB is widely expected to tighten its monetary policy.
• Investors also await the US PPI data for August.

The Euro (EUR) trades in a tight range at around 1.1640 against the US Dollar (USD) during the European trading session on Thursday. The major currency pair consolidates as investors await the European Central Bank’s (ECB) monetary policy decision, which will be announced at 12:15 GMT.

In the policy meeting, the ECB is widely anticipated to hike its Deposit Facility Rate by 25 basis points (bps) to 2.5%. Firm ECB interest rate hike expectations underscore the monetary policy statement and President Christine Lagarde’s press conference as key triggers for the euro’s next move.

Analysts at Danske Bank expect the ECB to deliver another modest tightening step at its upcoming meeting, noting that “in the euro area, the ECB will announce its deposit rate” and that “we expect the ECB to raise policy rates by 25bp, bringing the deposit rate to 2.50%, in line with consensus and market pricing.” They anticipate that President Lagarde will “retain full optionality over the future rate path and provide no firm guidance,” stressing that they “do not expect Lagarde to rock the boat materially, but keeping all options open, which should limit the market reaction in our view.”

On the US Dollar front, investors await the United States (US) Producer Price Index (PPI) data for August, which will be published at 12:30 GMT. The US headline PPI is expected to come in higher at 5.3% Year-on-Year (YoY) from 4.7% in July. The core PPI – which excludes volatile food and energy items – rose by 4.6% YoY, stronger than the previous reading of 4.2%.

EUR/USD Technical Analysis

In the daily chart, EUR/USD trades at 1.1637. The pair maintains a near-term bullish bias as price holds above the 20-day exponential moving average (EMA) at 1.1609, suggesting underlying demand remains intact. The Relative Strength Index (RSI) around 58 keeps a positive tilt without yet signaling overbought conditions, hinting that buyers still have some room to extend the advance while the short-term trend stays constructive.

On the downside, initial support is provided by the 20-day EMA at 1.1609, and a daily close below this level would ease the current bullish pressure and open the door to a deeper corrective pullback. As long as EUR/USD defends this moving average on closing bases, the broader technical structure favors further consolidation with an upside bias, with any dips likely to attract fresh buying interest rather than signaling a decisive trend reversal.

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

ING’s Frantisek Taborsky expects the Central Bank of the Republic of Türkiye (CBRT) to keep its policy rate at 37% for now, after normalising liquidity and lowering the effective funding rate. Weaker 2Q Gross Domestic Product (GDP) and gradual disinflation should allow two 100bp cuts to 35% in Q4, with markets already pricing a dovish path into year-end. ING sees continued disinflation driving further repricing and maintains forecasts of USD/TRY at 52 by year-end and 63 by end‑2027.

CBRT on hold before gradual cuts

"We expect the CBRT to keep rates unchanged at 37% today. It is too early to resume easing after the bank restarted weekly repo auctions and brought the effective funding rate down from 40% to the policy rate."

"Still, weaker-than-expected 2Q GDP and a continued gradual decline in inflation should allow two 100bp cuts to 35% in Q4."

"As liquidity conditions have normalised, market pricing has turned more dovish and moved closer to our year-end forecast. The CBRT rate is now priced at 34.50% by year-end."

"However, markets remain sceptical about the scope for easing next year, pricing only around 100bp of cuts. Continued disinflation could drive further dovish repricing in this part of the curve."

"The FX outlook is broadly unchanged. Long TRY positioning has already returned to pre-US-Iran conflict levels, despite the CBRT’s dovish August stance and the prospect of renewed easing. At the same time, the continued recovery in central bank FX reserves should support investor demand for the TRY carry trade. We forecast USD/TRY at 52 by year-end and 63 by the end of next year."

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

• AUD/JPY depreciates as escalating Middle East conflicts and tanker attacks have weighed heavily on global risk sentiment.
• Hawkish warnings from RBA officials keep expectations alive for another interest rate hike this month.
• Deutsche Bank highlighted that BoJ's Kazuyuki Masu struck a hawkish tone, stating the central bank will keep raising rates.

AUD/JPY extends its losing streak for the fourth consecutive day, trading around 110.70 during European hours on Thursday. The currency cross depreciates as the Australian Dollar (AUD) faces challenges amid escalating Middle East tensions that have weighed heavily on global risk sentiment.

However, recent developments show that Iran and the United States (US) struck tankers in the biggest wave of attacks on shipping since the war began, threatening to worsen the disruption of energy supplies from the Gulf. This pushed oil prices higher, intensifying inflationary pressures that have already started feeding into Australia’s consumer prices.

Consequently, expectations have grown regarding a fourth Reserve Bank of Australia (RBA) interest rate hike this year, a factor that could limit the AUD’s downside. Market participants are becoming increasingly confident in this trajectory, following warnings of upside inflation risks from Deputy Governor Andrew Hauser during an ABC interview on Tuesday.

Reinforcing this outlook, RBA Assistant Governor Sarah Hunter stated on Tuesday that the central bank may need to raise interest rates again if inflation proves more persistent than expected, keeping alive the prospect of another hike at its upcoming September meeting.

Global bond yields push toward multi-year highs

Deutsche Bank highlights that the recent back-up in global rates is not confined to Japan, noting that “Australia’s 10yr yield (+6.6bps) … is up to a post-2011 high of 5.27%, whilst Japan’s 10yr yield (+5.4bps) is up to 2.93%.” The bank points out that these moves underscore how both Australian and Japanese long-end yields are now trading near multi-year peaks as markets continue to reprice the path of policy normalisation.

BoJ’s Masu underlines steady path of policy normalisation

Deutsche Bank highlights that Bank of Japan board member Kazuyuki Masu struck a resolutely hawkish tone overnight, indicating that the central bank would “continue to raise the policy interest rate” as it advances its normalisation agenda. They note that Masu framed the policy objective in terms of price stability, stressing that “what is most vital from now on is to ensure that the underlying inflation rate does not significantly exceed 2%.”

• EUR/JPY gains some positive traction on Thursday, though the upside potential seems limited.
• An aggressive repricing of a more hawkish BoJ continues to underpin the JPY, capping the cross.
• Traders now look forward to the crucial ECB rate decision before placing fresh directional bets.

The EUR/JPY cross struggles to capitalize on its modest intraday gains and trades around the 178.75 region during the first half of the European session on Thursday. Meanwhile, spot prices remain within striking distance of the year-to-date low, touched on Tuesday, as traders keenly await the European Central Bank (ECB) rate decision.

A 25-basis-point (bps) ECB rate hike for the second time this year is all but certain, suggesting that the key focus will be on the central bank's outlook for its longer-term policy path amid persistent inflationary pressures. In fact, the official flash estimate showed that Eurozone annual inflation rose to 3.3% in August, up from 2.9% in the previous month. Furthermore, investors remain worried about inflation risks stemming from higher energy prices, bolstered by escalating tensions in the Middle East.

Hence, ECB President Christine Lagarde's comments during the post-meeting press conference will play a key role in influencing the Euro and provide some meaningful impetus to the EUR/JPY cross. Heading into the key central bank event risk, the bearish sentiment surrounding the US Dollar (USD) is seen lending some support to the Euro. The Japanese Yen (JPY), on the other hand, pauses for a breather following a hawkish Bank of Japan (BoJ) inspired rally and lends additional support to the EUR/JPY cross.

Traders have fully priced in a 25 bps BoJ rate hike at its upcoming meeting on September 17–18 and are assigning a high chance of a follow-up move in December. The bets were lifted after BoJ's prominent hawkish members – Hajime Takata and Naoki Tamura – recently pushed for faster and more nimble rate hikes to counter rising inflation. Moreover, BoJ's Kazuyuki Masu said earlier today that underlying inflation is approaching 2% and the policy rate is still below our estimated range for a neutral rate.

Adding to this, a combination of revised economic growth and strong wage gains bolstered the central bank’s normalization path. This might hold back traders from placing aggressive bearish bets around the JPY and keep a lid on the EUR/JPY cross, suggesting that any further up move could get sold into. Hence, it will be prudent to wait for strong follow-through buying before confirming that spot prices have formed a near-term bottom around the 177.85 region and positioning for any meaningful recovery.

UOB’s Quek Ser Leang and Lee Sue Ann keep a range-trading view on USD/CHF around 0.8100, after the pair held between 0.8065 and 0.8109 and closed near 0.8099. They now expect a slightly narrower 0.8060–0.8135 band to contain moves in the coming weeks. On a 1–3 month horizon, they see scope for further rebound but doubt a retest of the July peak at 0.8206.

Swiss Franc pair seen confined in band

"24-HOUR VIEW: Following Tuesday’s price action, we highlighted yesterday that “there has been no shift in either downward or upward momentum, and the current price movements are likely part of a range-trading phase between 0.8075 and 0.8115.” USD then traded within a lower range of 0.8065/0.8109 before closing little changed at 0.8099 (+0.06%). We are unable to derive much from the price action. Today, USD could trade between 0.8075 and 0.8115."

"1-3 WEEKS VIEW: In our most recent narrative from Monday (07 Sep, spot at 0.8100), we highlighted that, for the time being, we expect USD to trade in a range between 0.8055 and 0.8155. We continue to expect range-trading, but a narrower range of 0.8060/0.8135 is likely enough to contain the price movements in USD for now."

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

Commerzbank’s Michael Pfister notes that markets fully price today’s ECB rate hike and see around 85 basis points of additional tightening by mid-2027, heavily driven by Oil dynamics. He argues this leaves little room for the ECB to meet expectations, making a clearly hawkish surprise necessary for Euro strength, while any disappointment could weigh on EUR/USD.

High expectations constrain euro upside

"There is little doubt that the ECB will announce its second interest rate rise of the year today. This outcome is priced in at 100%, and almost all of the economists surveyed by Bloomberg (including ours) are expecting it. The actual interest rate decision is thus likely to be of virtually no significance for the euro."

"The recent rise in oil prices has led to expectations of more than two further interest rate rises by the middle of next year (with a total increase of 85 basis points priced in), with an additional 25 basis points being priced in over the last week alone. As we have often pointed out, expectations of ECB interest rate rises depend heavily on the oil price. But these high expectations are making it increasingly unlikely that the ECB will be able to meet them."

"Even if the ECB and its president, Christine Lagarde, were intent on delivering so many interest rate rises (which would already be ambitious), officials would certainly not want to commit to this today. Instead, they are likely to wait and see how the situation in the Middle East develops and what further price pressures lie ahead. In short, achieving a positive outcome for the euro is likely to be very difficult."

"The risks are thus rather asymmetrically distributed today: for a stronger euro, the ECB would have to adopt a very hawkish stance, whereas for a weaker euro, it would only need to disappoint the market's advanced expectations."

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

Here is what you need to know on Thursday, September 10:

Following Wednesday's choppy action, the activity in financial markets remains subdued early Thursday ahead of the European Central Bank's (ECB) monetary policy announcements and July Producer Price ındex (PPI) data from the United States (US).

The US Dollar (USD) stabilized in the American session on Wednesday after spending the first half of the day under modest bearish pressure. Following the US Treasury Department's announcement that they will buy up to $6 billion in 10- to 20-year Treasury bonds during its buyback operation on Thursday, the 10-yield US T-bond yield climbed to its highest level since November 2023 and supported the USD.

In the European morning on Thursday, the USD Index moves sideways at around 98.70. On a yearly basis, the PPI is forecast to rise 5.3% in August, following the 4.7% increase recorded in July. Meanwhile, US stock index futures trade mixed after Wall Street's main indexes closed in negative territory on Wednesday.

US 30-year Bond yield climbs despite expanded Treasury buybacks

Strategists at DBS highlight that the US 30Y yield “rose 4.3 bps to 5.29% despite US Treasury Secretary Scott Bessent’s announcement to triple bond buybacks to USD6 bn per operation, above the August 18 pledge of at least USD4 billion in the current quarter.” They argue that while “buybacks can support market liquidity,” their capacity to reassure investors on the broader macro backdrop is constrained, noting that “their ability to offset persistent concerns about inflation and the fiscal outlook is more limited.”

The ECB is widely forecast to raise key rates by 25 basis points (bps) after the September policy meeting. The ECB will also release revised macroeconomic projections and ECB President Christine Lagarde will deliver the policy statement and respond to questions at a press conference starting at 12:45 GMT. After closing marginally higher on Wednesday, EUR/USD fluctuates in a narrow channel below 1.1650 in the early European session.

Markets lean toward a more hawkish ECB path as Eurozone projections edge higher

Analysts at Deutsche Bank highlight that “investors also priced in a more hawkish path for the ECB, with an additional +9.0bps of hikes priced in by the June 2027 meeting, meaning that 86bps of further hikes are now priced by then.” For today’s decision, they note that the Governing Council is “widely expected to deliver a 25bp rate hike today, taking their deposit rate up to 2.5%.”

Looking beyond the near term, Deutsche Bank’s European economists think "that there’ll be small upward revisions to the GDP projections for 2026 and 2027, along with higher headline inflation for 2027 and 2028.” Even so, the bank expects the communication stance to remain cautious, with the ECB unlikely to offer strong signals on the future path of policy and instead to “repeat the ‘data dependent, meeting by meeting, no precommitment’ mantra.”

Gold (XAU/USD) managed to snap a three-day losing streak on Wednesday but retreated from daily highs following the US Treasury's announcement. XAU/USD holds steady above $4,400 in the European morning on Thursday.

GBP/USD stays in a consolidation phase at around 1.3550 after posting small gains on Wednesday.

USD/JPY recovered in the American session on Wednesday but still lost about 0.3% on the day. The pair moves sideways at around 153.50 in the European session.

• Dow Jones futures advance as a Reuters poll showed most economists expect steady Fed rates.
• Markets await vital Producer and Consumer Price Index releases to gauge future Federal Reserve monetary policy.
• Stronger economic indicators have fueled speculation, with CME FedWatch Tool pricing in significant odds for a rate increase.

Dow Jones futures advance by 0.36% to trade above 52,600 during European hours on Thursday. Meanwhile, S&P 500 futures gain by 0.22% to trade above 7,650, while Nasdaq 100 futures inch lower by 0.04% to trade near 29,430.

US stock futures post mixed results with positive sentiment following a recent Reuters poll, which indicated that most economists expect the Federal Reserve (Fed) to hold interest rates steady through the rest of the year. While recent economic data has remained strong, market participants are closely monitoring upcoming US Producer Price Index and Consumer Price Index reports to gain vital hints on future monetary policy ahead of next week's Fed meeting.

Thursday’s headline PPI inflation is expected to accelerate to 5.3% month-over-month in August, up from 4.7% in July, while core producer inflation is projected to increase to 4.6% from 4.2%.

Traders will quickly shift their focus toward Friday’s Consumer Price Index data, as these crucial inflation reports could provide further hints regarding the Federal Reserve's monetary policy outlook ahead of its meeting next week.

Following recent stronger US jobs data, traders have increased their bets on an interest rate hike, with the CME FedWatch Tool pricing in over 60% odds for a rate increase at the central bank's upcoming policy meeting.

Fed debate lingers as FOMC heads into blackout

Analysts at DBS note that, heading into the blackout period, "Fed officials were divided over whether to raise rates at next week’s FOMC meeting," underscoring the lack of consensus on the immediate policy path even as markets reassess the likelihood of further tightening.

• NZD/USD picks up to 0.5850 but maintains its near-term bearish trend intact.
• High Oil prices and rising global bonds are keeping risk appetite subdued.
• The US Dollar remains on its back foot, which is keeping the NZD from depreciating further.

The New Zealand Dollar (NZD) nudges higher against a depressed US Dollar (USD) on Thursday, but keeps its near-term bearish trend intact as high Oil prices and surging global yields keep market sentiment subdued. The NZD/USD pair trades near session highs above 0.5850 at the time of writing, but remains within Wednesday’s range with key support in the 0.5800 area eyed. 

Investors are wary of risk on Thursday, with Brent Oil prices a few cents below the $100 level after the US and Iran traded attacks on tankers earlier this week, in the strongest escalation of hostilities in months. Brent prices at these levels add pressure on New Zealand’s Oil-importing economy, and are likely to keep Kiwi Dollar rallies limited.

The US Dollar, on the other hand, is struggling amid a mix of factors, namely investors’ disappointment about the US Treasury’s bond buyback program, which is expected to start on Monday. This has eroded the traditional US Dollar’s safe-haven status and is keeping the NZD from dropping further.

Technical Analysis: A bearish H&S is in progress

NZD/USD is struggling to return above the 200-day simple moving average (SMA) at 0.5855, keeping a bearish near-term tone with price action nearing the neckline of a bearish Head & Shoulders formation, between 0.5820 and 0.5800. Momentum indicators in the daily chart remain within bearish territory, with the Relative Strength Index (RSI) around 44, and the Moving Average Convergence Divergence (MACD) below zero.

Bulls should break the mentioned 200-day SMA to shift the focus towards the September 4 high in the area of 0.5900, ahead of the late August highs near 0.6000.

On the downside, a clear break below the September 2 low at 0.5802 would activate an H&S pattern with the next support areas at 0.5765 and 0.5740, and the figure's measured target just below the year-to-date lows, at 0.5626.

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