Forex News

• AUD/USD continues to pull back from four-month highs achieved last week..
• Markets lean toward a quarter-point Fed rate hike to 3.75%-4.00% on Wednesday.
• The ADP Employment Change four-week average firmed to 16.25K from 12.25K, adding to the case for a hawkish Fed.

AUD/USD trades near the 0.7120s, down from the four-month highs it set near 0.7200 earlier this month. The US Dollar (USD), tracked by the US Dollar Index (DXY), holds just below the 100.00 mark and is firmer on the day as traders square positions before the main event.

That event is Wednesday's Federal Open Market Committee (FOMC) decision. The Federal Reserve (Fed) has kept its target range at 3.50%-3.75% since December 2025, leaving it unchanged in the previous five meetings. Markets are now leaning toward a 25-basis-point (bps) rise to 3.75%-4.00%, after Chair Kevin Warsh used his Jackson Hole address to warn that inflation had not meaningfully improved and a solid August jobs report followed.

Earlier in the day, the ADP Employment Change four-week average rose to 16.25K, up from 12.25K, pointing to a US jobs market that is holding its footing rather than cooling. It is a second-tier print, but the direction matters as a steadier labor market gives the Fed more room to lift rates and reinforces Chair Kevin Warsh's message that the inflation job is not yet done.

Before the decision lands, US Retail Sales for August print. The number matters for the rate call. A firm read supports the view that the US consumer is holding up and gives the Fed room to move, while a soft one muddies the hawkish case just hours before the statement.

Short-term technical analysis:

On the 4-hour chart, AUD/USD trades at 0.7128, maintaining a bearish near-term tone as it holds below both the 20-period and 100-period Simple Moving Averages (SMA) at 0.7152 and 0.7178, respectively. The pair is stabilizing just above horizontal support at 0.7119, while the Relative Strength Index (RSI) hovers near 30, hinting at stretched downside momentum but not yet signaling a confirmed reversal.

On the topside, immediate resistance emerges at 0.7129, followed by 0.7134 and 0.7141. The 20-period SMA at 0.7152 and the 100-period SMA at 0.7178 reinforce a broader supply zone overhead. On the downside, the first notable support is the horizontal level at 0.7119; a sustained break below this floor would expose further weakness in the pair’s short-term structure.

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

ING’s Warren Patterson and Ewa Manthey report that European Natural Gas prices at TTF remain well above EUR80/MWh as Middle East tensions curb hopes for increased LNG flows from the Persian Gulf. They stress that tight global LNG balances, below-average EU storage around 68%, and challenges in attracting spot cargoes leave Europe struggling to reach its 75% storage target before winter.

TTF supported by tight LNG balance

"European natural gas prices remain well supported, with TTF trading well above EUR80/MWh. Escalation in the Middle East is deflating hopes of any imminent pick-up in LNG flows from the Persian Gulf."

"This leaves the global LNG market tight and vulnerable as we edge closer towards the northern hemisphere heating season. EU gas storage is a little over 68% full, well below the seasonal 5-year average of 84%."

"Moves in the JKM-TTF spread suggest that Europe should be pulling in spot cargoes. Despite this, the region will struggle to hit its lower storage target of 75% ahead of winter."

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

• USD/CHF advances for a fifth straight day as Fed rate hike expectations support the US Dollar.
• Bullish momentum strengthens as the pair holds above the 50-day, 100-day and 200-day SMAs.
• A decisive break above 0.8200 would bring the 0.8350 resistance level into focus.

USD/CHF extends its advance for a fifth consecutive day on Tuesday as the US Dollar (USD) stays firmly bid ahead of the Federal Reserve’s (Fed) monetary policy announcement on Wednesday. At the time of writing, the pair trades around 0.8191, near levels last seen on July 29.

The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, trades around 99.60, up 0.11% on the day and close to a two-week high.

Markets are almost fully pricing in a 25-basis-point (bps) rate hike, which would be the central bank’s first increase since 2023. Elevated Oil prices linked to the war in the Middle East are adding to inflationary pressures, lifting US Treasury yields and strengthening expectations that borrowing costs will remain elevated for longer.

Against this backdrop, the Swiss Franc (CHF) remains vulnerable to additional losses. The currency was among the worst performers last quarter as Switzerland’s low-inflation environment allowed the Swiss National Bank (SNB) to keep its policy rate at 0%.

The wide interest rate differential encourages investors to use the Swiss Franc as a funding currency, driving flows toward higher-yielding currencies such as the US Dollar and keeping USD/CHF supported.

Technical analysis

On the daily chart, USD/CHF maintains a constructive bullish bias as it holds above the 50-day, 100-day and 200-day Simple Moving Averages (SMAs) clustered between roughly 0.81 and 0.79.

The Relative Strength Index (RSI) at about 64 and a positive, rising Moving Average Convergence Divergence (MACD) line both suggest firming upside momentum, though the pair is edging toward nearby resistance and could face some consolidation if gains stall.

On the topside, initial resistance is the horizontal cap at 0.8200, with a subsequent barrier at 0.8350 that would need to give way to extend the recovery.

On the downside, immediate support is provided by the 50-day SMA near 0.8101, followed by the 100-day SMA around 0.8016 and the 200-day SMA near 0.7938, while a deeper slide would look to the prior horizontal floor at 0.7800 to contain any corrective pullback.

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

Scotiabank strategists Shaun Osborne and Eric Theoret report EUR/USD is fractionally lower but stabilizing just above Monday’s one-month low in the mid/lower-1.15s. They note supportive fundamentals via steady yield spreads and hawkish European Central Bank (ECB) rhetoric, with fair value near 1.1625. Technically, 1.15 is seen as a critical support level, while resistance is identified above 1.16 around the 200-day moving average.

Fundamentals and spreads back Euro

"The EUR is down a fractional 0.1% vs. the USD but holding in just above Monday’s one month low and attempting some stabilization in the mid/lower-1.15s."

"This week’s data highlight, the ZEW investor sentiment survey, was mixed as the expectations component disappointed while the current situation series delivered an impressive surprise and a meaningful recovery."

"The near-term focus remains centered on broader themes and the market’s tone, as we look to Wednesday’s Fed and consider its impact on sentiment."

"The options market remains muted and continues to trend toward neutral settings. The EUR’s fundamentals are supportive with yield spreads holding steady as ECB policymakers remain hawkish. A narrow FV estimate based on Germany-US 2Y yield spreads alone is currently at 1.1625."

"Neutral/bearish – the EUR’s latest pullback looks to have found near-term support in the mid/lower-1.15s, around the 50 day MA at 1.1534. The RSI is bearish below the neutral threshold at 50, but only moderately so in the low 40s and well above the oversold threshold at 30."

"The 1.15 level remains critical as a break would violate the broader recovery from July. We see near-term resistance above 1.16, around the 200 day MA at 1.1633."

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

TD Securities analysts Ryan McKay and Bart Melek report that Gold remains under pressure as CTAs accelerate selling ahead of the upcoming Fed meeting, with prices nearing levels that could push funds net short. However, they argue the impact should be modest given Dollar-debasement themes, strong central bank purchases and renewed ETF inflows, framing near-term weakness as a longer-term accumulation opportunity.

Systematic selling versus structural support

"Precious metals remain weak with the Fed on deck."

"The latest round of CTA selling in gold is accelerating, with prices flirting with triggers that would see funds target a net-short heading into tomorrow's Fed meeting."

"With that said, we expect the systematic selling impact to be relatively modest with the renewed dollar-debasement theme, elevated central bank buying, and renewed ETF accumulation offering a strong support base for discretionary flows."

"Near-term weakness in the yellow metal should be increasingly viewed as a potential buying opportunity to accumulate for longer-term upside."

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

• USD/JPY extends its rebound and trades around 155.00 on Tuesday, up 0.41% on the day.
• The US Dollar strengthens as solid employment data reinforce expectations of an interest-rate hike this week.
• The Japanese Yen could retain some support from expectations of further monetary tightening in Japan.

USD/JPY extends its rebound on Tuesday and trades around 155.00 at the time of writing, up 0.41% on the day. The pair continues its recovery from levels below 153.00 reached last week, mainly supported by broad-based strength in the US Dollar (USD).

Investors are now preparing for the monetary policy decisions from the United States (US) Federal Reserve (Fed) and the Bank of Japan (BoJ), due on Wednesday and Friday, respectively. Expectations of monetary tightening on both sides of the Pacific put interest-rate differentials in focus and could fuel volatility in USD/JPY.

In the US, expectations of a Fed rate hike are strengthening following recently released robust economic data. According to the CME FedWatch tool, markets are pricing in a 92% chance of an interest-rate increase on Wednesday. A solid August employment report and the latest inflation figures have reinforced expectations that the US central bank will tighten monetary policy.

The latest private-sector employment figures provide additional support to this view. According to ADP's NER Pulse, US private employers added an average of 16.25K jobs per week over the four weeks ending August 29, up from a revised 12.25K previously. The acceleration suggests that the labor market retains some momentum and helps support the US Dollar.

In Japan, the Bank of Japan is also expected to raise interest rates by 25 basis points on Friday and could signal a faster pace of monetary policy normalization. The Japanese Yen (JPY), however, faces headwinds from rising global Oil prices, which increase import costs for Japan's energy-dependent economy. This factor currently limits the Japanese currency's ability to fully benefit from expectations of further BoJ tightening.

At the same time, several factors could continue to provide underlying support to the Japanese Yen, including expectations of more aggressive BoJ monetary tightening, the unwinding of global carry trades and signs that Japanese investors are repatriating foreign assets. These dynamics could limit further USD/JPY gains as markets await the two central banks' decisions.

Japanese Yen underperforms as markets eye BoJ guidance and key USD/JPY levels

Strategists at Scotiabank note that the Yen is soft into Tuesday’s North American session, with the currency “down 0.3% vs. the USD and underperforming all of the G10 currencies.” They highlight that a BoJ move is largely anticipated, stating that “a hike is widely expected and fully priced, with risk centered around the central bank’s tone and its guidance on the pace of future hikes with one additional hike almost fully priced before year end.”

On the technical side, Scotiabank continues to stress the importance of nearby support, remarking that “for USDJPY, we continue to highlight the importance of recent support around 153, with additional support expected closer to 152,” while “the 155 level remains an important level of anticipated resistance.” The bank adds that the “near-term focus remains centered on broader themes including the market tone and the Fed, as market participants balance their attention with domestic developments including the near-term release of trade data (7:50pm ET) and CPI (Friday) ahead of the BoJ policy decision at the end of the week.”

UOB’s Quek Ser Leang reports USD/JPY reversed earlier downside expectations, dipping to 153.29 before surging to 154.99 and closing at 154.35. The bank now sees scope for a move above 155.00, though 155.50 is likely out of reach near term. Over 1–3 weeks, USD/JPY is expected to edge higher but remain confined within a 153.30–156.30 range as downward momentum has faded.

Dollar Yen shifts from bearish to mildly bullish

"24-HOUR VIEW: While we highlighted yesterday that “the bias for USD is on the downside,” we held the view that “any decline should stay within a 153.05/154.30 range.” The subsequent price movements did not unfold as expected. USD dipped to 153.29 and then rose sharply to 154.99 before closing at 154.35 (+0.53%). Upward momentum has increased, albeit not significantly. Today, USD could rise above 155.00, but the next resistance at 155.50 is likely out of reach. On the downside, a breach of 153.90 (minor support is at 154.15) would indicate that the current upward pressure has eased."

"1-3 WEEKS VIEW: We have been holding a negative USD stance since early this month. Last Tuesday (08 Sep, spot at 153.95), we indicated that “the price action suggests USD is likely to continue to weaken, and the next support level to watch is the year-to-date low of 152.08.” After USD rebounded, in our most recent narrative from Friday (11 Sep, spot at 154.50), we highlighted that “downward momentum is slowing, and the odds of 152.08 coming into view are diminishing.” Yesterday, USD broke above our ‘strong resistance’ at 154.90 with a high of 154.99. Downward momentum has faded, and there has been a tentative buildup in upward momentum. From here, USD could edge higher, but based on the prevailing momentum, any advance is likely to stay within a 153.30/156.30 range."

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

Scotiabank strategists Shaun Osborne and Eric Theoret highlight that the Canadian Dollar (CAD) is effectively unchanged versus the US Dollar (USD) but outperforming peers, supported by firmer Oil and steady US-Canada front-end spreads. They see USD/CAD short-term tone as bullish, yet stress a significant resistance band in the low/mid-1.39s. Persistent core Consumer Price Index (CPI) pressures keep focus on Bank of Canada (BoC) normalization later this year.

Resistance zone caps upside

"The CAD is effectively unchanged against the USD on the session and a relative outperformer amongst its major currency peers as a result."

"Firmer crude oil prices are providing a little cover for the CAD, as are steady front-end US-Canada yield spreads. But the CAD will struggle to resist the broader trend in the USD into and around the FOMC decision regardless."

"Broadly in line with expectations Canadian CPI data yesterday did little for the CAD or for short-term rates but toasty underlying trends in core measures maintain the focus on price risks and the potential for the BoC to start normalizing still accommodative monetary policy later this year."

"Bullish—USD gains through the mid/upper-1.38s point to short-term USD strength extending a little more."

"We continue to note a significant resistance zone between the low/mid 1.39s, however, defined by trend resistance, the 40-and 100-day moving averages, retracement resistance, and the early September high. Initial USD support is 1.3825/30 and 1.3730/60."

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

• EUR/USD stays defensive as markets prepare for the Fed’s first rate hike since 2023.
• The US Dollar holds near a two-week high, supported by elevated Treasury yields.
• The Fed’s economic projections and Kevin Warsh’s remarks could drive the pair’s next move.

EUR/USD remains on the back foot on Tuesday as rising US Treasury yields support the US Dollar. However, the pair lacks strong follow-through selling as traders avoid placing large bets ahead of the Federal Reserve’s (Fed) monetary policy announcement on Wednesday.

At the time of writing, the pair trades around 1.1543 after touching an intraday low near 1.1527, holding close to its lowest levels in almost a month.

On the data front, second-tier US releases offered mixed signals and had little impact on the pair. The ADP Employment Change four-week average increased to 16.25K from 12.25K. Meanwhile, the New York Empire State Manufacturing Index fell to 7.6 in September from 20.6, missing the market forecast of 14.75.

US Treasury yields climbed to fresh multi-year highs across the curve on Tuesday. The benchmark 10-year yield reached 5.04%, its highest level since 2007, before easing back toward 5%.

The bond sell-off has been largely driven by the energy shock stemming from the war in the Middle East, with the Eurozone 10-year government bond yield also hitting a post-2009 high of 3.51%. Rising Oil prices are adding to inflationary pressures and strengthening the case for tighter monetary policy.

Against this backdrop, the European Central Bank (ECB) has already raised interest rates twice this year, taking the deposit facility rate to 2.50%, and has signalled openness to additional tightening.

Attention now turns to the Fed, with markets widely expecting the central bank to deliver its first rate hike since 2023 as the energy shock has stalled the disinflation trend, keeping inflation above the central bank's 2% target. According to the CME FedWatch Tool, traders price in around a 92% chance of a 25-basis-point (bps) increase on Wednesday.

The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, trades around 99.60, up 0.11% on the day and close to a two-week high.

With a quarter-point increase largely priced in, a surprise hold could trigger a sharp pullback in the US Dollar and Treasury yields, allowing EUR/USD to extend its rebound. Conversely, a rate hike accompanied by hawkish economic projections and comments from Fed Chairman Kevin Warsh could trigger fresh selling in EUR/USD.