Published: 9/23/2025

Overall Market Sentiment: Cautious risk-on to start the week. Odds of another Fed cut in October are high, PCE on Friday is the pivot, and the curve has re-steepened even as nominal yields are a touch firmer. That backdrop has capped broad USD momentum.

Currency Outlooks

🔺 USD: Futures imply a high probability of another 25 bp cut on 28–29 Oct and decent odds of a second move by the December meeting, with market commentary and FedWatch snapshots pointing to roughly 90 percent for October and meaningful follow-through risk into year end. Consensus for Friday’s core PCE is near 0.2 percent month on month, so a downside surprise would likely pressure the dollar quickly. The 2s10s spread sits near the mid 50s to 60 bp area, with the 2-year around 3.6 percent and the 10-year near 4.14 to 4.15 percent, consistent with a curve that is no longer inverted. Dollar Index traded near the 97.3 to 97.8 area into Monday’s close.

Levels context: DXY 97.3 support, 98.2 resistance. EURUSD 1.1760 to 1.1850 is the first test band on USD weakness. (Levels are tactical, not sources.)

🔻 EUR: The ECB held policy on 11 Sep and kept key rates at DF 2.00 percent, MRO 2.15 percent, and MLF 2.40 percent. Near term, EUR trades the U.S.–EU policy spread and the data mix. Watch today’s Eurozone flash PMIs and Wednesday’s German Ifo Business Climate. Support 1.1725, resistance 1.1875 to 1.1900.

⚖️ GBP: The BoE paused at 4.00 percent with a 7–2 vote and slowed QT to 70 billion pounds over the next 12 months, skewing sales away from the long end. Sterling remains data- and risk-tone driven this week. Cable near term support 1.3450, resistance 1.3625.

🔻 CAD: The BoC cut 25 bp to 2.50 percent and retained an easing bias. Oil is hovering in the mid 60s for Brent and near 62 dollars for WTI, which has weighed on CAD alongside softer risk appetite earlier this week. USDCAD pivoted around the high-1.37s to 1.38 handle on Monday.

🔻 JPY: The BoJ kept the policy rate near 0.5 percent on 19 Sep and announced it will begin selling ETFs and J-REITs, roughly 330 billion yen and 5 billion yen per year respectively. With the Fed set to ease again and the U.S. 10-year near 4.15 percent, the yield spread tailwind to USDJPY is smaller than it was, which limits upside and keeps 149 to 150 in the intervention risk zone. Working levels, 146.0 support, 149.0 resistance.

⚖️ AUD: Flash PMIs cooled in September, with the S&P Global Australia Composite at 52.1 and manufacturing at 51.6 on the preliminary read. AUD remains a clean global risk proxy into Friday’s PCE. Spot near 0.66 with 0.6580 support and 0.6660 resistance.

Day and Week Ahead

• Today Tue 23 Sep: Flash PMIs for Eurozone and UK, staggered through the morning CEST. Australia flash was released at 23:00 UTC Monday, India at 05:00 UTC today.

• Wed 24 Sep: Germany Ifo Business Climate, 10:00 CEST.

• Thu 25 Sep: U.S. Durable Goods Orders, 08:30 ET.

• Fri 26 Sep: U.S. Personal Income and Outlays, including core PCE for August, 08:30 ET.

• Thu 25 Sep: SNB decision, consensus expects a hold at 0.00 percent.

House view on biases: Fade broad USD strength into PCE unless core prints 0.3 percent or higher, which would likely firm the dollar and bull-flatten less than markets expect.

🪙 Gold: Fresh records reinforce that real-yield dynamics and macro hedging demand are blunting USD upside even with firmer nominals. Spot hit an all-time high near 3,759 dollars today.

🛢 Oil: Brent around 66 dollars and WTI near 62 dollars, a modest drag on CAD and a mild support to the global disinflation narrative.

📈 Stocks: Risk tone is constructive while the market leans toward an October Fed cut. Equities benefited Monday even as yields edged up, which aligns with a selective pro-cyclical tilt if PCE is benign.