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The euro has continued to rally against the greenback from the 1 August 2025 low of 1.1392 and broke above its recent 52-week high of 1.1830 printed on 1 July 2025, within its medium-term uptrend phase in place since 13 January 2025

The EUR/USD hit a 4-year high of 1.1919 on Wednesday, 17 September, at the onset of the FOMC announcement of a 25 basis points (bps) interest rate cut to bring down the Fed funds rate to 4.00%-4.25%, and the release of the latest summary of economic projections (dot plot) that indicates two more projected interest rate cuts of 25 bps each before 2025 ends.

Post FOMC sell-off due to a less “dovish” Fed Chair Powell’s press conference

Thereafter, the EUR/USD erased all its early intraday gains and closed lower by -0.5% at the end of Wednesday, 17 September 2025, US session due to a less “dovish” Fed Chair Powell’s press conference.

Powell described the latest policy move as a “risk management” cut, emphasising that the Fed will remain data-dependent and proceed “meeting by meeting.” This stance reduced expectations of a deeper, new cycle of monetary policy easing.

The EUR/USD extended its decline in today’s Asia session, hitting a low of 1.1780, a drop of 1.2% from yesterday’s post-FOMC high of 1.1919.

The Fed funds futures market is still implying three interest rate cuts in 2026

Fig. 1: Aggregated FOMC meeting probabilities on Fed funds rate as of 18 Sep 2025 (Source: CME FedWatch tool)

Despite Fed Chair Powell’s “meeting by meeting” rhetoric and the latest updated dot plot projections that show only a 25-bps cut in 2026, market participants in the Fed funds futures market are still expecting at least three interest rate cuts of 25 bps each in 2025 to bring the Fed funds rate to 2.75%-3.00% in 2026, according to the latest data from the CME FedWatch tool (see Fig. 1).

A continuation of dovish expectations implied by the Fed funds futures market is likely to cap the strength of the US dollar, in turn, creating a positive feedback loop back into the EUR/USD.

Let’s now examine the latest short-term (1 to 3 days) trajectory and key technical levels to watch on the EUR/USD.

Fig. 2: EUR/USD minor trend as of 18 Sep 2025 (Source: TradingView)

Preferred trend bias (1-3 days)

The current decline of 1.2% seen in the EUR/USD from its post-FOMC high of 1.1919 is likely a minor corrective decline within its ongoing minor uptrend phase in place since the 1 August 2025 low of 1.1392.

Bullish bias on the EUR/USD above 1.1790/1.1770 key short-term pivotal support, and a break above 1.1860 sees a retest on 1.1910 before the next intermediate resistance comes in at 1.1970/1.2000 (Fibonacci extension and the upper boundary of the minor ascending channel) (see Fig. 2).

Key elements

• The EUR/USD has shaped an hourly bullish reversal candlestick at the 1.1790/1.1770 key short-term support.
• The hourly RSI momentum indicator has staged a bullish breakout from its parallel descending resistance after it hit its oversold level in today’s Asian session. These observations indicate a short-term bullish momentum revival for the EUR/USD.
• The yield spread between the 2-year German Bund and the US Treasury note has continued to trend higher (narrowing) from -1.63% on 16 September to -1.54% at the time of writing.
• This development indicates a relative decline in the yield attractiveness of the 2-year US Treasury versus its German counterpart, which in turn exerts downside pressure on the US dollar against the euro.

Alternative trend bias (1 to 3 days)

A break below the 1.1770 key short-term support invalidates the bullish scenario on the EUR/USD to see a deeper minor corrective decline to expose the next intermediate supports at 1.1700 (also the 20-day moving average) and 1.1675 (also the 50-day moving average).

Markets

After the Fed decision yesterday it was up to the Bank of England (BoE) to assess whether the balance between inflation and growth/health of the labour market allows to continue policy easing. Contrary to the Fed, this wasn’t the case. The focus in this balancing exercise during summer turned again to overweight inflation risks. BoE currently assess that it still has some squeezing out to do on existing or even emerging persistent inflationary pressures, to sustainably return inflation to the 2% target. With this in mind, the BoE today decided (7-2 majority) to keep the policy rate unchanged at 4%. The committee still expects inflation to sightly rise in September from the 3.8% Y/Y August level, before returning to 2% thereafter. Still, the committee remains alert on the risk that the temporary uptick in inflation could put additional pressure on wages and price setting. Risks to inflation remain tilted to the upside. This only allows for a gradual and careful approach with respect to further withdrawal of policy restraint. In this respect, the BoE is not on a preset course. Aside from decision on the policy rate, the BoE also decided to slow its stock of bond purchases to £70 bln over the next 12 months (was £100 bln this year). In executing this process the bank will sell fewer long maturity gilts than Gilts at other maturities (40% ST, 40% MT and 20% LT). The BoE decision both on the policy rate and on QT were broadly as expected. Gilt yields today are rising between 0.5 bp (2-y) and +6.5bps (30-y), a move in line with Euro/German bond markets. Markets still see only about a 35 % chance of a BoE rate cut before the end of the year, with a next 25 bps stop not fully discounted before April next year. EUR/GBP is stuck in a tight range in the upper half of the 0.86 big figure (0.868).

Global markets, including US Treasuries, had to navigate yesterday’s Fed communication, which basically showed a high degree of fog/dispersion of views as the FOMC resumed reducing policy restriction yesterday in precautionary move to balance the risk of a further weakening in the labour market. In this respect, US jobless claims today provided a first (admittedly very mince, fragmented) reality check on markets’ sensitively to labour market data. Weekly claims declining from 264k to 231k (vs 240k expected) was enough for (short-term) yields to reverse an early decline of about 3 bps. US yields currently add 3-5 bps across the curve. The German yield curve bear steepens with the 2-y yield little changed while the 30-y adds 7 bps. Similarly, the dollar reversed a tentative intraday loss. DXY currently trades 97.45 (from 96.92). EUR/USD aborted an attempt to regain/hold north of 1.18 (currently 1.176). Despite an indecisive picture on Fed policy/global monetary conditions post yesterday’s FOMC decision, equities again were better bid with the EuroStoxx 50 adding 1.25% and the S&P 500 opening at a new record (+0.4%).

News & Views

The Norwegian central bank lowered its policy rate by 25 bps to 4% this morning. The moves caught some by surprise after (core) CPI, amongst others, last week came in to the upside of expectations. The Norges Bank indeed noted that inflation may remain elevated for a little longer than projected in June with only little spare capacity in the economy. The central bank had considered to keep the rate unchanged but eventually opted for a rate cut, stressing that the job of bringing inflation back to target has not been completed, but a cautious easing of monetary policy will pave the way for returning inflation to target without restraining the economy more than needed. “Cautious” in the Norwegian case means one more rate cut per year in the coming three years, according to the new forecast. The policy rate should be around 3-3.25% at the end of the policy horizon in 2028. The Norwegian krone whipsawed in the wake of the decision but EUR/NOK eventually trades virtually unchanged around the 11.59 opening levels.

Growth in New Zealand missed the -0.3% q/q expectation by a huge margin. The -0.9% contraction in Q2 fully wiped out the advance made in Q1. The economy is now 0.6% smaller than the same period in 2024. Growth in services stalled while the goods (-2.3%) and primary (-0.7%) industry sectors declined. The soft print spurred bets for a bumper rate cut by the New Zealand central bank (RBNZ). Markets attach a 33% chance for a 50 bps move in October. That would mean the RBNZ hit its end of year policy rate target (2.5%) made in August one meeting ahead. NZ swap yields tanked 12 bps at the front. The kiwi dollar fell to NZD/USD 0.59.

Daily Pivots: (S1) 145.98; (P) 146.51; (R1) 147.54; More...

Intraday bias in USD/JPY stays neutral first. On the upside, break of 149.12 resistance will suggest that pullback from 150.90 has completed as a correction, and rise from 139.87 is still in progress. Further rise should then be seen back to retest 150.90 next. On the downside, below 145.47 will resume the fall to 142.66 support next.

In the bigger picture, price actions from 161.94 (2024 high) are seen as a corrective pattern to rise from 102.58 (2021 low). Decisive break of 61.8% retracement of 158.86 to 139.87 at 151.22 will argue that it has already completed with three waves at 139.87. Larger up trend might then be ready to resume through 161.94 high. In case the corrective pattern extends with another fall, strong support is expected from 38.2% retracement of 102.58 to 161.94 at 139.26 to bring rebound.

Daily Pivots: (S1) 0.7847; (P) 0.7871; (R1) 0.7912; More….

Intraday bias in USD/CHF stays neutral for the moment. Some consolidations would be seen above 0.7828 temporary low. But upside should be limited below 0.8006 resistance to bring another fall. On the downside, break of 0.7828 will resume larger down trend to 61.8% projection of 0.8475 to 0.7871 from 0.8170 at 0.7797. Firm break there will pave the way to 100% projection at 0.7566.

In the bigger picture, long term down trend from 1.0342 (2017 high) is still in progress. Next target is 100% projection of 1.0146 (2022 high) to 0.8332 from 0.9200 at 0.7382. In any case, outlook will stay bearish as long as 0.8332 support turned resistance holds.

Daily Pivots: (S1) 1.1774; (P) 1.1847; (R1) 1.1885; More...

Intraday bias in EUR/USD remains neutral and more consolidations would be seen below 1.1917. Further rise is expected as long as 1.1741 resistance turned support holds. Above 1.1917 will resume larger up trend to 1.2 psychological level. However, firm break of 1.1741 should confirm short term topping, and turn bias back to the downside for 1.1607 support.

In the bigger picture, rise from 0.9534 (2022 low) long term bottom could be correcting the multi-decade downtrend or the start of a long term up trend. In either case, further rise should be seen to 100% projection of 0.9534 to 1.1274 from 1.0176 at 1.1916. Sustained break of 1.2 psychological level will carry larger bullish implications. Next target is 138.2% projection at 1.2581. This will remain the favored case as long as 55 W EMA (now at 1.1215) holds.

• The Bank of England (BoE) kept the Bank Rate at 4.00% as widely expected.
• The vote split was 7-2 in favour of hold, also as expected.
• The BoE did not tweak the guidance more hawkish and thus further cuts remain on the table.
• QT was tapered from an annual pace of GBP100bn. to GBP70bn.
• The market reacted by trading Gilt yields a bit lower and EUR/GBP a bit higher, but the move later faded.

The Bank of England (BoE) kept the Bank rate at 4.00% as widely expected. The vote split was 7-2 in (keep vs. cut) with Professor Allan Taylor (who favoured a 50bp cut in August) and Swati Dhingra (notorious dove) dissenting.

The overall guidance remained unchanged, with the BoE reiterating that "a gradual and careful approach to the further withdrawal of monetary policy restraint remains appropriate". Removing this would likely have dampened expectations for near-term rate cuts further.

The annual QT decision has been a contentious issue, given the fragile Gilt market and the government's growing fiscal challenges, where interest payments are weighing still heavier on the fiscal space. The decision aligned with expectations set the annual pace of GBP70bn, backed by 7of 9 committee members, with one member arguing for a higher pace and one member for lower one.

BoE call. We continue to expect the BoE to deliver the next cut in the Bank Rate in November, followed by another cut in February, bringing the Bank Rate to 3.50%. However, we acknowledge that a November cut is highly dependent on more disinflationary signs in the September CPI data.

Market reaction. Gilt yields traded a couple of basis points lower and EUR/GBP a bit higher on the announcement, likely due to the absence of more hawkish guidance from the BoE. However, the initial reaction was short-lived. We expect EUR/GBP to move higher towards 0.89 on a 6-12-month horizon on a weakening of the UK growth outlook and a positive correlation to a USD-negative environment.

Daily Pivots: (S1) 1.3588; (P) 1.3657; (R1) 1.3694; More...

Intraday bias in GBP/USD remains neutral and more consolidations could be seen below 1.3725. Further rise is expected as long as 55 D EMA (now at 1.3488) holds. Above 1.3725 will bring retest of 1.3787 high first. Decisive break there will resume larger up trend to 1.4004 projection level. However, sustained break of 55 D EMA will indicate that corrective pattern from 1.3787 is extending with another falling leg, and bring deeper fall to 1.3332 support and below.

In the bigger picture, up trend from 1.3051 (2022 low) is in progress. Next medium term target is 61.8% projection of 1.0351 to 1.3433 from 1.2099 at 1.4004. Outlook will now stay bullish as long as 55 W EMA (now at 1.3151) holds, even in case of deep pullback.

Sterling traded steadily mixed today, showing little reaction to the BoE’s decision to hold rates at 4.00%. The 7–2 vote leaned slightly dovish, with Swati Dhingra and Alan Taylor backing a 25bps cut, but the outcome was broadly expected given their well-established dovish leanings. Importantly, the MPC’s statement flagged that medium-term inflation risks remain “prominent,” sending a clear signal that policymakers are not yet comfortable opening the door to more near-term easing.

For markets, the key question is whether November will deliver a cut. On that, the announcement offered little clarity. Progress in services and core disinflation remains uneven, and policymakers may conclude there is insufficient evidence by November to justify a move.

Another complication is fiscal policy. The UK government is scheduled to present its budget in late November, and some MPC members may prefer to wait until the impact of tax and spending plans is clearer before adjusting interest rates. That raises the risk that a December or early-2026 move may be more likely.

On the broader FX board, Kiwi remains the weakest performer of the week after a sharp GDP miss fueled calls for a 50bps RBNZ cut in October. Dollar is the second weakest, as its post-FOMC bounce shows signs of fading, while Aussie sits third from the bottom after soft jobs data.

By contrast, Swiss Franc leads as the strongest performer, followed by Euro and Loonie. Yen and Sterling sit mid-table, though Yen could slide lower if U.S. and European yields extend their rebound into week’s end.

In Europe, at the time of writng, FTSE is up 0.17%. DAX is up 1.05%. CAC is up 1.04%. UK 10-year yield is up 0.039 at 4.668. Germany 10-year yield is up 0.035 at 2.709. Earlier in Asia, Nikkei rose 1.15%. Hong Kong HSI fell -1.35%. China Shanghai SSE fell -1.15%. Singapore Strait Times fell -0.26%. Japan 10-year JGB yield rose 0.008 to 1.601.

US initial jobless claims fall back to 231k, vs exp 240k

US initial jobless claims fell -33k to 231k in the week ending September 13, below expectation of 240k. Four-week moving average of initial claims fell -750 to 240k. Continuing claims fell -7k to 1920k in the week ending September 6. Four-week moving average of continuing claims fell -10k to 1933k.

BoE holds at 4.00%, two doves dissent,

BoE left its Bank Rate unchanged at 4.00% today, in line with expectations. The decision came with a slight dovish tilt, as two members of the Monetary Policy Committee—Swati Dhingra and Alan Taylor—voted for an immediate 25bps cut. The MPC also voted by 7–2 to continue reducing the stock of UK government bonds held for monetary policy purposes by GBP70 billion over the next 12 months, taking the total down to GBP488 billion.

Policymakers reiterated that a “gradual and careful” approach remains appropriate, with the timing of further easing dependent on the extent of disinflation. The statement stressed that policy is not on a pre-set course and will respond flexibly to new data.

On inflation, the Bank acknowledged progress but kept risks in focus. CPI was steady at 3.8% in August and is expected to edge slightly higher in September before trending back toward the 2% target. Wage growth has slowed from its peak and is expected to decelerate further, while services inflation has held broadly flat. Still, the BoE cautioned that medium-term upside risks remain “prominent.”, particularly if the temporary uptick in CPI feeds into wages and price-setting.

NZ economy shrinks -0.9%, bets of 50bps RBNZ cut rises

New Zealand’s economy contracted far more than expected in Q2, with GDP falling -0.9% qoq against consensus forecasts of -0.3% qoq. The release confirmed a deeper downturn, with economic activity now having declined in three of the last five quarters. The breadth of weakness points to rising headwinds that could force the RBNZ into a more aggressive easing cycle.

Goods-producing industries led the contraction with a -2.3% drop, while primary industries fell -0.7% and services output was flat. “The 0.9 percent fall in economic activity in the June 2025 quarter was broad-based with falls in 10 out of 16 industries,” said economic growth spokesperson Jason Attewell. Manufacturing was the single largest drag, contracting -3.5% in the quarter, while construction fell -1.8% following a modest rebound in Q1.

The scale of contraction triggered a wave of forecasts for deeper RBNZ easing. Westpac now expects a 50bp cut in October followed by a further 25bp reduction in November, compared with earlier projections of 25bp moves at both meetings. That would lower the OCR from the current 3.00% to 2.25% by year-end.

Australia jobs disappoint in August as employment falls -5.4k

Australia’s labor market weakened in August as total employment fell by -5.4k, against expectations for a 21.2k gain. The headline masked stark contrasts, with full-time jobs dropping by -40.9k while part-time roles increased by 35.5k. Hours worked fell -0.4% mom, underscoring signs of cooling demand for labor.

The unemployment rate held steady at 4.2% in line with forecasts, though the participation rate edged down to 66.8% from 67.0%. The data suggest that while unemployment remains low, underlying labor market conditions are softening.

GBP/USD Mid-Day Outlook

Daily Pivots: (S1) 1.3588; (P) 1.3657; (R1) 1.3694; More...

Intraday bias in GBP/USD remains neutral and more consolidations could be seen below 1.3725. Further rise is expected as long as 55 D EMA (now at 1.3488) holds. Above 1.3725 will bring retest of 1.3787 high first. Decisive break there will resume larger up trend to 1.4004 projection level. However, sustained break of 55 D EMA will indicate that corrective pattern from 1.3787 is extending with another falling leg, and bring deeper fall to 1.3332 support and below.

In the bigger picture, up trend from 1.3051 (2022 low) is in progress. Next medium term target is 61.8% projection of 1.0351 to 1.3433 from 1.2099 at 1.4004. Outlook will now stay bullish as long as 55 W EMA (now at 1.3151) holds, even in case of deep pullback.

US initial jobless claims fell -33k to 231k in the week ending September 13, below expectation of 240k. Four-week moving average of initial claims fell -750 to 240k.

Continuing claims fell -7k to 1920k in the week ending September 6. Four-week moving average of continuing claims fell -10k to 1933k.

Full US jobless claims release here.

As the chart shows, today the Nasdaq 100 index (US Tech 100 mini on FXOpen) has, for the first time in history, climbed above the 24,500 level.

According to media reports, bullish sentiment was driven by the long-awaited Fed decision to cut interest rates for the first time in 2025.

Although the Fed also indicated it would remain cautious about further cuts, the easing acted as a bullish catalyst for the entire stock market – European equities also advanced today, with technology companies leading the way.

Technical Analysis of the Nasdaq 100 (US Tech 100 mini on FXOpen)

When looking at the Nasdaq 100 index (US Tech 100 mini on FXOpen) within the context of the September rally (highlighted by the blue channel), we note the following:

→ In mid-September, price action reflected market optimism, as the index traded in the upper half of the channel – with resistance at the upper boundary (R) and support at line S.

→ Yesterday’s volatility spike produced a similar move (marked with an arrow) to the one we highlighted in today’s earlier gold analysis, namely a sharp reversal from the lower boundary of the channel (essentially a bullish engulfing pattern, albeit less clear due to volatility and the chosen timeframe).

Following the reversal from the lower boundary, which unfolded aggressively (a sign of bullish conviction), the price advanced steadily, breaking through key levels:

→ the midline of the blue channel;

→ the R2 resistance line shown in red;

→ the former all-time high at 24,165.

Moreover, the index’s behaviour around 24,300 demonstrated the persistence of buyers – the price moved above a cluster of local resistances and then extended its rally.

Bearish view:

→ bullish momentum has pushed the RSI indicator into overbought zone;

→ when attempting to break above the psychological 24,500 level, the price failed to hold, suggesting a false bullish breakout.

Given the above, we could assume that optimism prevails in the market, supported by the Fed’s decision:

→ on the one hand, further gains towards the upper boundary of the blue channel may take place;

→ on the other hand, the market may be overheated and vulnerable to a correction (for instance, back towards the blue midline).

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