EUROPEAN FX UPDATE: Choppy trade amid light catalysts and with risk events looming

USD: DXY +0.1%; 97.486

• Edged higher through the European session shortly after printing session lows coming out of APAC hours, where for the most part DXY saw some relief from yesterday's extension of post-NFP selling and as longer-dated US yields retreated.


• In terms of state-side news, the US Senate Banking panel is to vote on Miran's Fed nomination on September 10th, according to Bloomberg. Further, White House is preparing a report critical of the Bureau of Labor Statistics, according to WSJ.


• The attention now turns to data releases, including the BLS prelim. benchmark revisions are scheduled today, followed by PPI on Wednesday and CPI on Thursday.


• DXY resides in a 97.259-97.517 range at the time of writing, with the next level to the downside the 24th July low at 97.109.

EUR: EUR/USD -0.1%; 1.1752

• Moves at the whim of the buck following initial choppiness coming out of Asian hours.


• In France, PM Bayrou lost in a landslide as expected, while President Macron is to name a new PM in the coming days, which may come after the September 10th strikes. The OAT-Bund spreads pushed wider after Bayrou’s defeat, though EUR/USD held steady, with focus now on Macron’s next PM pick and looming ratings risk from Fitch on September 12th.


• EUR/USD trades in a 1.1744-1.1780 band with the 24th July peak seen at 1.1788.

JPY: USD/JPY -0.6%; 146.64

• JPY firmed in European hours following source reports that the BoJ reportedly sees some chance of hiking this year, despite the political situation, via Bloomberg citing sources, but likely to keep rates unchanged on September 19th. Some officials are even of the view that a hike could be appropriate as early as October. Earlier sources via Reuters noted that while political uncertainty in Japan will not derail the BoJ's normalisation plan, it could impact the timing of the next hike: "BoJ does not need to hike in the midst of turbulence".


• This comes in the context of recent doubts thrown into the BoJ hiking plans after Japanese PM Ishiba decided to resign as LDP president and gave instructions to hold an emergency LDP leadership election.


• Nevertheless, markets still believe the rate will be maintained this year, with only some 13bps of hikes baked in, with the next 25bps hike seen in March 2026.


• USD/JPY fell under its 50 DMA (147.42) to a 146.56 trough from a 147.56 session high, with the next level to the downside the 14th August low at 146.22.

GBP: GBP/USD +0.1%; 1.3515

• Gained a firmer footing at the 1.3500 handle after G10 currencies generally took advantage of recent dollar selling, but with further upside limited amid light catalysts.


• Overnight, it was reported that UK Chancellor Reeves is to tell ministers to prioritise the fight against inflation in a Cabinet meeting today, according to FT, although this caused little immediate follow-through on exchange rates.


• Ahead, BoE's Breeden is due to speak as she is moderating a fireside chat at the BIS Innovation Summit ‘Realising innovation: paths to maturity for new models and technologies’, thus monetary policy commentary may be sparse.


• GBP/USD resides in a 1.3544-1.3583 range as it eyes the 14th August high at 1.3595.

Antipodeans: AUD/USD +0.3% 0.6608; NZD/USD +0.1%; 0.5947

• Holding the positive bias seen in APAC hours as the pairs are kept afloat after a firmer PBoC reference rate setting, but with gains capped following weaker Australian consumer sentiment and mixed business surveys.


• AUD/USD has reclaimed 0.6600 in a 0.6589-0.6610 intraday range as it takes aim at the 24th July peak at 0.6625.


• NZD/USD topped its 50 DMA (0.5957) and reached close proximity to its 100 DMA (0.5963).

09 Sep 2025 - 10:20- ForexEU Research- Source: Newsquawk