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Forex markets were subdued in Asian session today, with major pairs showing little movement while regional equities held steady. The muted tone comes despite a disappointing run of Chinese economic data, which showed broad weakness in activity. Investors appeared reluctant to extrapolate too much pessimism from the Chinese numbers. Instead, the data reinforced expectations that Beijing will be forced to accelerate stimulus measures. For traders, the prospect of stronger state support is cushioning risk sentiment, limiting downside pressure on Asian assets.

The policy outlook in China remains closely tied to the Fed. Once the Fed’s rate-cut path is clearly defined, the PBoC will have greater room to ease without triggering destabilizing capital outflows. That dynamic has kept speculation alive of further PBoC cuts in the months ahead, especially as growth signals soften.

While markets are steady for now, volatility is expected to rise sharply this week with four major central bank meetings on deck. The Fed takes center stage, with a widely expected rate cut that carries unusually high risks due to voting splits and fresh economic projections. The BoC, BoE, and BoJ decisions will also be closely watched, alongside a heavy data calendar that includes UK jobs, CPI, and retail sales, Germany’s ZEW survey, Australian employment, and New Zealand GDP.

While monetary policy dominates, geopolitics is also back in play. High-level U.S.–China trade talks kicked off in Madrid on Sunday, bringing together Treasury Secretary Bessent and USTR Greer with Vice Premier He Lifeng and chief negotiator Li Chenggang. The meeting follows July’s Stockholm discussions that extended a 90-day tariff truce and reopened rare-earth exports to the U.S. That extension keeps the pressure on Beijing while limiting near-term escalation.

Still, expectations for a breakthrough remain muted. There is little chance of a major agreement, with another temporary extension the most likely outcome. Markets are particularly focused on whether Washington delays the Sept. 17 deadline for ByteDance to divest TikTok’s U.S. operations, a decision that could otherwise trigger a ban.

In Asia, at the time of writing, Nikkei is up 0.89%. Hong Kong HSI is up 0.19%. China Shanghai SSE is down -0.17%. Singapore Strait Times is down -0.07%. Japan 10-year JGB yield is flat at 1.602.

NZ services PMI slumps to 47.5, 18th month contraction

New Zealand’s services sector deteriorated further in August, with BusinessNZ Performance of Services Index slipping from 48.9 to 47.5, well below the long-run average of 52.9. The reading also marks the 18th consecutive month of contraction. Both

Activity/Sales (46.2) and New Orders/Business (47.8) weakened, suggesting demand remains fragile. Employment improved slightly to 48.3 but remains in contraction territory, reflecting businesses’ reluctance to expand payrolls in the face of subdued activity.

The survey showed 59.6% of respondents made negative comments in August, an increase from July but still less pessimistic than June’s tally. Firms cited multiple pressures, including high interest rates, sticky inflation, and the cost-of-living squeeze eroding household spending. Rising operating costs, seasonal slowdowns, supply chain disruptions, and uncertainty over government policy also weighed on sentiment.

China industrial output, retail sales miss forecasts, fixed asset investment slumps

China’s economy slowed in August, with key indicators falling short of expectations. Industrial output grew 5.2% yoy, down from 5.7% yoy in July and short of forecasts for 5.8% yoy, marking its weakest pace since August 2024. Retail sales also slowed, rising just 3.4% yoy versus 3.7% yoy previously and expectations of 3.8% yoy, signaling soft household demand despite ongoing government measures to support spending.

Investment activity showed the sharpest loss of momentum. Year-to-date fixed asset investment rose only 0.5%, far weaker than consensus 1.4% and July’s 1.6%. The drag came primarily from the property sector, where real estate investment plunged -12.9% in the first eight months. Excluding real estate, investment rose 4.2%.

The National Bureau of Statistics highlighted “many unstable and uncertain factors” in the global environment and warned that the economy still faces “multiple risks and challenges.” It urged stronger policy implementation to stabilize employment, businesses, and expectations, but the latest figures suggest momentum remains fragile, with property weakness continuing to weigh heavily on growth prospects.

Silver steals spotlight, charging toward 50 while Gold pauses

Precious metals remain firmly bid, but leadership has shifted. Gold’s rally stalled just ahead of a key Fibonacci projection, while Silver broke out to a new 14-year high. Both metals remain supported by a mix of geopolitical risk, policy divergences, and strategic investor demand for hard assets.

Silver’s case is probably more compelling. The market faces a prolonged supply deficit and tightening physical availability, giving its rally deeper structural foundations. This dynamic, coupled with strong investor interest, has pushed prices higher and opened room for further gains on both near-term and medium-term horizons.

Near-term, Silver will remain bullish above former resistance at 39.49, now turned support. Next target is 61.8% projection of 28.28 to 39.49 from 36.93 at 43.85. Decisive break there could prompt upside acceleration to 100% projection at 48.14.

On the broader time frame, Silver has already cleared 100% projection of 21.92 to 34.84 from 28.28 at 41.20, setting up to 138.2% projection at 46.13. There is potential of further rally to 161.8% projection at 49.18 before topping, as the fifth wave of the five-wave rally from 17.54.

So in short, for Silver, holding 40 keeps the bullish structure intact, with acceleration toward 50 possible once 44 is cleared.

Gold, meanwhile, looks set to consolidate further in the short term, below 261.8% projection of 3267.90 to 3408.21 from 3311.30 at 3678.63. But pullback should be contained above 3511.49 support to bring rebound. Firm break of 3678.63 will target 323.6% projection at 3765.34 next.

Fed, BoC set to ease as BoE, BoJ hold fire

Global markets face one of the busiest weeks of the year, with four major central bank meetings alongside a heavy slate of data releases. The Fed and BoC are widely expected to resume their rate-cutting cycles, while the BoE and BoJ are set to hold steady but with close attention on forward guidance.

The Fed meeting is the marquee event. Consensus expects policymakers to cut rates by 25bps, bringing the target range to 4.00–4.25%. That would mark the first move since November 2024 with possible signal of re-acceleration of the easing cycle following recent weak labor market data. However, the outcome may not be as straightforward, with the vote split and economic projections likely to carry as much weight as the headline cut.

Several uncertainties cloud the decision. Governors Christopher Waller and Michelle Bowman, both leaning dovish, could press for a 50bps move given the labor market softening. The status of Stephen Miran, nominated as temporary Governor, also looms large—if confirmed in time, his vote could tilt the balance toward a deeper cut. On the other side, Lisa Cook may favor holding steady, introducing the risk of multiple dissents in either direction. This raises the possibility of a fractured committee outcome.

Fresh economic projections will also matter. With job growth stalling and unemployment edging up, the new dot plot may shift from penciling in two cuts this year to three. A Reuters poll showed 60% of economists expect 50bps of easing by year-end, while 37% forecast 75bps. That diverges from market pricing, where traders see over an 80% chance of 25bps moves in both October and December. The outcome will shape expectations not only for 2025 but for how long rates stay restrictive into 2026. Retail sales data later in the week adds another variable for Fed watchers.

The BoC is also set to move. Markets and economists overwhelmingly expect a 25bps cut, lowering the policy rate to 2.50%. A Reuters survey showed 25 of 32 economists anticipate easing this week, aligning with market pricing. Among Canada’s top five banks, RBC stands out in expecting a hold, contingent on the latest inflation release due just before the decision.

Forward guidance will be critical. Over 70% of economists predict the BoC will deliver at least 50bps of cuts by year-end, taking the policy rate to 2.25% or lower, with a minority even expecting 75bps. How Governor Tiff Macklem frames the balance between still-firm wage growth and a weakening consumer sector will guide expectations. Given recent soft Canadian data and rising global risks, markets will be quick to price in more cuts if the BoC leaves the door wide open.

In the UK, the BoE is set to keep Bank Rate unchanged at 4.00% this week. But the outlook is contested. A Reuters poll found 42 of 67 economists expect one final cut in November, while 22 see no further moves this year. Upcoming jobs, CPI, and retail sales data will heavily influence the November call. With inflation expectations edging higher, the BoE is cautious about easing too far, too fast.

The BoJ is also expected to stand pat at 0.50%, preferring more time to assess how new U.S. tariffs and trade deals affect the economy. Policymakers are also monitoring whether food price inflation recedes in coming months, as well as the impact of stronger wage settlements. A Reuters poll showed 55% of economists expect the BoJ to hike to 0.75% by next quarter, leaving risks tilted toward further tightening. Japan’s national CPI release later this week will be a key test of whether inflation pressures are indeed moderating.

Beyond central banks, data releases from Germany’s ZEW survey, Australian employment, and New Zealand GDP will round out a packed week.

Here are some highlights for the week:

• Monday: New Zealand BNZ services; China industrial production, retail sales, fixed asset investment; Swiss PPI; Eurozone trade balance; Canada manufacturing sales, wholesale sales; US Empire state manufacturing.
• Tuesday: Japan tertiary industry index; UK employment; Canada CPI; US retail sales, import prices, industrial production, business inventories, NAHB housing index.
• Wednesday: Japan trade balance; UK CPI; Eurozone CPI final; US housing starts and building permits, FOMC rate decision; BoC rate decision.
• Thursday: New Zealand GDP; Australia employment; Swiss trade balance; ; Eurozone current account; BoE rate decision; US jobless claims, Philly Fed manufacturing.
• Friday: Japan CPI, BoJ rate decision; Germany PPI; UK retail sales, public sector net borrowing; Canada retail sales.

EUR/USD Daily Outlook

Daily Pivots: (S1) 1.1709; (P) 1.1728; (R1) 1.1756; More...

Range trading continues in EUR/USD and intraday bias remains neutral. With 1.1607 support intact, further rise is expected. On the upside, above 1.1779 will target a retest of 1.1829 high. Firm break there will resume larger up trend to 1.1916 projection level next.

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. This will remain the favored case as long as 55 W EMA (now at 1.1174) holds.

Key Highlights

• EUR/USD remained in a positive zone and traded above 1.1700.
• A key bullish trend line is forming with support at 1.1705 on the 4-hour chart.
• Bitcoin gained bullish momentum and climbed above $116,000.
• USD/JPY is consolidating below the 148.20 resistance zone.

EUR/USD Technical Analysis

The Euro started a fresh increase above 1.1700 against the US Dollar. EUR/USD cleared 1.1750, tested 1.1780, and recently corrected some gains.

Looking at the 4-hour chart, the pair remained supported and settled above the 1.1700 level, the 100 simple moving average (red, 4-hour), and the 200 simple moving average (green, 4-hour). It is again rising with a move above the 50% Fib retracement level of the downward move from the 1.1779 swing high to the 1.1658 low.

On the upside, the pair could face resistance near the 1.1750 level or the 76.4% Fib retracement. The first major hurdle for the bulls could be 1.1780. A close above 1.1780 could set the pace for another increase.

In the stated case, the pair could rise toward 1.1850, above which the bulls could aim for a move toward 1.1880. Any more upsides could send the pair toward 1.1920.

On the downside, immediate support is 1.1700. There is also a key bullish trend line forming with support at 1.1705. The next key area of interest might be near 1.1680 and the 100 simple moving average (red, 4-hour).

Looking at Bitcoin, the bulls remained in action and they were able to push the price above the $116,000 resistance zone.

Upcoming Key Economic Events:

• NY Empire State Manufacturing Index for Sep 2025 – Forecast 2, versus 11.9 previous.
• ECB's President Lagarde speech.

Precious metals remain firmly bid, but leadership has shifted. Gold’s rally stalled just ahead of a key Fibonacci projection, while Silver broke out to a new 14-year high. Both metals remain supported by a mix of geopolitical risk, policy divergences, and strategic investor demand for hard assets.

Silver’s case is probably more compelling. The market faces a prolonged supply deficit and tightening physical availability, giving its rally deeper structural foundations. This dynamic, coupled with strong investor interest, has pushed prices higher and opened room for further gains on both near-term and medium-term horizons.

Near-term, Silver will remain bullish above former resistance at 39.49, now turned support. Next target is 61.8% projection of 28.28 to 39.49 from 36.93 at 43.85. Decisive break there could prompt upside acceleration to 100% projection at 48.14.

On the broader time frame, Silver has already cleared 100% projection of 21.92 to 34.84 from 28.28 at 41.20, setting up to 138.2% projection at 46.13. There is potential of further rally to 161.8% projection at 49.18 before topping, as the fifth wave of the five-wave rally from 17.54.

So in short, for Silver, holding 40 keeps the bullish structure intact, with acceleration toward 50 possible once 44 is cleared.

Gold, meanwhile, looks set to consolidate further in the short term, below 261.8% projection of 3267.90 to 3408.21 from 3311.30 at 3678.63. But pullback should be contained above 3511.49 support to bring rebound. Firm break of 3678.63 will target 323.6% projection at 3765.34 next.

The market prepared last week for this week’s U.S. Federal Reserve meeting and expectations of a 0.25% cut in interest rates. U.S. PPI inflation came in below expectations and CPI matched forecasts, making it highly likely that the Fed will cut rates. U.S. jobless claims were worse than expected, following weak payroll data earlier in the month, reinforcing the view of a slowing U.S. economy. The European Central Bank kept its policy rate unchanged at 2.15%, while gold extended its rally to fresh record highs on safe-haven demand and lower-rate prospects.

In currency markets, USD/JPY tested lower after the softer U.S. inflation data and on rising expectations that the Bank of Japan will raise rates this year. The pair found support and closed the week near unchanged. Japanese GDP data beat forecasts, and optimism over the appointment of a new prime minister following Ishiba’s resignation further supported sentiment toward Japan.

Equities remained the main focus as U.S. and Japanese stock indexes surged to record highs, driven by expectations of a U.S. rate cut, with the market looking for the next trigger to spark a large move in FX markets.

Markets This Week

U.S. Stocks

U.S. equities hit record highs again last week, supported by expectations that the Federal Reserve will begin cutting interest rates after soft U.S. inflation data. AI-related names remained strong, helping technology stocks outperform the broader market. However, while indexes reached new highs, the short-term uptrend lacks momentum, suggesting range trading is the preferred strategy ahead of the upcoming Federal Reserve meeting. Key resistance is at 45,750, 46,000, and 47,000, with support at 45,700, 45,000, 44,000, and 43,000.

Japanese Stocks

The Nikkei 225 gained 3% last week on optimism over a new Japanese prime minister and positive sentiment from strong U.S. equities. Better-than-expected Japanese industrial production confirmed the economy is performing more strongly than anticipated. Last week’s price action was very positive, so following the uptrend by buying on weakness looks like the best short-term strategy now. Resistance is at 45,000円 and 46,000円, while support is at 44,000円, 43,000円, and 42,000円.

USD/JPY

Stronger-than-expected Japanese GDP data increased expectations that the Bank of Japan will raise interest rates this year, bringing USD/JPY down to test support at 146 early last week. That support held, prompting a rebound toward the middle of the recent 146–149 range by the week’s end. Range trading remains the favored approach in the short term, with a preference for selling, which also suits the medium-term outlook. Key levels remain unchanged, with resistance at 148, 149, and 150, and support at 146 and 145.

Gold

Despite concerns that gold is overbought, prices climbed to fresh record highs last week ahead of the expected U.S. interest rate cut this week. The current buying is largely speculative, following the strong uptrend with no clear resistance on the charts. However, the likelihood of a quick reversal is increasing, making selling on signs of fading momentum the best short-term strategy, while medium-term traders may prefer to stay patient and wait for a retracement to buy. Resistance levels are at $3,600, $3,700, and $3,800, with support at $3,600, $3,500, and $3,450.

Crude Oil

WTI found support at last month’s lows early in the week as fighting intensified between Russia and Ukraine. However, the market met resistance at the downward-sloping 10-day moving average and closed the week near unchanged, staying under pressure close to support as concerns about oversupply and a slowing U.S. economy encouraged selling. With technical indicators pointing lower, selling into strength remains the preferred strategy. Resistance levels are at $65, $70, and $75, while support lies at $60 and $55.

Bitcoin

Bitcoin surged back above the key $112,000 level last week on expectations that the U.S. Federal Reserve will cut interest rates next week. Reports of large buyers returning to the market and increased demand for Bitcoin ETFs, alongside anticipation of positive regulatory actions for crypto ETFs, added to the bullish momentum. Now back above $112,000, the best approach appears to be buying on strength, with technical indicators pointing higher. Resistance levels are at $120,000, $125,000, and $150,000, while support lies at $112,000, $105,000, and $100,000.

This Week’s Focus

• Monday: China Industrial Production, E.U. Trade Balance, U.S. NY Empire State Manufacturing Index
• Tuesday: U.K. Unemployment Rate, E.U. Industrial Production, U.S. Retail Sales and Industrial Production
• Wednesday: Japan Trade Balance, U.K. CPI, E.U. CPI, U.S. Housing Starts and Fed Interest Rate Decision
• Thursday: Australia Unemployment Rate, U.K. BoE Interest Rate Decision, U.S.Initial Jobless Claims
• Friday: Japan National CPI and BoJ Interest Rate Decision, U.K. Retail Sales

This week is set to be busy, with the U.S. expected to cut official interest rates and central bank meetings in the U.K. and Japan where both are expected to keep rates unchanged. How each central bank explains its decision will be closely watched by traders and is likely to create volatility. U.S. retail sales and Japanese inflation are the key economic releases, and it will be interesting to see whether the recent narrow ranges in FX are broken or if equities and gold reverse. Overall, it should be a week full of trading opportunities.

China’s economy slowed in August, with key indicators falling short of expectations. Industrial output grew 5.2% yoy, down from 5.7% yoy in July and short of forecasts for 5.8% yoy, marking its weakest pace since August 2024. Retail sales also slowed, rising just 3.4% yoy versus 3.7% yoy previously and expectations of 3.8% yoy, signaling soft household demand despite ongoing government measures to support spending.

Investment activity showed the sharpest loss of momentum. Year-to-date fixed asset investment rose only 0.5%, far weaker than consensus 1.4% and July’s 1.6%. The drag came primarily from the property sector, where real estate investment plunged -12.9% in the first eight months. Excluding real estate, investment rose 4.2%.

The National Bureau of Statistics highlighted “many unstable and uncertain factors” in the global environment and warned that the economy still faces “multiple risks and challenges.” It urged stronger policy implementation to stabilize employment, businesses, and expectations, but the latest figures suggest momentum remains fragile, with property weakness continuing to weigh heavily on growth prospects.

New Zealand’s services sector deteriorated further in August, with BusinessNZ Performance of Services Index slipping from 48.9 to 47.5, well below the long-run average of 52.9. The reading also marks the 18th consecutive month of contraction. Both

Activity/Sales (46.2) and New Orders/Business (47.8) weakened, suggesting demand remains fragile. Employment improved slightly to 48.3 but remains in contraction territory, reflecting businesses’ reluctance to expand payrolls in the face of subdued activity.

The survey showed 59.6% of respondents made negative comments in August, an increase from July but still less pessimistic than June’s tally. Firms cited multiple pressures, including high interest rates, sticky inflation, and the cost-of-living squeeze eroding household spending. Rising operating costs, seasonal slowdowns, supply chain disruptions, and uncertainty over government policy also weighed on sentiment.

Full NZ BNZ PSI release here.

Platinum (PL) shows a bullish sequence from March 2020 low, confirming the right side is higher. In this article, we will explore the latest long-term Elliott Wave technical outlook.

Platinum (PL) Monthly Elliott Wave Chart

The monthly Platinum chart illustrates that the wave ((I)) rally peaked at 2308.8, followed by a wave ((II)) pullback that bottomed at 562. The pullback formed a zigzag Elliott Wave structure. From the wave ((I)) high, wave (A) declined to 752.1, wave (B) rallied to 1918.5, and wave (C) dropped to 562, completing wave ((II)) in a higher degree. The metal has since resumed its ascent in wave ((III)). From the wave ((II)) low, wave (I) reached 1348.2, with a wave (II) pullback concluding at 796.8. In the near term, as long as the 562 pivot low holds, the metal is expected to continue rising.

Platinum (PL) Daily Elliott Wave Chart

The daily Platinum chart shows that the wave ((2)) pullback ended at 843.1. From that low, the metal is nesting higher with wave (1) ended at 1016 and pullback in wave (2) ended at 870. Wave (3) higher is in progress as an impulse in lesser degree. Wave 1 of (3) peaked at 1105, followed by a wave 2 pullback concluding at 875.9. The metal has since resumed its upward trend in wave 3. In the near term, as long as the price stays above 875.9, expect Platinum to continue rising.

Ethereum: ⬆️ Buy

• Ethereum reversed from support area
• Likely to rise to resistance level 4750.00

Ethereum cryptocurrency recently reversed up from the support area located at the intersection of the support level 4250.00 (which has been reversing the price from the end of August), 38.2% Fibonacci correction of the upward impulse from August and the lower daily Bollinger Band.

The upward reversal from this from the support area (strengthened by the two intersecting up channels) started the active wave B.

Ethereum cryptocurrency can be expected to rise to the next resistance level 4750.00 (target for the completion of the active wave B.).

Markets entered last week with elevated anticipated and left with even sharper convictions. Weak U.S. labor data tilted sentiment decisively toward faster Fed easing, while equity markets used that prospect as a springboard to yet another round of record highs.

Bond markets echoed that view. US 10-year yield broke briefly below 4%, sending a signal that investors are ready to front-load expectations for deeper easing. In the currency markets, Dollar failed to reclaim ground, leaving the stage open for other majors to shine.

At the front of the pack, Aussie surged ahead, powered additionally by strong regional risk-on sentiment. Kiwi followed closely, while Sterling also managed to climb, finding just enough support to offset the weight of ongoing fiscal worries.

In stark contrast, Yen languished as domestic risk appetite overshadowed the support from falling US yields. Loonie and Dollar also slipped to the bottom tier. In between, Euro and Swiss Franc provided a measure of balance. Both benefitted modestly from Dollar weakness but stopped short of major gains.

Wall Street Extends Record Run, 10-Year Yield Presses 4%

U.S. equities extended their uptrend last week, with all three major indexes notching fresh record highs. NASDAQ led the charge, finishing Friday at a new peak, while S&P 500 recorded its best weekly performance since early August and its fifth advance in six weeks. DOW slipped slightly on Friday but comfortably held above the 46,000 mark for the first time in history.

The rally was powered by deepening conviction that the Fed will accelerate its easing cycle. Markets interpreted weak labor data — most notably the surge in initial jobless claims to a four-year high — as confirmation that the economy requires additional support. “Bad news was good news” for risk assets, with traders confident that the Fed will prioritize its employment mandate.

Inflation developments added to the dovish mood. August’s CPI matched expectations and showed no fresh escalation in core pressures. PPI undershot forecasts, hinting that tariff-related cost increases may not be passing through as aggressively as feared. Combined, the data reinforced the view that the Fed has room to cut without stoking inflationary risks.

For the September 17 meeting, a 25bps rate cut is fully priced in. Markets now assign roughly an 85% probability to another move in October and an 80% chance of a December cut. If the Fed’s updated projections and Chair Jerome Powell’s remarks align with this path, equities could find further fuel for gains into year-end.

Technically, NASDAQ is attempting to move away from its long-term ascending channel. Sustained trading above the resistance could trigger a new wave of buying, and push NASAQ to 100% projection of 10088.82 to 20204.58 from 14784.03 at 24899.78, which is close to 25k psychological level.

On the other hand, stretched conditions are emerging in the stock markets, as seen in overbought condition in W RSI, and bearish divergence condition in D MACD. Break of 21033.04 support would suggest the rally is tiring, opening the door for consolidation before any renewed push higher.

In fixed income, U.S. Treasuries also reflected the dovish tilt. 10-year yield dipped briefly to 3.996 before drawing support from near term falling channel, and recovered to close to 4.061%. While 10-year yield might still try to defend the 4% psychological level, any recovery should be capped below 4.188 support turned resistance.

The next directional move hinges on how the Fed frames its easing cycle. A signal of faster cuts or a lower terminal rate would likely drive yields down further. Next target is 138.2% projection of 4.629 to 4.205 from 4.493 at 3.907, or even further at 161.8% projection at 3.807.

Euro Sluggishness Limits Dollar Index Selloff

It was a classic bearish cocktail for Dollar last week — falling Treasury yields, firm risk appetite, and rising expectations for aggressive Fed easing. Yet Dollar Index ended the week only marginally lower, signaling hesitation among sellers despite the fundamental backdrop. The biggest factor preventing a steeper Dollar decline has been the sluggish Euro. Normally Dollar’s most liquid counterpart, the single currency has struggled to gather momentum.

Last week’s ECB meeting provided no spark, even though the Governing Council unanimously kept the deposit rate unchanged at 2.00% and President Christine Lagarde tried to sound upbeat. Lagarde emphasized that risks to growth had become “more balanced” following the U.S.–EU trade deal that trimmed tariff uncertainty. She argued that while higher tariffs, a stronger Euro, and rising global competition would weigh on activity this year, these headwinds should fade in 2026.

But the narrative was drowned out by France’s worsening political crisis. The ouster of Prime Minister François Bayrou underscored the fragility of President Emmanuel Macron’s government and revived fiscal sustainability fears at a time when long-term French yields are already elevated. At the same time, Germany continues to struggle with industrial malaise.

Sentix investor confidence confirmed this fragile backdrop. The index fell sharply in September to its weakest since April, with the survey blaming a toxic mix of French political instability, prolonged German weakness, an unfavorable tariff arrangement with the U.S., and the war in Ukraine. It warned that the modest summer recovery in sentiment had “disintegrated at a rapid pace” and saw little chance of an autumn rebound.

Against this backdrop, Euro’s inability to rally has blunted what could have been a more pronounced Dollar selloff. Dollar Index continues to lean lower, but without Euro strength, it lacks momentum to break decisively through critical support levels.

Technically, as long as resistance at 98.63 caps rebounds, the near term bias for Dollar Index is for another test of 96.37 low. That level could hold on the first attempt and trigger a bounce.

However, decisive break of 96.37 would firstly confirm resumption of whole down trend from 114.77. More importantly, sustained trading below the multi-decade channel floor at around 96 would have major bearish implications. It would open up deeper medium term down trend to 61.8% retracement of 70.69 (2008 low) to 114.77 (2022 high) at 87.52.

AUD/JPY Tops Weekly FX Performers Amid Asia Equity Boom

Asian stock markets also ended last week on a strong note, with bullish sentiment most evident in Japan and Hong Kong. The combination of softer U.S. yields, mounting Fed rate-cut expectations, and local catalysts created powerful momentum across the region, pushing indexes to multi-year and record highs.

In Tokyo, Nikkei surged more than 4% for the week, marking yet another record. The rally was fueled by multiple factors: Tech and AI-linked shares tracking NASDAQ’s strength, optimism over Fed easing, and renewed political hopes at home. The emergence of former economic security minister Sanae Takaichi as a frontrunner for the LDP presidency injected a uniquely domestic bullish factor, as investors looked for a potential return to Abenomics-style policies favoring fiscal support and monetary accommodation.

Trade developments added another tailwind. Japan recently secured a reduction in U.S. auto tariffs, easing a critical pressure point for the country’s key export sector. Together, these drivers made for a rare alignment of global and local positives, giving the Nikkei its strongest weekly performance in months.

Technically, Nikkei remains on track to 100% projection of 25661.89 to 42426.77 from 30792.74 at 47557.62. Outlook will stay bullish as long as 41863.20 support holds, in case of retreat.

Hong Kong’s Hang Seng Index also impressed, posting its largest weekly gain in six months and closing at the highest level since August 2021. The rally was supported by improving liquidity conditions, as well as the prospect that a U.S. rate cut could prompt the People’s Bank of China to ease policy further. Such a move could encourage mainland savers to rotate deposits into equities, bolstering valuations.

Additionally Hong Kong stocks remain undervalued relative to mainland peers, which recently rallied to decade highs. With additional “southbound inflows” from mainland investors using the stock connect program, liquidity conditions are likely to stay supportive, feeding optimism that the HSI still has room to catch up.

Technically, HSI is on track towards 161.8% projection of 14597.31 to 22700.85 from 14794.16 at 27905.69. For the near term, outlook will stay bullish as long as 25013.26 support holds, in case of retreat.

In currency markets, the risk-on tone spilled over in the region. AUD/JPY emerged as the week’s best-performer, closing 1.59% higher. Immediate focus is now on 38.2% projection of 86.03 to 97.41 from 94.38 at 98.72. Firm break there will pave the way to 61.8% projection at 101.41 next. Nevertheless, break of 97.38 support will bring consolidations first, before staging another rise.

AUD/USD Weekly Report

AUD/USD's rise from 0.5913 resumed through 0.6624 resistance last week. There is no sign of topping yet, and initial bias stays on the upside. Next target is 0.6713 fibonacci level. Firm break there will carry larger bullish implications. On the downside, below 0.6589 minor support will turn bias neutral and bring consolidations first, before staging another rally.

In the bigger picture, there is no clear sign that down trend from 0.8006 (2021 high) has completed. Rebound from 0.5913 is seen as a corrective move. While stronger rally cannot be ruled out, outlook will remain bearish as long as 38.2% retracement of 0.8006 to 0.5913 at 0.6713 holds. Nevertheless, considering bullish convergence condition in W MACD, sustained break of 0.6713 will be a strong sign of bullish trend reversal, and path the way to 0.6941 structural resistance for confirmation.

In the long term picture, fall from 0.8006 is seen as the second leg of the corrective pattern from 0.5506 long term bottom (2020 low). Hence, in case of deeper decline, strong support should emerge above 0.5506 to contain downside to bring reversal. On the upside, firm break of 0.6941 will argue that the third leg has already started back to 0.8006.