EUROPEAN FX UPDATE: Quiet trade in FX with all majors in narrow ranges awaiting the next catalyst

USD: DXY U/C; 98.15

• DXY remains confined to a tight range after trading little changed overnight and following the previous day's ultimately flat performance as data and market-moving events for the buck were sparse.


• The White House’s removal of Fed Governor Lisa Cook is seen as negative for the dollar, with the matter now headed for a protracted legal process, while Cook’s FOMC voting rights remain in question. This, alongside the recent appointment of Stephen Miran, sets up the 17 September FOMC as an interesting meeting. Markets currently price an 89% chance of a 25bps cut at that meeting.


• Back to today, the attention now turns to incoming US data, including GDP and Initial Jobless Claims scheduled today, followed by the latest PCE data on Friday.


• Any bounce in the dollar on the numbers could be short-lived, with Fed’s Waller – now leaning dovish – speaking later tonight. Waller is slated to speak at 23:00 BST on the economy.


• DXY currently resides in a narrow 98.05-98.21 parameter at the time of writing, after dipping under yesterday's trough at 98.15. 50 DMA resides at 98.04 today, whilst the 21 DMA resides at 98.34.

EUR: EUR/USD U/C; 1.1637

• EUR/USD is moving in tandem with the buck after yesterday's intraday recovery and rebound from a brief dip beneath the 1.1600 handle.


• There has been little in terms of fresh updates from the French political debacle. French Finance Minister Lombard said the public deficit will be on target in 2025, 2026 budget is almost ready, text that gets voted will be the "fruit of compromise".


• EZ sentiment data printed sub-forecasts across all fronts but did little to move the EUR.


• ECB minutes from July are due today; while that meeting briefly lifted short-dated EUR swaps, rates have since climbed another 10bp, leaving little room for fresh upside from the release, according to ING.


• EUR/USD resides in a current 1.1631-1.1654 range at the time of writing, with the 21 DMA at 1.1631 (matching today's low) and 50 DMA at 1.1657.

JPY: USD/JPY -0.1%; 147.25

• USD/JPY oscillates within a narrow band and struggles for a clear direction after recent fluctuations and amid the indecisive risk appetite in Japan.


• Comments from BoJ's Nakagawa garnered very little reaction as she reiterated the BoJ will continue to raise the interest rate if the outlook for economic activity and prices is realised.


• Markets currently only price a 10% chance of a 25bps hike at the 19th September meeting, with the first 25bps hike not fully priced until March 2026.


• USD/JPY bounced off levels near its 50 DMA (146.98) this morning, notching a current range between 147.01-147.49.

GBP: GBP/USD U/C; 1.3493

• GBP/USD at the whim of the dollar, having briefly reclaimed 1.3500 status in the overnight session but with upside capped amid quiet newsflow.


• That being said, overnight headlines suggested the UK Treasury is said to be considering a tax hike on landlords by imposing national insurance on rental income ahead of Chancellor Reeves’ autumn budget, according to The Times.


• UK PM Starmer is planning a cabinet shake up, according to FT; expected to appoint new economic advisor ahead of autumn budget.


• Aside from that, data and speakers remain on the quieter side for GBP, with Cable currently on either side of its 50 DMA (1.3493) in a 1.3484-1.3518.

Antipodeans: AUD/USD +0.1%; 0.6512. NZD/USD +0.1%; 0.5861

• Antipodeans hold a mild upward bias against the dollar in quiet newsflow.


• Strength was seen overnight after the PBoC continued to strengthen the yuan reference rate.


• The currencies were unfazed by weaker-than-expected Australian private capex data and mixed New Zealand business surveys.

28 Aug 2025 - 10:20- ForexData- Source: Newsquawk