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The EUR/USD pair advanced to 1.1804 on Tuesday, marking a second consecutive day of gains. The US dollar faced sustained pressure as markets digested mixed signals from Federal Reserve officials regarding the interest rate outlook.

Several Fed members advocated for caution on further easing, pointing to signs of stabilising inflation. However, this stance was countered by new Governing Council member Stephen Miran, who warned that the central bank may be underestimating current policy tightness and risks damaging the labour market without more decisive rate cuts.

Investors are now focused on the upcoming release of the PCE price index on Friday – the Fed's preferred inflation gauge – which is expected to provide critical guidance for future monetary policy.

Adding to the market's unease are the ongoing US congressional budget negotiations. Lawmakers are working to avert a potential government shutdown by the 30 September deadline, creating a fresh layer of uncertainty.

Technical Analysis: EUR/USD

H4 Chart:

On the H4 chart, EUR/USD completed a decline to 1.1727, followed by a correction to 1.1818. The current expectation is for a resumption of the downward move towards an initial target of 1.1704. Upon reaching this level, a subsequent rebound towards 1.1800 is anticipated. This bearish scenario is technically supported by the MACD indicator, whose signal line is around the zero line and pointing decisively downwards.

H1 Chart:

The H1 chart shows the pair completed its descent to 1.1727 and is now forming a corrective structure. Today's price action has created an upward move towards 1.1818. From here, we expect a decline to 1.1777. A further rise to 1.1824 could then unfold, completing the corrective phase and setting the stage for a new downward wave targeting 1.1704. This outlook is confirmed by the Stochastic oscillator, with its signal line currently below 50 and falling sharply towards 20.

Conclusion

While the euro is capitalising on a weaker dollar driven by divergent Fed commentary and political risks, the technical structure suggests the upside may be limited. The broader trend appears poised for a resumption of declines, contingent on the key PCE data and developments in Washington.

• EUR/USD finds familiar support after pullback from 4-year high.
• A break above 1.1800 could trigger the next bullish cycle.

EUR/USD continues to defend its July–September upleg. Despite its pullback from a four-year high of 1.1917, the bulls managed to secure strong foothold around the 20-day simple moving average (SMA) at 1.1735 on Monday. Recall that the pair has been fluctuating above its short-term SMAs for nearly two months. Therefore, yesterday’s pivot boosted optimism that the bulls are still in town.

With the Fed preparing a more accommodative monetary policy and the ECB pausing its rate-cut cycle, the euro still carries an advantage, although upcoming data releases could alter policy guidance. German flash business PMI figures for September were mixed earlier today: the services sector showed further expansion to 52.5, while the manufacturing PMI slipped back into contraction below 50.

From a technical perspective, traders may prefer to remain on the sidelines unless the price reclaims the 1.1800 level. If that happens, the 1.1900 area could act as immediate resistance, and a decisive break above it could open the way toward the 1.2000–1.2050 region. Beyond that, the next barrier may emerge around 1.2150.

On the downside, if the pair falls below its short-term SMAs and the 2025 support trendline, currently located in the 1.1680–1.1740 zone, the bears could push the price toward the 1.1590 region. The 61.8% Fibonacci retracement level of the latest upleg may reinforce that floor. Otherwise, a deeper sell-off could extend toward the 1.1500 area.

In summary, EURUSD appears neutral in the short-term outlook. After its pullback from a four-year high, the bulls need to reclaim the 1.1800 area to revive momentum for a continuation higher.

Preliminary PMI estimates for the entire eurozone exceeded expectations, but this did not help the single currency grow. On Tuesday, the rise to 1.18 was actively sold off.

French businesses reacted negatively to the political turmoil caused by budget disputes, which also affected tariffs. Both the service sector and manufacturing performed below expectations and showed a deepening decline. The composite index fell to 48.4, its lowest level since April.

The main positive surprise came from the German services sector, where the index jumped from 49.3 to 52.8 against the expected 49.5. This is the highest the index has been since May 2024. These figures signal a return to service growth, while market participants had expected the downturn to continue, with values below 50.

However, Germany’s manufacturing sector contributes much more than in the UK or the US, so the unexpectedly sharp drop in the manufacturing PMI from 48.8 to 48.5, against an expected rise to 50.1, is dampening optimism.

Germany pulled up the service sector figures for the entire eurozone, ensuring that the index rose to its highest level since December. The composite index reached 51.2, its highest level since May last year.

Higher-than-expected figures for the eurozone are allowing the euro to remain at a relatively high level of $1.1800 and are pushing EURGBP to the upper limit of its range for almost two years. However, these improvements are too modest to become the basis for a breakthrough of important resistance levels, which the euro has been unable to overcome for the past two months.

Gold is once again benefiting from a combination of geopolitical tensions, demand for safe-haven assets, and reduced risk appetite in the stock and cryptocurrency markets. The price per ounce returned to its historic highs, reaching $3,750 on the spot market and adding 3% from the start of the day on Friday to the start of active trading in Europe on Tuesday.

The previous historic high was set on 17 September, followed by two days of profit-taking. However, the wave of decline was not long-lasting, and gold corrected by less than 20% from its last rally on 20 August. This indicates a strong appetite for gold, despite the price highs and an almost unprecedented rate of growth since the beginning of the year. From a technical point of view, the expansion of this pattern indicates the potential for the price to rise to $4,000.

Politics is once again working in favour of gold bugs. The tightening of work visa rules is likely to cause discontent in India. Modi’s statements about the need to make the country independent of foreign markets are undermining hopes for a trade settlement.

The latest discussion of a government shutdown also supports gold purchases.

The Fed’s softening of its monetary policy stance is providing additional long-term confidence to buyers. Although this reassessment of market prospects has paused in recent days, it appears to be a pause rather than a reversal, as it would take a strong improvement in labour market indicators and a surge in inflation to change this trend.

Gold is being pushed in the same direction by expectations that global central banks will continue to accumulate gold reserves at the expense of the dollar’s share in them, as alternative currencies do not look much better in terms of fundamentals.

On the other hand, the price growth rate is now more of a bearish factor. The historic rally is increasing demand for a full-fledged portfolio shake-up, with a correction of more than 130% growth over the last three years. The period from September to November, with the end of the financial and calendar year, looks like a suitable point to start this trend.

Additionally, the RSI on daily timeframes entering the overbought zone above 80 earlier in September increases the risks of a decline. Last week’s price decline pushed the index back to 70. A similar signal has triggered a sideways movement or correction about a dozen times in the last five years, with only one exception in April 2024, when we saw an 8% price increase before a three-month sideways movement.

On balance, we view the situation as the final stage of gold’s increase over the past three years. Growth within it may be quite aggressive, combined with accelerated closing of short positions. However, for medium- and long-term investors, this is suitable for closing long positions and looking for the right moment to open short ones.

As the chart shows, Hong Kong’s Hang Seng Index (Hong Kong 50 on FXOpen) has fallen more than 3% from its 2025 high over the past week. In recent days, several factors may have driven bearish sentiment:

→ Domestic Chinese policy: Media reports indicate that on Monday the head of China’s central bank held a press conference, but market participants may have been disappointed by the proposed economic stimulus measures.

→ US influence: This includes both trade deal negotiations and the Federal Reserve’s recent decision to cut interest rates.

→ Other news: For example, the approach of Typhoon Ragas.

Additionally, reaching a peak near 27,000 points may have prompted long-position holders to take profits, creating a wave of selling.

Nevertheless, the chart shows several technical signs suggesting that the market is finding support, and the scope for further declines appears limited.

Technical Analysis of the Hang Seng Index Chart

Market movements in September have formed an ascending channel (shown in blue), with support provided by:

→ the lower boundary of this channel;

→ the psychological level of $26,000;

→ the 50% retracement level following the A→B impulse.

Bulls may take confidence from the fact that the RSI is in oversold territory.

In the short term, the initiative remains with the bears:

→ they are holding the Hang Seng stock price within a descending trajectory (shown in red);

→ the break below the 26,300 level occurred aggressively (marked with an arrow) — wide candles indicate a seller-dominated imbalance, making the consideration of a bearish Fair Value Gap pattern (highlighted in purple) relevant.

However, in the longer term, the odds favour the bulls:

→ the index has risen approximately 30% since the start of 2025;

→ in this context, we may be inside a Bullish Flag pattern, suggesting a potential resumption of the prevailing uptrend after an intermediate correction.

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UK business activity weakened sharply in September, with the flash composite PMI dropping from 53.5 to 51.0, a 4-month low. Manufacturing fell further into contraction from 47.0 to 46.2. Services slipped from 54.2 to 51.9, pointing to a broad loss of momentum across sectors.

S&P Global’s Chris Williamson described the report as a “litany of worrying news,” citing slumping overseas trade, worsening confidence, and steep job losses. The survey signalled around 50,000 job cuts over the past three months, underscoring that the economy is “almost stalling.”

The only bright spot was softer price pressures, with firms reporting one of the smallest increases in goods and services prices since the pandemic. For the BoE, the combination of weakening growth, easing inflation, and rising unemployment may shift the debate back toward a "more dovish stance" in the months ahead.

Full UK PMI flash release here.

Eurozone flash PMIs for September showed a mixed picture, with manufacturing slipping back into contraction while services drove growth. The manufacturing index fell from 50.7 to 49.5, but services rose from 50.5 to 51.4, a 9-month high, lifting the Composite PMI from 51.0to 51.2 — its strongest in 16 months.

Hamburg Commercial Bank’s Cyrus de la Rubia said the bloc is “still on a growth path,” though far from gaining "any real momentum". Germany’s recovery stood out, with manufacturing falling from 59.8 to 48.5 but services jumping to 52.5, pushing its Composite PMI from 50.5 to 52.4 (a 16-month high). France lagged, with both manufacturing and services sliding back below 50, leaving its composite at 48.4, down from 49.8 and a 5-month low.

De la Rubia cautioned that French political uncertainty had disrupted production plans, while order books in both Germany and France showed significant declines. Hiring has now “come to a halt” across the bloc, with sluggish job creation in services and sharper losses in manufacturing. Confidence in rising output has dipped.

On the inflation side, cost pressures in services have "eased slightly" but remain unusually high, while selling prices "cooled more noticeably". That combination could give the ECB reason to consider whether a rate cut before year-end is back on the table.

Full Eurozone PMI Flash release here.

The short-term Elliott Wave analysis for Silver (XAGUSD) indicates a robust impulsive rally that began on July 31. From that low, the metal surged, completing wave 1 at $38.73, followed by a corrective pullback in wave 2 that concluded at $36.94. The upward momentum resumed in wave 3, which peaked at $42.96, as illustrated on the one-hour chart. Subsequently, wave 4 unfolded as a zigzag structure, with wave ((a)) terminating at $42.23 and wave ((b)) reaching $42.636. The decline in wave ((c)) finalized at $41.11, marking the completion of wave 4 in the higher degree.

Silver then turned higher in wave 5, exhibiting an internal structure of five smaller-degree waves. From the wave 4 low, wave (i) advanced to $42.23, followed by a dip in wave (ii) to $41.13. The metal continued its ascent, with wave i concluding at $41.88 and wave ii finding support at $41.18. In the near term, as long as the price remains above $41.11, dips are expected to attract buyers in a 3, 7, or 11-swing sequence, supporting further upward extensions. This analysis suggests that Silver’s bullish trend remains intact, with potential for additional gains as the impulsive structure continues to develop.

Silver (XAGUSD) – 60 Minute Elliott Wave Technical Chart:

XAGUSD – Elliott Wave Technical Video:

https://www.youtube.com/watch?v=KURP_M3v3FA

The Japan 225 CFD Index (a proxy of the Nikkei 225 futures) has continued to remain in a bullish trend as expected and rallied by 5.3% to hit a fresh all-time high of 45,956 on last Thursday, 18 September 2025, ex-post FOMC.

Thereafter, the Japan 225 CFD Index staged a minor corrective pull-back of -3.2% to print an intraday low of 44,485 on Friday, 19 September 2025, on the onset of the Bank of Japan (BoJ) announcement to start unwinding its massive hoard of around 79.5 trillion yen of exchange-traded funds (ETF) by market value as of mid-September tied to Japan benchmark stock indices.

BoJ aims to sell its ETF holdings at a pace of around ¥620 billion per year by market value, or ¥330 billion by book value, starting in 2026. It will be a gradual unwinding process that may take more than 100 years to complete under the current plan. Additionally, it marks the first time the BoJ has laid out a plan for offloading the assets it has accumulated over years of ultra-easy monetary policy.

Let’s now examine a fundamental factor that still supports a medium-term bullish trend in the Nikkei 225.

Earnings revision continues to get upgraded for Japanese equities

Fig. 1: Japan & US Citigroup Earnings Revision Index as of 19 Sep 2025 (Source: MacroMicro)

Sell-side analysts have continued to upgrade the earnings growth potential of the Japanese stock market. Based on the latest data from the Citigroup Earnings Revision Index for Japanese equities as of 19 September 2025, it rose to 0.34 from the previous reading of 0.19 on 29 August 2025 (see Fig. 1).

The Japan Citigroup Earnings Revision Index has been trending upwards since 20 June 2025, printing -0.35, which suggests that analysts, on average, are becoming more optimistic about the outlook for corporate earnings in Japan, in turn supporting the ongoing medium-term bullish trend in the Nikkei 225.

In addition, the pace of analysts’ earnings upgrades in Japan rose at a steeper pace since 29 August 2025, versus the US Citigroup Earnings Revision Index.

We now focus on the short-term (1to 3 days) trajectory, key elements, and key levels to watch on the Japan 225 CFD Index from a technical analysis perspective.

Fig. 2: Japan 225 CFD Index minor trend as of 23 Sep 2025 (Source: TradingView)

Preferred trend bias (1-3 days)

Maintain the bullish bias on the Japan 225 CFD Index with a tightened short-term pivotal support now at 45,000. A clearance above 45,960 increases the odds of bullish impetus for the next intermediate resistances to come in at 46,430/46,580 and 46,870 (Fibonacci extension cluster and towards the upper boundary of a steeper minor ascending channel from the 2 September 2025 low) (see Fig. 2).

Key elements

• The price actions of the Japan 225 CFD Index have continued to oscillate above its 20-day and 50-day moving averages, which suggests that its minor and medium-term uptrend phases remain intact.
• The hourly RSI momentum indicator of the Japan 225 CFD Index has exhibited a bullish momentum condition as it managed to trend higher above an ascending support and has not reached its overbought zone (above the 70 level).

Alternative trend bias (1 to 3 days)

A break below the 45,000 key short-term support for the Japan 225 CFD Index invalidates the bullish acceleration scenario to kickstart a minor corrective decline sequence to expose the next intermediate supports at 44,560 and 44,050.

Markets

The slight US Treasury underperformance vs Bunds throughout the day yesterday deepened in the wake of some Fed policymakers hitting the wires after last week’s meeting. Fed’s Hammack and Bostic, both non-voters this year, and Musalem (voter) are all worried about inflation, which has been and still is too high for a long time. Bostic and Musalem supported the September rate cut but warned the room for further easing is limited (without policy becoming overly accommodative). Hammack prior to that meeting said she saw no case for lowering interest rates with inflation too high and the labour market “still in a pretty good shape”. The Fed should be very cautious in removing policy restriction, the Cleveland Fed president noted. Miran repeated his call for jumbo cuts this year to 3%-3.25% and added that’s he’ll likely continue to dissent at future Fed meetings. Such comments make him a man to ignore from a market point of view. The US yield curve bear flattened with net daily changes varying between +1.9 bps (30-yr) to 3.2 bps (2-yr). German rates traded within a 2.5 bps trading range to end the day basically flat, the exception being the 30-yr (+2 bps). Interest differentials widened in favour of the USD but it were the technicals that dominated EUR/USD. The pair bounced off a short-term upward sloping trendline (originating in August) to end around the 1.18 big figure. EUR/GBP followed higher in EUR/USD’s slipstream and closes in on the July high (0.8769). Gold rallied to a new record high ($3746/ounce) like a two-staged-rocket while oil prices dropped for a fourth day straight ($66.57/b). Wall Street keeps hitting records, although the one yesterday was driven by the usual (tech) suspects.

The economic calendar churns out September PMI business confidence indicators today. It started with Australia and India this morning (see below), heads into the euro area and the UK before arriving in the US. Japan is scheduled for release tomorrow due to a national holiday. The euro area economy is bottoming out but it’s happening at a snail’s pace. That’s the main message coming from the PMIs for the last couple of months now and we don’t expect a major acceleration having taken place last month. Consensus expects readings similar to August: 51.1 for the composite with both manufacturing (50.7) and services (50.5) growing marginally. US PMIs are usually of second tier importance (compared to the ISMs) but nevertheless worth following up. We’ve seen US yields correcting higher in the wake of the Fed’s very dispersed dot plot. It lacked clear, unambiguous guidance for future moves lower while markets were positioned as such. Given the wide views at the Fed, (money) markets are vulnerable for economic data in both directions. Upside surprises strengthen calls from the likes mentioned above and vice versa. For the US dollar to lose support at EUR/USD 1.1919 (September multiyear high) the US PMIs would probably have to deliver a major miss though. Fed chair Powell later vents views on the economy but they shouldn’t differ much from the ones set out last week.

News & Views

Australia and India kicked off September global PMI releases this morning. Australian business activity growth slowed with the composite PMI falling back from a multi-year high of 55.5 in August to 52.1. The weaker expansion of output was driven by a slower rise in incoming new orders (even drop in goods new orders), attributed partly to a renewed fall in export orders. Business optimism also fell to the lowest level in a year. That said, firms continued to hire at a solid pace to cope with ongoing workloads and to clear existing orders. Average input costs continued to increase at an above-average pace while selling price inflation eased slightly. Indian private sector growth cooled as well in September. The composite PMI came off a multi-year high as well but still points at a sharp rate of expansion (63.2 from 61.9). A softer expansion in new business intakes accompanied slower increases in private sector output and employment, with international sales also rising at a weaker pace. The impact of higher US tariffs (50%) on India was partly offset by stronger domestic order growth backed by lower tax rates. Prices trends were more benign as cooler input cost inflation allowed for selling charges to be lifted to a lesser degree. Nevertheless, business confidence strengthened at the end of the second fiscal quarter.