Published: 9/22/2025

Overall Market Sentiment:
Cautious risk-on. Equities are holding gains after the Fed’s cut, while the dollar index sits near the high-97s and the long end is elevated into Friday’s Core PCE. The 10-year yield is around 4.14 percent and the 2-year near 3.57 percent, leaving 2s10s roughly plus 55 to 60 basis points and no longer inverted. A soft PCE would favor bull steepening since the front end should lead the move lower, while a hot PCE could bear-steepen via a long-end backup and trimmed odds of near-term cuts.

Key macro this week (CEST unless noted)
• Tue 23 Sep: Flash PMIs for Eurozone and UK, and US 15:45. S&P shows Eurozone 10:00 CEST, UK 10:30 BST, US 09:45 ET.
• Wed 24 Sep: Germany Ifo Business Climate 10:00 CEST.
• Fri 26 Sep: US Personal Income and Outlays with Core PCE for August.

Currency Outlooks

🔻 USD
Futures still lean to two more 25 bp cuts by year-end, with high odds for October and additional easing by December, so the dollar is data-sensitive rather than guidance-sensitive. Median expectations for Friday’s Core PCE center on about 0.2 percent month on month. If Core PCE prints 0.3 percent or higher, the market can trim cut odds and the dollar tends to pop. DXY trades near 97.8, with support 97.3 and resistance 98.2. UST 10-year around 4.14 percent and 2-year around 3.57 percent keep 2s10s positive.

🔺 EUR
ECB held on 11 Sep and kept rates at DF 2.00, MRO 2.15, MLF 2.40. Markets now price a strong probability that policy stays on hold through year-end, so EUR trades the US-EU data gap. Watch Tuesday’s flash PMIs. Technically, EURUSD is above the 200-day near 1.11 and the 50-day near 1.167; a benign US PCE would keep the pair supported toward 1.1850 to 1.1900, while a hot US print caps rallies quickly.

⚖️ GBP
BoE paused last week and slowed QT to about £70 billion over the next 12 months. Pricing leans toward no further 2025 cuts barring softer data. Near term drivers are UK flash PMIs and the US PCE print. For GBPUSD, a close back above 1.355 stabilizes the tape; a break under 1.340 would put 1.332 in view.

⚖️ CAD
BoC cut 25 bp to 2.50 percent and left an easing bias. Oil is range-bound in the mid-60s on Brent and near the low-60s on WTI, which tempers CAD upside unless US data underwhelms. For USDCAD, respect 1.332 to 1.335 as first support and 1.350 to 1.355 as resistance.

🔺 JPY
BoJ kept the overnight call rate around 0.5 percent and formalized steady sales of equity funds that it holds. The plan allows ETF sales of about ¥330 billion per year and J-REIT sales near ¥5 billion per year. Policy normalization is gradual, so a durable yen bid still leans on lower US yields. Intervention risk rises if 150 is probed.

⚖️ AUD
Australia’s Monthly CPI Indicator for August prints Wednesday 11:30 AEST, and the RBA meets on 30 Sep. AUDUSD sits around 0.659; the 50-day is near 0.655 and futures-based 200-day references sit close to 0.643. The dollar’s tone around PCE likely sets the week’s direction.

🪙 Gold: Still near record highs as cut expectations persist. Real 10-year yields sit around 1.75 percent. A soft PCE would likely invite a retest of highs, while a hot print risks a pause.

🛢 Oil: Brent around 67 dollars and WTI near 63 dollars, with supply and demand concerns keeping ranges tight. That mix limits CAD’s ability to outperform unless US inflation softens.

📈 Stocks: US benchmarks are near records, but further upside in the 10-year toward or above roughly 4.2 percent would challenge pro-cyclical FX.

Key levels to track today
• DXY 97.3 support, 98.2 resistance.
• EURUSD 1.1700 support, 1.1850 to 1.1900 resistance.
• GBPUSD 1.340 support, 1.355 resistance.
• USDJPY 147.0 support, 149.5 to 150.0 resistance.
• USDCAD watch 1.332 to 1.335 support and 1.350 to 1.355 resistance.

Trade the narrative: the path of Core PCE relative to already substantial cut odds is the fulcrum this week. A soft or inline 0.2 percent month on month favors bull steepening and fading broad USD strength. A 0.3 percent print argues for tighter risk and patience on USD fades until after the data.