EUROPEAN FX UPDATE: USD kicks the week off on a softer footing ahead of a slew of jobs metrics

USD: DXY -0.2%; 97.92

• USD has continued to pull back from the upside last week, which was spurred by a strong raft of US data (GDP, durables, weekly claims) that prompted a mild hawkish repricing in Fed easing expectations. This week's data docket will likely prove to be more pivotal for the USD given its focus on the labour market with JOLTS due tomorrow, ADP Wednesday, weekly claims on Thursday and NFP on Friday. Note, ISM manufacturing and services are also due this week. As it stands, markets assign an 89% chance of a 25bps cut next month with a total of 42bps of loosening seen by year-end. Fed speak is due today from Waller, Hammack, Musalem, Williams and Bostic but the market will likely be more focused on the aforementioned upcoming data prints. Note, on Capitol Hill, US President Trump will discuss the looming government shutdown with congressional leaders on Monday. DXY has slipped below its 50DMA @ 98.02 and made its way back onto a 97 handle. The next level of support comes via the 25th September trough @ 97.73.

EUR: EUR/USD +0.2%; 1.1717

• EUR is taking advantage of the softer USD with incremental macro drivers for the region on the light side over the weekend. The main data focus this week is on flash EZ inflation metrics on Wednesday. Expectations are for HICP in September to rise to 2.2% Y/Y from 2.0%, with the super-core metric seen holding steady at 2.3% Y/Y. Investec (and as also suggested by the consensus view), looks for a “temporary” departure from target on account of “volatile elements rather than a change in the underlying trend.” Ahead of the EZ-wide prints, Spanish HICP printed in-line with consensus at 3.0% (prev. 2.7%), whilst the M/M metric only picked up to 0.1% from 0.0% (exp. 0.3%). Further on Spain, the nation's sovereign debt rating was upgraded at Fitch on Friday on account of increased growth prospects. EUR/USD has continued its ascent on a 1.17 handle with a current session peak @ 1.1733. The next upside target comes via the 25th September peak @ 1.1754.

JPY: USD/JPY -0.6%; 148.53

• JPY sits at the top of the G10 leaderboard with gains overnight seen as Japanese participants positioned for a pivotal week featuring the BoJ Tankan Survey (Wednesday), US Non-Farm Payrolls (Friday), and the LDP leadership election (Saturday). The pair tested and eventually breached 149.00 to the downside from a 149.51 high, a move coinciding with DXY’s break below 98.00. Thereafter, JPY strength was accelerated following comments from BoJ's Noguchi who noted that upside risks are becoming more important in making policy decisions and the need to adjust policy has heightened. Markets currently assign a 36% chance of a 25bps hike next month. USD/JPY has delved as low as 148.53, taking out the 25th September low @ 148.55. Focus is now on a test of the 200DMA to the downside @ 148.41.

GBP: GBP/USD +0.3%; 1.3443

• Cable is on the rise and extending its move on the 1.34 handle with price action largely being driven by the softer USD. In the absence of any tier 1 UK data for the upcoming week, attention will be on the Labour Party conference in Liverpool. Today sees UK Chancellor Reeves due to give remarks around midday London time. Ahead of which, she has declared that she is committed to her fiscal rules and not increasing VAT, income tax or national insurance. Additionally, reporting via Bloomberg notes that Reeves risks a confrontation with the head of the government’s fiscal watchdog over plans to scrap her annual spring forecast. Note, the Autumn budget is due on November 26th. BoE's Ramsden is due to give remarks at 13:00BST. Cable has risen as high as 1.3450 with the next resistance point coming via the 50DMA @ 1.3467.

Antipodeans: AUD/USD +0.3%; 0.6566. NZD/USD +0.3%; 0.5790

• Antipodeans eventually gained after both initially struggling to fully benefit in APAC hours from the softer dollar amid a cautious risk tone at the time. Attention stays on tomorrow’s RBA meeting, where markets price only a slim 8% chance of a 25bps cut with consensus for no change. Antipodeans showed little reaction to the firmer CNY fixing by the PBoC. AUD/USD has continued its ascent on a 0.65 handle with a current session peak @ 0.6573. Next upside target comes via the 0.66 mark, above which lies the 25th September high @ 0.6604. NZD/USD is eyeing a test of 0.58 with a current session high @ 0.5795.

29 Sep 2025 - 10:05- ForexData- Source: Newsquawk