EUROPEAN FX UPDATE: USD holds onto yesterday's gains ahead of a raft of Fed speak

USD: DXY U/C; 97.86

• USD has paused for breath after a notable pick-up yesterday, which didn't have a clear or obvious macro driver. Broadly, the USD has continued to pick up since last week's FOMC policy announcement with comms from the Fed (ex-Miran and Bowman) largely adopting a cautious stance. Most recently, voter Goolsbee has cautioned against a series of rate cuts and said he is uncomfortable with overly frontloading cuts. Today's docket sees a deluge of Fed speak with voters Goolsbee, Williams, Miran, Schmid, Barr, Bowman and non-voters Logan and Daly all due on deck. Markets price an October cut at 92% with a total of 42bps of loosening seen by year-end. On the data slate, weekly claims will be eyed for any further deterioration in the labour market, alongside durable goods and trade metrics. Note, Barclays' passive month-end and quarter-end rebalancing model shows moderate USD selling against all majors. DXY has ventured as high as 97.91, running out of steam ahead of yesterday's 97.92 peak. If breached, the 50DMA sits just above the 98 mark @ 98.02.

EUR: EUR/USD U/C; 1.1740

• EUR is steady vs. the USD with incremental macro drivers for the Eurozone on the light side. Geopolitical headlines surrounding Ukraine/Russia and drone activity over certain nation's remain frequent but so far not having any obvious impact on the FX space with ING making the observation that "if investors were substantially more worried about military conflict at NATO's eastern border, CEE currencies would be a lot weaker, as would German equity markets". With the ECB on hold and a lack of notable EZ data releases, the USD will likely provide the greatest source of near-term traction for EUR/USD. The pair sits just above yesterday's trough @ 1.1727 and the WTD low @ 1.1726.

JPY: USD/JPY -0.1%; 148.71

• USD/JPY was choppy overnight and within a tight range with the pair initially trimming some of Wednesday’s USD-driven gains before reversing back towards session highs in catalyst-light trade. BoJ minutes from two meetings ago discussed the case for future rate hikes if the economic and price outlooks are realised, though timing remained divided. Markets price a 72% chance of a 25bps rate hike by year-end. Elsewhere, US President Trump reportedly plans to visit Japan on 28th or 29th of October, according to TV Asahi; Chief Cabinet Secretary Hayashi said no decision has yet been made on the visit. USD/JPY has pulled back a touch from yesterday's 148.91 high, delving as low as 148.57 but stopping shy of the 200DMA @ 148.51.

GBP: GBP/USD U/C; 1.3447

• GBP is flat vs. USD and EUR with macro drivers for the UK notably lacking and nothing of note on today's agenda. Yesterday's hawkish-leaning remarks from BoE's Greene have had little sway on markets with the policymaker noting she is less concerned about a rapid decline in the labour market, risks from trade persist but have abated somewhat, and highlighted that the risks to the inflation outlook have shifted to the upside. As is the case with EUR/USD, the dollar is likely to dictate near-term direction for Cable. The pair currently sits towards the bottom end of yesterday's 1.3426-1.3528 range and below its 50DMA @ 1.3471.

Antipodeans: AUD/USD +0.2%; 0.6595. NZD/USD +0.1%; 0.5822

• Both are a touch firmer vs. the USD and at the top of the G10 leaderboard with little in the way of newsflow out of Australia or New Zealand. AUD/USD ran into resistance at the 0.66 mark and is contained within yesterday's 0.6574-0.6628 range. NZD/USD hit a fresh MTD low overnight @ 0.5808 as AUD/NZD breached 1.13 to the upside before staging a modest recovery.

CHF: EUR/CHF +0.1%; 0.9337

• As widely expected, the SNB refrained from delving into NIRP and kept its policy rate at 0%. The decision to do so was largely due to inflation coming in a touch above the SNB's forecast (albeit only just above the bottom end of its target range) and a broader reticence to take policy below the 0% mark. The policy statement reiterated that the Bank remains ready to intervene in forex markets as needed. The SNB refrained from adding any language around the CHF, such as it being "highly valued" despite it being the best performing currency YTD vs. the USD. Additionally, it left its reserve tiering system unchanged; some had speculated a potential tweak, which could have prompted banks to hold fewer deposits at the SNB and thus soften the CHF. From an economic perspective, inflation projections were left unchanged and the SNB warned over the impact of the US' trade policies. Market pricing moved in a hawkish direction since the announcement, with just 5bps of easing implied by end-2026 vs 10bps heading into the announcement. EUR/CHF saw some fleeting downside before returning to pre-release levels.

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