• Cable holds softer tone in NY session, risk-off flow and an energy bid keep USD supported

• Key focus on upcoming policy decisions. Markets price a Fed hike, BoE f/c to hold but could tilt hawkish

• UK data risk ahead-jobs (Tue) and CPI (Wed) could have a say on the BoE decision

• Technically, GBP/USD is holding above the 55/100/200-day MA cluster at 1.3443-1.3466

• A clean break below opens 1.3300, a bounce from here keeps 1.3600 in sight

• Near-term resistance comes in at 1.3550
GBPUSD daily chart

Justin McQueen is a Reuters market analyst. (The views expressed are his own). ((Email: ))

Bank of America Global Research flags a quant signal for EUR/JPY downside.

"EURJPY downside screens as the most attractive expression of further JPY strength. Our signals are most clearly bearish on the pair, while the combination of a bearish ADX trend and a downside Bollinger Band breakout suggests strong negative momentum. With carry again screening as the best performing factor, EURJPY also screens favourably given its low carry cost," BofA notes.

"The fundamental backdrop is also supportive. If Japanese public pension funds rebalance towards domestic assets, EUR may be most exposed given the size of the implied flows relative to daily FX turnover... Finally, the trade largely avoids heightened near-term USD event risk ahead of the September FOMC meeting," BofA adds.

AUD/USD is facing mounting downside risks, having fallen to a four-week low on Monday amid pressures from global bond yields and weakening technical signals.

Central banks worldwide are adopting an increasingly hawkish stance to combat inflation. Notably, the ECB raised rates last week, and markets have increased the odds that the Fed, RBA, and BOJ will follow suit with hikes at their September meetings. This hawkish shift has fueled a broad rally in global bond yields, driven not only by rate hike expectations but also by growing government deficits and increased bond issuance.

The rise in yields and rates poses a threat to global economic growth, potentially pushing some already-struggling economies toward contraction. Given the Australian economy's heavy reliance on global growth, a persistent rise in the global interest rate complex would likely weigh on its outlook. This anticipated slowdown, combined with expectations that the RBA may eventually need to pivot to a more dovish stance, is currently pressuring AUD/USD.

Technically, the picture has turned bearish. The pair trades below both its 10- and 21-day moving averages, and has broken below the 23.6% Fibonacci retracement of the 0.6867-0.7238 rally. Both daily and monthly RSI readings point to downward momentum, while a bearish inverted hammer candle for September reinforces the negative outlook.

Should these bearish forces continue, AUD/USD could test the 0.6980-0.7010 zone, a confluence area containing the 61.8% Fibonacci retracement, the 200-day moving average, and August's monthly low. A break below this support zone would bring the 0.6825/50 level into focus as the next downside target.
audusd

(Christopher Romano is a Reuters market analyst. The views expressed are his own)

Credit Agricole CIB Research previews this week's September FOMC decision.

"The Fed’s September rate decision is a very close call, as we see the upcoming FOMC meeting as a truly live one. Even if we have some sympathy for the arguments in favour of a hike, we continue to lean towards the Fed staying on hold once again, though we have about as little conviction in this view as possible, and even if the Fed does leave rates unchanged we would expect a hawkish tone that keeps rate hikes on the table at upcoming meetings," CACIB notes.

"We expect the statement to remain much shorter and more concise than it had been in recent years, in line with the first two meetings under Warsh...In the press conference, even if the Fed does not hike, we would expect Warsh to stick with the more hawkish tone of Jackson Hole, as this was much more favourably received than his July press conference," CACIB adds.

Goldman Sachs Research previews this week's September FOMC meeting.

"We added a 25bp rate hike at this week's September FOMC meeting to our forecast last Friday following the August CPI report. The report had little impact on our inflation view but pushed market pricing of a hike to nearly 90%, high enough that the FOMC will likely want to avoid the market reaction that would likely follow from remaining on hold.

We continue to expect two cuts in 2027 but now expect them in September and December (vs. June and December previously). We have also raised our forecast for the terminal rate to 3.25-3.5% (vs. 3-3.25% previously)," GS notes.

"The key question for the meeting is whether the median dot will show one hike or two in 2026. We expect a 10-8 majority to show one hike because some participants might be ambivalent about the first hike and some might want to avoid pushing market expectations any higher," GS adds.

FX options are inherently forward-looking, thriving on volatility and offering a real-time read on positioning and sentiment ahead of event risk. That makes the recent shift in USD/JPY options flow worth watching closely as both the Fed and BoJ prepare to deliver policy decisions this week.

When USD/JPY began its slide from 160.00 in early September, options markets moved fast to hedge the growing possibility of a break toward 150.00, with demand for downside strikes surging. That 150.00 strike demand has since tailed off, as spot losses stalled below 153.00 and early positions booked significant profits on the back of a rapid rise in implied volatility and downside skew, which — combined with the lower spot price — pushed up the cost of downside strike options sharply higher. Notably, traders using RKO structures to cheapen those downside strikes have been lifting their knockout triggers closer to 150.00 from 145.00 now — the level they'd want spot to avoid if hoping to preserve the value of the attached JPY call vanillas.

The more interesting development now is renewed demand for shorter-dated strikes above 155.00, positioning that would hedge or benefit from a near-term bounce back above that level. Most of these options are timed to expire in the wake of Friday's BoJ decision, with the window also capturing Wednesday's Fed outcome. Markets have grown used to the BoJ under-delivering on the hawkish rhetoric priced in ahead of meetings, and this flow suggests traders may be positioning for a repeat.

Adding to that picture, risk reversals — the JPY call-over-put premium — have fallen sharply since the initial drop from 160.00, retracing almost the entire spike from 1.75 to 2.75 implied vols. In other words, the aggressive surge in premium for USD/JPY downside protection that defined early September has largely unwound.

These option markets prices shifts suggest traders are hedging the risk that the BoJ could underdeliver on hawkish expectations — a scenario that could see USD/JPY reclaim 155.00, if it hasn't already by the time the decision lands. At the same time, the lifting of RKO knock-out triggers closer to 150.00 from the mid 145's suggests 150.00 is being treated as a much tougher barrier to breach near term — it would now require a materially higher, more hawkish bar from the BoJ (or a correspondingly dovish surprise from the Fed) to threaten it, especially given the sharp USD/JPY drop already seen over the past two weeks.

Related comments - Warsh, Trump and the Fed's credibility tightrope

The FX volatility trap shines bright
USD/JPY 25 delta risk reversals

(Richard Pace is a Reuters market analyst. The views expressed are his own)

• U.S.-listed shares of gold miners fall premarket, tracking a decline in bullion prices [GOL/]

• Spot gold down 1.5% at $4,280.61/ounce after posting a third straight weekly decline on Friday

• Prices decline as expectations of a U.S. Federal Reserve interest-rate hike this week strengthened after recent hot inflation data and rallying oil prices

• Higher interest rates reduce the appeal of non-yielding gold despite its inflation-hedge status

• Top miners Newmont and Barrick Mining down 2.7% and 2.3%, respectively

• South African miners Gold Fields , AngloGold Ashanti and Harmony Gold decline between 3.3% and 4.3%

• Canadian miners: Agnico Eagle Mines falls 3.7% and Kinross Gold dips 2.4%

(Reporting by Sumit Saha in Bengaluru)

• Dollar firms, yen wobbles near 7-month high ahead of Fed, BOJ decisions

• USD/JPY has risen from 153.38 to 154.61, on Monday, so far according to EBS data

• However spot is stuck under the 154.66 level, 23.6% of the 160.39-152.89 September fall

• A break and daily close above the 154.66 level would hint at a bigger recovery

• USD/JPY and EUR/JPY tend to move in tandem, log correlations are high above +0.5

Daily Chart


Daily Chart


Correlation Chart

(Martin Miller is a Reuters market analyst. The views expressed are his own)

Compared with the surge in European gas prices after Russia's invasion of Ukraine in 2022, the near-doubling in prices since June is relatively modest and seems less concerning for EUR/USD traders who are already betting on a drop.

In 2022, gas prices rose more than 30-fold, and the eurozone current account flipped from a large surplus to a substantial deficit. This year, by contrast, a large surplus has been maintained even as gas prices in Europe have roughly doubled. The price of natural gas in North America is unchanged.

Unsurprisingly, the impact on EUR/USD has been much more modest. The pair collapsed from around 1.18 in August 2022 toward 0.98 back then, whereas this year it eased from roughly 1.18 at the start of the conflict in the Middle East to just below 1.14 before rebounding above 1.17.

Positioning has also shifted: traders who were betting about $23 billion on euro gains in February 2026 are now wagering around $6 billion on a decline, while volatility, as reflected by the one-month options benchmark, which had surged into double digits in 2022, has slumped since March and is not far from all-time lows.EURUSD, betting, natgas in Europe and North America,
eurozone c/a and volatility

(Jeremy Boulton is a Reuters market analyst. The views expressed are his own)

• AUD/USD drops to 0.7138, its lowest level since September 2

• U.S. dollar stronger on hawkish shift in Fed expectations

• Growing consensus Fed to raise rates this week, and again in December

• Ahead of Fed meeting, Trump says U.S. should have world's lowest interest rate

• 0.7122 (Sept 2 low) and 0.7100 are AUD/USD support points

• CFTC data: net AUD short shrank by 11% to 34,870 contracts in week to Sept 8

AUDUSD

(Robert Howard is a Reuters market analyst. The views expressed are his own)

• Cable falls to 1.3488 as hawkish shift in Fed expectations buoys USD

• Fed meeting starts Tuesday. Safe-haven dollar also benefits from higher oil prices

• 1.3479 was Friday low as USD rose on hotter than expected 0.3% US core CPI print

• Friday low was four pips shy of Sept 2 low. 1.3535 was rally high from 1.3479

• UK PM Burnham to meet business leaders on Monday to discuss growth

• CFTC data: net GBP short rose 18% to 58,836 contracts in week to Sept 8

GBPUSD

(Robert Howard is a Reuters market analyst. The views expressed are his own)

• FX option strikes expire at 10am New York/14:00 GMT on Monday September 14

• EUR/USD: 1.1500 (1.2BLN), 1.1545-50 (1.6BLN), 1.1575-80 (1.1BLN), 1.1585-90 (320M), 1.1600 (1.2BLN)

• 1.1610-15 (754M), 1.1620-25 (2.3BLN), 1.1630-35 (746M), 1.1645-55 (1.3BLN)

• USD/CHF: 0.8170 (400M), 0.8195 (446M)

• GBP/USD: 1.3390-1.3400 (383M), 1.3515 (137M), 1.3540-45 (186M)

• AUD/USD: 0.7125-30 (414M), 0.7160 (200M), 0.7175 (376M).

NZD/USD: 0.5750 (620M), 0.5830 (292M)

• USD/CAD: 1.3750 (315M), 1.3925-30 (332M)

• USD/JPY: 152.00 (203M), 154.00 (863M). EUR/JPY: 177.50 (260M)

• Friday's FX options wrap - US CPI delivers the jolt, but not the follow-through (Richard Pace is a Reuters market analyst. The views expressed are his own)

• AUD/USD +0.1% from Mon 0.7141 low, but sellers likely near Fri 0.7168 close

• Brent crude rallies 3.1% to $107.90 a barrel in Asia trading Mon

• Saudi pipeline damage & fresh weekend attacks compounds oil supply concerns

• Markets expect 25 bps FFR hike Wed after higher-than-expected U.S. core CPI

• RBA officials (including Bullock) before parliamentary committee on Fri

• AUD bounces from lower hourly Bollinger band, but may resume downside drift

• Break below 0.7122 support zone would likely spur further short-term losses

• Range Asia 0.7141-68 support 0.7122 0.6920, resistance 0.72825 0.7661
Brent Crude Daily 21-DMA


AUD Hourly Bollinger Study


AUD Daily 21/55/100-DMA

(James Connell is a Reuters market analyst. The views expressed are his own.)

• AUD/USD -0.3% Mon, support dissipating as oil supply concern returns

• Pair pushing lower hourly Bollinger band, will slow downside progress

• However, break below 0.7122 support zone would re-accelerate move

• WTI +3.5% following Saudi East-West pipeline damage & fresh weekend attacks

• Investors anticipate FFR hike Wed after higher-than-expected U.S. core CPI

• RBA Assistant Governor Sarah Hunter fireside chat in Canberra Mon

• Range Asia 0.7141-68 support 0.7122 0.6920, resistance 0.72825 0.7661
AUD Hourly Bollinger Study


AUD Daily 21/100/200-DMA

(James Connell is a Reuters market analyst. The views expressed are his own.)

• Shares of Kalgoorlie Gold Mining fall 13% to A$0.02, their lowest level since February 6

• Shares mark their biggest intraday pct loss since August 4

• Gold explorer announces A$2.3 million ($1.64 million)placement at A$0.02 per share, a 13% discount to last close

• Says proceeds will be used to accelerate exploration activities throughout its Pinjin gold project in Western Australia

• Co also announces entitlement offer to raise further A$1.1 million

• More than 4 mln shares change hands, about 3.8x the 30-day average

• YTD, stock down 60%, including session's moves

($1 = 1.3990 Australian dollars)

(Reporting by Subhalakshmi Dey in Bengaluru)

• USD/JPY 153.38-79 EBS in Asia so far, heavy despite strong US CPI data

• Friday saw push down from 154.61 to 153.24, IMM CTA data may have helped

• IMM CTAs reversed positions from net shorts to net longs, 1st time since Feb

• US yields higher upping Fed rate hike bets this week but shrugged off

• Wider JGB-US Treasury rate differentials also shrugged off

• Higher crude oil prices also look to have been shrugged off

• Japanese exporters, other again sellers in early Asia trade

• Weak technicals, test of 152.89 low Sept 8, 152.28 trough February 12 eyed

• 152.10 low of year on January 27 and 152.00 also in speculator sights

• USD/JPY back below 153.79 100-HMA, 153.80-154.10 hourly Ichimoku cloud

• Underlying resistance at also descending 200-HMA up at 155.41

• In options, only significant expiries today 152.00 $503 mln, 154.00 $863 mln

• Related comments , , ,

• Also

• US markets , , , on crude

• On IMM CTAs , , US CPI

• On Middle East , , for more click on [FXBUZ]

USD/JPY daily:


USD/JPY hourly:

(Haruya Ida is a Reuters market analyst. The views expressed are his own)

• NZD/USD +0.1% Mon after weekend attacks on Saudi Arabia & ships in the Gulf

• Saudi East-West pipeline damage stoking oil supply fears, WTI +2.5%

• U.S. Aug core CPI +0.3% m/m (poll +0.2%), investors expect Fed hike Wed

• NZD targets 0.5762 support zone, break below will accelerate sell off

• RBNZ Assistant Governor Angus McGregor due to speak Thur

• Range NZ 0.58099-19, support 0.5795 0.5762, resistance 0.5995 0.6012
NZD Daily 21/100/200-DMA

(James Connell is a Reuters market analyst. The views expressed are his own.)

• AUD/USD -0.1% Mon amid fresh attacks on Saudi Arabia & ships in the Gulf

• Saudi East-West pipeline damage puts global oil supply under further strain

• U.S. Aug core CPI +0.3% m/m (poll +0.2%), markets expect FFR hike Wed

• RBA Assistant Governor Sarah Hunter fireside chat in Canberra Mon

• AUD 11-week rally intact, but break below 0.7122 support would be terminal

• Pair's target remains 0.72825 50-month high, Fed & RBA outcome dependent

• Range Asia 0.7160-68 support 0.7122 0.6920, resistance 0.72825 0.7661
AUD Daily 21/55/100-DMA

(James Connell is a Reuters market analyst. The views expressed are his own.)

The euro slipped against a mixed dollar on Friday after slightly hotter-than-expected U.S. CPI boosted expectations of a Fed rate hike next week to a near certainty.

Headline CPI increased 0.4% in August, matching the median estimate, while the core reading rose an above-forecast 0.3%, its largest increase since April. Annual readings of 3.4% and 2.4%, respectively, remain above the Fed target of 2%.

Markets odds of a Fed hike next week jumped to 90% from about 70% on Thursday.

U.S. consumer sentiment weakened in early September as higher gasoline prices and trade tensions fueled inflation concerns.

WTI oil held near $100/bbl as Iran planned a regional meeting to discuss commercial shipping routes, while Houthi militants advanced in Yemen.

EIA said Saudi Arabia's crude supply fell to its lowest level in more than three decades in August.

As an energy summit approaches, the White House is considering using the Defense Production Act to boost U.S. refining capacity.

ECB President Christine Lagarde said the central bank will remain data-dependent, while chief economist Philip Lane warned that energy prices could hit consumption this autumn.

On the eve of a BRICs summit, Indian Prime Minister Narendra Modi and Russian President Vladimir Putin agreed to deepen India-Russia ties.

DXY edged up and the volatility curve steepened with one-month DYX implieds slipping to 5.48% as bearish risk reversals eased.

EUR/USD eased amid Fed tightening expectations though failed to move out of its September range near 1.16 as bearish momentum faded.

EUR/CHF rose to its highest level since April 2025, with Swiss National Bank Chairman Martin Schlegel warning that higher energy prices are boosting hike expectations outside Switzerland.

GBP/USD remained rangebound despite firmer Fed hike odds as resilient UK data keeps sterling underpinned above its 1.3475 September low, with nearby resistance around 1.3550.

USD/JPY slid after failing to hold CPI-driven gains, though momentum eased near its 153.30 100-week moving average as U.S. shares and yields advanced, leaving resistance in place near 154.60 and the 155 pivot level.

AUD/USD rebounded from a CPI-driven drop to 0.7150 and recovered to 0.7187; a move back above the 21-DMA keeps the bias bullish, with support at 0.7150 and resistance at 0.7187.

Treasury yields were up as much as 8 basis points as the curve flattened. The 2s-10s curve fell about 4 basis points to +32.6bp, lowest since July.

The S&P 500 rose nearly 1%, fueled by tech and consumer shares.

WTI oil slid 2.2%, pulling back from a near 4-month high above $100/bbl.

Gold gained 1.1% on broadly higher precious metal prices while copper was flat.

Heading toward the close: EUR/USD -0.16%, USD/JPY -0.44%, GBP/USD +0.07%, AUD/USD +0.19%, DXY +0.10%, EUR/JPY -0.61%, GBP/JPY -0.38%, AUD/JPY -0.24%.(Editing by Burton Frierson Robert Fullem is a Reuters market analyst. The views expressed are his own)

• NY opened near 0.7170 after AUD/USD moved upward in overnight trading

• The pair fell sharply as USD, US yields rallied after Aug. CPI

• The pair fell below the 21-DMA, hit a 7-session low of 0.7150

• Post-CPI USD, yield gains were quickly erased however & both turned down

• Gold, silver, copper, equities rallied sharply and USD/CNH turned lower

• AUD/USD rallied above the 21-DMA, hit the 10-DMA traded 0.7187

• Diverging daily RSI, move back above 21-DMA give daily techs a bullish lean
audusd

(Christopher Romano is a Reuters market analyst. The views expressed are his own)

Bank of America Global Research reviews today's US August CPI report.

"Headline CPI rose 0.4% m/m, in line with expectations. However, core CPI came in firmer than expected at 0.3% m/m (0.29% unrounded), leaving the y/y rate unchanged at 3.4%. The details also prompted us to revise our August core PCE tracking estimate up from 0.26% m/m to 0.30% m/m.," BofA notes.

"Combined with current market pricing of 21bp for next week's FOMC meeting, today's report should greenlight a Fed hike," BofA adds.

• GBP/USD choppy in NY trade, U.S. CPI core m/m came in firm, but the move lacks conviction

• Dollar’s failure to bid on ostensibly positive data suggests the path of least resistance is lower

• Market-implied odds now price an 87% chance of a Fed hike next week, up from 67% pre-CPI

• UK GDP beat forecasts, supporting a more constructive tone for sterling

• Meanwhile, the currency remains surprisingly resilient to the moves higher in yields and oil

• Spot essentially flat on the week, underscoring ongoing indecision
GBPUSD daily chart

Justin McQueen is a Reuters market analyst. (The views expressed are his own). ((Email: ))

ANZ Research discusses the key EUR/USD technical levels to watch going into next week's FOMC meeting.

"Positioning is becoming more supportive. EUR/USD noncommercial net shorts narrowed, leaving scope for further short covering if ECB expectations remain firm. Next week’s euro area ZEW survey data are the key domestic releases. However, the FOMC will likely be the larger catalyst for EUR/USD through its impact on relative rate expectations," ANZ notes.

"Technicals remain constructive but momentum is flattening, consistent with consolidation ahead of the FOMC rather than trend continuation. EUR/USD is trading between 1.1615, the 38.2% retracement of the January–June decline, and 1.1634, the 200- dma. The 50- and 100-dma are rising and providing support at 1.156 and 1.153 beneath. Firm ECB pricing and scope for further short covering favour a break above 1.1634, with initial resistance at 1.1709 and then 1.175.

Dips towards 1.159 should remain supported, although a hawkish Fed and a close below 1.153 would leave the pair vulnerable to a deeper pullback," ANZ adds.

EUR/USD slipped to a seven-session low on Friday after U.S. August month-on-month core CPI surprised to the upside, triggering a spike in the U.S. interest rate complex and dollar as markets raised the odds of a Fed rate hike next week and beyond. Despite this near-term pressure, however, the pair retains upside potential if those hikes actually materialize.

The stronger-than-expected core CPI print boosted the probability that the Fed will hike rates next week. If the Fed follows through and signals that its inflation fight is far from over, it would point to further tightening ahead and underscore the central bank's seriousness about controlling inflation.

Interestingly, price action at the long end of the Treasury curve hinted that this inflation battle may already be underway: after spiking to fresh multi-year and multi-decade highs, both 10-year and 30-year yields reversed course and moved lower.

This reversal suggests a broader dynamic—if the Fed's anti-inflation stance is genuine, economic growth could slow, eventually forcing the Fed toward rate cuts down the road. The pullback in Treasury yields and the dollar may already reflect investors positioning for that outcome.

Should this scenario continue to unfold, the dollar could find it difficult to sustain a rally and might instead weaken further as market participants unwind long-dollar positions. A softer dollar backdrop would be supportive for EUR/USD, potentially fueling a rally toward the 2025 yearly high.
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(Christopher Romano is a Reuters market analyst. The views expressed are his own)