Bank of America Global Research discusses the USD outlook into the September FOMC decision on Wednesday.

"There remains considerable two-way risk for the USD at Wednesday's meeting. At the extremes, we see the FOMC-related bull and bear case for the USD as the following:

Bullish USD case: The Fed hikes and some combination of the following are met: 1) The SEP shows broadening support for additional hikes (relative to the June SEP); 2) growth and inflation forecasts are elevated even in the context of further hike guidance; 3) Chair Warsh himself (intentionally or unintentionally) offers some indication that a more prolonged campaign is necessary to return inflation on the path to 2%.

Bearish USD case: Of course, if the Fed opts to hold in the face of sticky inflation and market pricing, we expect the dollar to depreciate swiftly and significantly. But even in the event of a hike, the USD could soften with dovish or non-committal language from Warsh," BofA notes.

Bottom line: Fed expected to hike 25bp. SEP to show 50bps of total hikes in '26. Fed choice is simple: hike or bond spike. Warsh likely to deliver hawkish hike, which should support higher front end rates & twist flattening of UST curve. USD outcome will be determined by Fed ability to "out-hawk" market expectations & other G10 central banks.

• AUD/USD +0.2% from Tue 0.71171 low in subdued trading as FOMC outcome looms

• Futures pricing implies 93.2% chance of FFR hike Wed, DXY & UST yields firm

• WTI +4.0% to $105.48 a barrel as Saudi Arabia starts cancelling EU shipments

• AUD rangebound pre-Fed, but eventual drift toward 0.7080 100-DMA likely

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

• Overnight range 0.71173-34 support 0.7080 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.)

• EUR/USD eased within narorw 1.1527-52 range as surge in oil lifts dollar, yields

• Losses are cushioned by haven-related dip buying ahead of large 1.1500 option expiries this week.

• Upside is capped by the 100-DMA at 1.1554, while the 55-DMA at 1.1522 provides support.

• Volatility remains subdued ahead of Wednesday's Fed decision, where a 25 bp rate hike is expected

• A break beyond the 1.14-1.16 range is needed to generate momentum

• ECB's Moulin: higher yields reflect increased debt issuance and rising inflation expectations

• German Chancellor Friedrich Merz canceled NY trip due after electoral setbacks
EUR

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

• GBP$ soft in NY afternoon, -0.14% at 1.3478; NorAm range 1.3497-1.3471

• Pair hovers near trend low ahead of Wednesday's expected Fed 25bp hike

• BoE seen on hold on Thursday; LSEG's IRPR indicates +9bp (36% odds) by BoE

• Further out the curve, BoE policy seen slightly above the Fed may stall declines

• Fiscal concerns remain a key focus of cable traders as 10-yr gilts trade at 19-yr highs

• GBP$ supt 1.3464 Mon/Tues lows, 1.3443 flat 100-DMA, 1.3407 50% of 1.3140-1.3675

• Res 1.3500 big-figure resistance, 1.3517 the falling 10-DMA, 1.3566 daily high Sept 9

GBP$ Chart:

(Paul.Spirgel is a Reuters market analyst. The views expressed are his own)

CIBC Research previews the September FOMC decision.

"The Fed simply can’t wait on the sidelines, and it’s not because core CPI was one tick higher than expected. Failing to at least begin nudging the fed funds rate higher would raise two risks that exceed the risks to the economy from a higher policy rate. For one, long term interest rates that feed into mortgages could end up spiking even further if the Fed seems unwilling to lean against inflation. If the bond market didn’t do that immediately, upcoming increases in headline CPI could do so by adding to inflation expectations," CIBC notes.

"The doves on the Fed have likely flipped over in the face of climbing bond yields, a strong jobs report, a slight uptick in core CPI and, importantly, an escalation in oil prices without much assurance on when that might end. Warsh cannot allow himself to be in a minority dissenting camp in such an early vote in his role as Chair, and his last speech opened the door for him to vote for a hike if that was the sentiment of the committee," CIBC adds.

• AUD$ holds slight loss in NY afternoon, -0.12% at 0.7132; NorAm range 0.7134-0.7124

• FX market subdued ahead of Fed rate decision Wednesday; more action in bonds, oil

• Oil rise tempers AUD weakness, though broader risk-off stirs haven flows into USD

• Alt-CCY BTC hit hard on rising rate expectations, gold dip less austere

• RBA also seen on hawkish path, LSEG's IRPR prices 1.4 rate hikes by Dec meeting

• AUD$ res 0.7141 Tuesday high, 0.7173 daily conversion line, 0.7200 psychological lvl

• Supt 0.7109 daily low Sept 14, 0.7100 big-figure support, 0.7080 the 100-DMA
AUD$ Chart:

(Paul Spirgel is a Reuters market analyst. The views expressed are his own.)

Goldman Sachs Research previews the September BoE meeting on Thursday.

"We expect the MPC to hold Bank Rate at 3.75% at this week's (17 September) meeting. A 6-3 vote looks most likely, though there is some risk of a 5-4 split. We expect the communications to acknowledge that risks of material second-round effects have intensified since the last meeting given rising energy prices," GS notes.

"Our baseline is that the Committee reiterates that it stands ready to act as necessary to return inflation to target but refrains from providing a strong steer on the upcoming meetings, though there is some risk that the minutes signal that policy tightening is likely to be needed," GS adds.

EUR/USD needs a decisive break of the 1.14-1.17 range before a sustained trend can emerge. A thinning option expiry calendar may open that door.

The pair remains trapped between a rising 55-day moving average near 1.1522 and the 100-day moving average at 1.1554, leaving price action compressed and momentum muted. Nearby option-related flows are also contributing to the stalemate, as cash hedging activity around large expiries continues to attract and contain spot.

A cluster of 1.1550 strikes expires on Tuesday, which could modestly ease resistance for bulls. However, additional option interest remains concentrated closer to 1.16 later this week. On the downside, roughly EUR9 billion of expiries are parked near 1.15, with a similar amount around 1.14. These sizable option positions may continue to anchor EUR/USD until they roll off, after which price action could become more directional.

The key question is what catalyst can break the impasse. Low one-week implied volatility suggest the upcoming Fed decision may not generate a lasting move. Mid-month, dip-buying on Tuesday may be a relative-value play against rising global bond yield or the view that a Fed hike may be a one-off event.

ECB speakers this week may reinforce a tightening bias if elevated energy prices persist, though that support could prove temporary. Political risks also linger should pro-EU cohesion weaken.

EUR/USD remains near its April 2025 high of 1.1573 and is testing the upper end of its four-month 1.14-1.17 range. A break above 1.17 or below 1.14 is needed to trigger a sustained move. Until then, range trading remains the preferred strategy.
EUR


EUR expiry

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

Standard Chartered Research previews the September FOMC decision.

"The correct Fed policy decision in our view is straightforward - stay on hold until the noise from tariffs and data revisions dissipates....," SC notes.

"We continue to expect the FOMC to hold policy rates on 16 September...An unneeded hike will have a reputational impact if data suggest inflation pressures are diminishing 

An on-hold decision may hurt the USD and the long end of the curve; a hike would likely stabilise both. The statement and SEP may change little; Warsh looks set to face a difficult press conference," SC adds.

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.