Bank of America Global Research previews tomorrow's September FOMC decision.

"The Fed is now widely expected to hike Wednesday by 25bps. Rates price this with ~85% likelihood, up from just 35% likelihood just 2 weeks ago. The sharp shift in Fed pricing was catalyzed by Warsh Jackson Hole (JH) speech + stronger labor & inflation data. It is the first part of a previously very out-of-consensus 75bps hike in '26 call from BofA US Economics," BofA notes.

"Fed faces simple choice at Sept FOMC: hike or risk large bond spike. If the Fed does not hike with current pricing, it risks a sharp and disorderly UST long end move. US 30Y could rapidly test 5.75%; UST buybacks would be futile to stop it. Bond price action, including post Friday's CPI, shows the bond likes orthodoxy  Orthodoxy = use rate hikes to slow inflation & quell long end rate spike (not buybacks)

Sept FOMC communications likely lean hawkish. SEP will show 50bps of total hikes in '26, Waller may dovish dissent. Big Q: which Warsh in presser? July FOMC or JH Warsh? We think JH, largely to support bond. If right, UST curve likely to twist flatten, USD to be supported, & risk challenged. If wrong, bigger Bessent "house" needed for bond," BofA adds.

• EUR/USD pressured by energy concerns, broader USD strength ahead of potential Fed hike

• Trsy yields hold firm ahead of 20-year auction as high oil underpins

• Germany's Merz: China squeezing European firms via industrial policy and FX practices

• EUR3.2B in Tuesday's 1.1550 expiries limit gains; huge 1.1500 strikes may limit downside this week

• Soft RSI and stochastics weigh after 100-DMA resistance at 1.1554 caps

• Strong futures volume suggests dip-buying near 1.1527 day's low and 55-DMA at 1.1522
EUR

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

• Cash hedging of soon-to-expire FX options can help to draw and contain spot if nearby, there are big ones in EUR/USD

• The biggest strike for Tuesday's 10-am New York cut expiry is a 1.1550 strike on €3.2 billion

• Wednesday has €1-billion at 1.1550-60 and 1.1585-1.1600 on €2.2 billion expiring before the key Fed decision

• Thursdays biggest strike expiries are at 1.1500-10 on €4.2billion, 1.1550 on €1 billion and 1.1590-1.1600 on €4 billion

• Friday's largest are between 1.1500-15 on €4.8 billion and at 1.1600 on €1.6 billion

• If EUR/USD breaks 1.1500 - Thursday and Friday have €1billion each at 1.1450 and a combined €8 billion 1.1400 strikes

• Related comment - EUR/USD: What FX options say ahead of the Fed meeting
EUR/USD FX option strikes expiring September 15-18

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

• Shares of cryptocurrency and blockchain-related companies fall premarket

• Bitcoin falls nearly 3% ahead of voting on Clarity Act later in the day, and the Federal Reserve's rate decision on Wednesday

• The Clarity Act aims to create a regulatory framework for cryptocurrencies, and had stalled amid concerns of insufficient ethics and illicit finance safeguards

• Bitcoin , the world's biggest cryptocurrency, down 2.9% at $76,833.83, while Ether falls 3.8% to $2471.74

• Crypto exchange Coinbase Global falls 4.7%

• Crypto miners: Riot Platforms Inc MARA Holdings , Hut 8 , and Bit Digital down between 1.6% and 2.2%

• BTC buyer Strategy slips 4.5%

• BTC mining machine maker Canaan Inc down 5%

• ProShares Bitcoin Strategy ETF falls 2.8%

• iShares Bitcoin Trust ETF down 2.8%

• As of last close, BTC down 12.4% YTD, ETH down 17%

(Reporting by Utkarsh Hathi in Bengaluru)

• USD/JPY has climbed from 154.22 to 155.25, on Tuesday, EBS data shows

• Bets on GPIF repatriation may be overblown as any shift would be slow

• Spot is trading above the broken 154.66 level is a 23.6% retrace of the 160.39-152.89 Sept fall

• A daily close above the 154.66 level would add to the upside potential

• However, a failure to close above 154.66 would signal a "bull trap"

• A bull trap is set when a market breaks above a tech level but reverses and is usually bearish

• 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)

• Cable falls to 1.3470 as dollar benefits from higher oil prices, UST yields

• 10-year UST yield rose to 5.02% in Asia, its highest level since 2007

• 1.3470 is six pips shy of Monday's five-week low (1.3455 is 200DMA)

• 1.35 is now a resistance level (1.3501 was Asian session high)

• UK jobs market stays soft before BoE rate call. CPI data due Wednesday

• BoE to stop selling 20-year and 30-year gilts, Telegraph reports

GBPUSD

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

• Ichimoku cloud twists often attract and one is close by at 1.1490

• The EUR/USD daily cloud twists on September 15

• The Federal Reserve is expected to hike interest rates by 25bps

• Traders betting on a drop before the event may book profits after

• Fed hike to offset recent ECB hike, balance

• EUR/USD volatility is low and Fed hike unlikely to change that

•
EURUSD

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

• FX option strikes expire at 10am New York/14:00 GMT on Tuesday September 15

• EUR/USD: 1.1485-90 (463M), 1.1525 (487M), 1.1535-45 (866M), 1.1550 (3.1BLN), 1.1560-70 (1.9BLN)

• 1.1575-85 (1.2BLN), 1.1600-05 (1.9BLN)

• USD/CHF: 0.8115-25 (419M), 0.8195-0.8200 (774M), 0.8225 (295M)

• GBP/USD: 1.3395-1.3400 (560M), 1.3495-1.3505 (633M).

EUR/GBP: 0.8550 (664M)

• AUD/USD: 0.7045-50 (1.3BLN), 0.7085-90 (376M), 0.7100-10 (938M), 0.7175 (1BLN)

• USD/CAD: 1.3800 (796M), 140.00 (3.6BLN)

• USD/JPY: 153.50 (687M), 153.95-154.00 (1.1BLN), 154.50 (581M), 155.00 (707M), 156.00 (540M)

• FX options wrap - The volatility trap tightens its grip (Richard Pace is a Reuters market analyst. The views expressed are his own)

• AUD/USD -0.3% Tue on oil supply concern and rising Fed hike expectations

• AUD slide towards 0.7080 100-DMA appears likely as downswing momentum builds

• Futures pricing implies 92.1% chance of FFR hike Wed, Broad USD index +0.1%

• Middle East instability compounds existing inflation concern, WTI +1.6% Tue

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

• Range Asia 0.7121-41 support 0.7080 0.6920, resistance 0.72825 0.7661
AUD Daily 21/55/100-DMA


DXY Daily 55-DMA

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

• AUD/USD -0.2% Tue as DXY and Fed rate hike expectations rise in unison

• Oil supply concerns escalate with no end to Middle East hostilities in sight

• Futures pricing indicates 93.2% probability of 25 bps FFR hike Wed

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

• AUD move toward 0.7080 100-DMA likely as downside potential develops

• Range Asia 0.7128-41 support 0.7080 0.6920, resistance 0.72825 0.7661
AUD Daily 21/55/100-DMA


DXY Daily 55-DMA

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

• Shares of Australia's Manhattan Gold fall 15.7% to A$0.0215, their lowest level since July 20

• Shares on track for worst day since May 18 if trends hold

• Diversified miner discloses placement of A$4.5 million ($3.21 million) at A$0.02 per share, a 21.6% discount to last close on September 10

• More than 5.4 million shares change hands, about 2.8x the 30-day average

• YTD, stock down 23.2%, including the session's moves

($1 = 1.4019 Australian dollars)

(Reporting by Subhalakshmi Dey in Bengaluru)

• BTC recoils more than 1.2% in Asia Tuesday, last $78,120

• Falls back under 61.8% Fibo retracement level at $78,774

• Bearish ahead, if it ends Tues below key support at $77,385

• That would place it back inside Bollinger downtrend channel

• Risk assets under pressure as UST yields heading north again

• USD strengthens as US10y 4.983%, recoups from late Mon pullback
BTC

(Ewen Chew is a Reuters market analyst. The views expressed are his own.)

• NZD/USD -0.7% from Mon 0.5819 high amid building Fed rate hike anticipation

• NZ Aug electronic card retail sales -0.9% m/m (prior +1.3%), +0.2% y/y

• Futures pricing currently suggests 93.2% chance of 25 bps Fed hike Wed

• DXY firms & UST yields trade above 5% for first time since Oct 2023

• WTI +0.5% to $101.93 a barrel as oil supply concerns continue to escalate

• Clean break below 0.5760 support zone would pave way for move toward 0.5627

• RBNZ Assistant Governor Angus McGregor due to speak Thur

• Range NZ 0.5775-865, support 0.5755-60 0.5627, resistance 0.5995 0.6012
DXY Daily 55-DMA


NZD Daily 21/55/100-DMA

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

• AUD/USD +0.4% from Mon 0.71085 low; Fed hike momentum to limit further gains

• Futures pricing now implies 93.2% probability of 25 bps hike by FOMC Wed

• DXY +0.4% late Mon & UST yields trade above 5% for first time since Oct 2023

• Brent crude +1.7% to $106.34 a barrel as Middle East deterioration continues

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

• AUD move toward 0.7080 100-DMA likely in coming sessions as downside opens

• Overnight range 0.71085-49 support 0.7080 0.6920, resistance 0.72825 0.7661
AUD Daily 21/100/200-DMA


DXY Daily 55-DMA

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

Morgan Stanley Research previews the UK August inflation report due on Wednesday.

"We expect headline CPI to tick up to 3.1%Y driven almost entirely by energy - auto pump prices rose by 7%M in August," MS notes.

"We see core inflation at 2.6%Y, unchanged from July. We forecast services inflation at 0.3%M with the rise driven by base effects in airfares. Our RPI inflation forecast rounds up to 3.5%Y, and is below the market fixing," MS adds.

• Ether traded lower over the weekend, fell below the 10-DMA

• Monday trading saw Ether fall back below the 10-DMA but then rally

• Ether rallied 2466.71-2544.07, it was up +0.97% in NY's afternoon

• Downward reversals for the USD , US yields

helped buoy

• Rallies off the lows in gold, silver, equities also contributed to Ether's lift

• A daily bull hammer formed and daily RSI turned upward again

• Rising monthly RSI & bull flag on the daily chart reinforce bullish tech signals

• A test toward the 3050.00 area still seems plausible
eth

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

• NY opened near 0.7130 after 0.7168 traded overnight, drop extended early NY

• USD, US yield continued overnight rallies, US 10-yr yield

pierced 5.0%

• Yields, USD then moved downward which helped riskier assets recover some losses

• Gold, silver, copper & equities lifted off the lows while USD/CNH turned lower

• AUD/USD neared 0.7150, was down only -0.33% during NY's afternoon

• Techs lean bearish; RSIs are falling & the pair is below the 10- & 21-DMAs

• A daily bull hammer candle formed which may be a worry for AUD/USD bears
audusd

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

ANZ Research previews this week's September BoJ meeting.

"Looking ahead, a 25bp hike is widely expected. The primary focus will be on the Bank of Japan’s forward guidance. Given that markets are pricing in approximately 90bp of additional hikes, we believe it will be difficult for the BoJ to adopt a stance that is more hawkish than current expectations. We therefore maintain a modestly positive view of USD/JPY and expect the pair to move towards 155–156. If the BoJ’s commentary is particularly hawkish and brings forward additional hikes currently priced out, potentially at intervals shorter than quarterly, the pair could remain near current levels," ANZ notes.

"Two other scenarios appear less likely in our view. A 50bp (outsized) hike, as implied by BoJ member, Hajime Takata, in recent commentary, would likely push USD/JPY towards 150. Conversely, if the BoJ leaves rates unchanged at this meeting, we expect the pair to retest 160 and potentially move higher," ANZ adds.

• 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)