On Wednesday, Federal Reserve official Williams expressed support for interest rate cuts but did not convey confidence in a reduction at the September policy meeting. He indicated that policymakers need to monitor economic data during the upcoming meeting. "Risks are becoming more balanced; we just need to observe how the data evolves," Williams stated. Meanwhile, traders assign an 87% probability of a rate cut at the September FOMC meeting. In the Eurozone, the risk of an early general election in France is increasing, constraining the euro's upward potential. Earlier this week, French Prime Minister François Bayrou called for a confidence vote on his €44 billion budget plan scheduled for September 8. In response, opposition parties are expected to oppose the confidence vote, potentially leading to an early parliamentary election in France.

Regarding tariffs, the U.S. has imposed tariffs of up to 50% on Indian imports, effective Wednesday, escalating tensions in U.S.-India relations. These measures include a 25% punitive tariff on oil imports from Russia. India plans to provide financial assistance to affected exporters and is committed to trade diversification by expanding into regions such as China, Latin America, and the Middle East, with key commodities like steel, aluminum, and passenger vehicles exempt from tariffs. Federal Reserve Board member Cook announced plans to initiate legal action over President Trump's attempt to dismiss her—prompting renewed debate over the independence of the Federal Reserve. Her attorneys argue that Trump's attempt is unfounded, while the Fed emphasizes that her 14-year term safeguards the long-term interests of the American people. The Federal Reserve stated that, unless a court rules otherwise before the September 16-17 meeting, her term will remain unchanged. Market reactions included stock market volatility and a weakening dollar, supporting the view of a strategic downward trend for the U.S. dollar.

In the 1D timeframe, the MACD indicator for the EURUSD shows a death cross between the MACD line and signal line, indicating waning bullish momentum. The ascending momentum histogram is gradually diminishing, with lower highs observed, while the RSI remains around 50, also exhibiting decreasing peaks. The price has not reached new highs and forms a head and shoulders top pattern, signaling a potential bearish divergence. In the short term, the market is likely to consolidate or decline. Currently, the price is supported by the middle Bollinger Band and the EMA50; holding above these levels could sustain an upward trend. A break below these supports may lead to further declines toward the lower Bollinger Band and the EMA200, approximately at 1.146 and 1.123 respectively. In the 1W timeframe, the price is oscillating upward along the EMA12 with a reduced slope, RSI at around 60, and a double top formation. The MACD shows a high-level death cross, with the MACD line and signal line approaching the zero-axis from below, indicating an ongoing correction. A break below the EMA12 could push the price down toward the middle Bollinger Band or the EMA50, around 1.14 and 1.118. It is recommended to go short at the highs in the short term.

Trading Direction: Sell

Entry Price: 1.164

Target Price: 1.14

Stop Loss: 1.183

Support: 1.159, 1.145, 1.14

Resistance: 1.17, 1.183, 1.19

In the Eurozone, Germany’s GfK Consumer Climate Index for September fell sharply to -23.6, missing expectations of -21.5 and down from the previous reading of -21.7. This marks the third consecutive monthly decline and highlights the fragile state of household confidence in Europe’s largest economy. The report revealed a steep drop in income expectations, with concerns over potential job losses and weaker spending intentions adding to worries about the region’s uneven recovery. The deterioration in sentiment continues to weigh on the euro, reinforcing the challenges faced by policymakers as demand softens.

At the same time, political uncertainty in France is exerting additional pressure on the single currency. Prime Minister François Bayrou has tied his €44 billion budget proposal to a crucial vote of confidence in parliament, scheduled for September 8. The move has raised the risk of a government collapse or even early elections, intensifying questions about political stability in the Eurozone’s second-largest economy.

Looking ahead, Thursday’s calendar will draw close market attention. The release of Eurozone confidence surveys and the ECB Monetary Policy Meeting Accounts may offer fresh insight into the Governing Council’s latest debate over inflation and growth risks. In the U.S., weekly jobless claims will provide an early look into labor market conditions, while Friday’s Core PCE Price Index—the Fed’s preferred inflation gauge—remains the most anticipated data point of the week.

On the U.S. policy front, political interference concerns resurfaced after President Donald Trump announced plans to dismiss Fed Governor Lisa Cook. The move is seen as an effort to influence the Federal Reserve and potentially redirect monetary policy, reigniting debate over the institution’s independence. According to the CME FedWatch tool, money markets now price in an 87.2% probability of a 25-basis-point cut in September.

Meanwhile, Fed officials continue to shape market expectations. Dallas Fed President Lorie Logan stressed the need for clearer communication as the central bank weighs possible adjustments. She cautioned that focusing solely on banks’ short-term demand for reserves risks inflating the balance sheet unsustainably, and instead called for prioritizing longer-term needs through Treasury holdings.

Fed Chair Jerome Powell last Friday struck a more dovish tone, suggesting that rate cuts could come as soon as September given “rising downside risks to the labor market.” He also acknowledged that tariffs may create a temporary inflationary shock, though such effects could fade over time, potentially allowing for a less restrictive stance. Still, Powell emphasized the delicate balance: inflation risks remain skewed to the upside while employment risks are tilted to the downside.

Richmond Fed President Thomas Barkin echoed caution on Tuesday, describing the outlook as warranting only a “modest adjustment” in rates, reflecting his view of a modestly expanding economy. Against this backdrop, Treasury yields have been subdued: the 10-year yield eased two basis points to 4.246%, while U.S. real yields ticked up to 1.826%. Markets now turn their attention to Thursday’s second estimate of Q2 GDP, where expectations of 3.1% growth could support the dollar if exceeded, or reinforce a dovish outlook if missed.

EURUSD has largely traded sideways over the past month, with price action oscillating within a defined range. However, the pair recently came under renewed pressure as it approached the 100- and 200-period moving averages, suggesting a possible repeat of earlier bearish momentum. If this pattern holds, another downside move could unfold, with the next target near 1.1600, where key support aligns. On the 1-hour chart, the 100- and 200-period moving averages are positioned at 1.1643 and 1.1651, making these levels critical to watch for potential bearish acceleration.

Momentum indicators also add weight to the downside case. The RSI has climbed to 62, nearing overbought conditions. A move closer to 70 could trigger renewed selling pressure. Additionally, a notable divergence has emerged between price and RSI: while EURUSD has set lower highs, the RSI has posted higher readings. This divergence suggests waning bullish strength and raises the possibility of a trend reversal. If confirmed, the combination of resistance at moving averages and weakening momentum could open the path for a deeper correction.

Trading direction: Sell

Entry price: 1.1651

Target price: 1.1610

Stop loss: 1.1670

Validity: Sep 05, 2025 15:00:00

President Donald Trump’s move to dismiss Federal Reserve Governor Lisa Cook has been widely interpreted as an attempt to exert influence over the central bank and potentially steer monetary policy in his favor. The action has raised renewed concerns about the independence of the Federal Reserve, a theme closely watched by investors. Money markets are now pricing in nearly an 87.2% probability of a 25-basis-point rate cut in September, according to the CME FedWatch tool.

In the meantime, Dallas Fed President Lorie Logan has emphasized the need for clearer policy communication as the Fed evaluates possible adjustments to its strategy. She cautioned that addressing only the growing short-term demand for reserves could lead to an unsustainably large balance sheet. Instead, she stressed the importance of focusing on banks’ longer-term reserve requirements, with the Fed maintaining its balance sheet mainly through longer-dated Treasuries.

Last Friday, Fed Chair Jerome Powell signaled that a rate cut could be considered as early as September, citing “rising downside risks to the labor market” and a shift in the balance of risks that may justify a recalibration of policy. While acknowledging that tariffs might have a temporary inflationary impact, Powell suggested such pressures could fade, creating room for a less restrictive stance. Still, he warned that inflation risks remain tilted to the upside, while employment risks lean to the downside—highlighting the delicate trade-off currently confronting the central bank.

On Tuesday, Richmond Fed President Thomas Barkin reinforced a cautious stance, remarking that his outlook points to only a “modest adjustment” in rates, reflecting his view that the economy is moving forward at a moderate pace.

Meanwhile, U.S. Treasury yields have been under pressure. The 10-year yield slipped two basis points to 4.246%, while U.S. real yields—derived from nominal yields adjusted for inflation expectations—edged up 1.5 basis points to 1.826% at the time of writing.

Attention will soon shift to Thursday’s release of the second estimate of U.S. Q2 GDP. Expectations point to a 3.1% annualized growth rate, but any upside surprise could provide short-term support for the U.S. dollar. Conversely, a softer print may reinforce the market’s dovish rate outlook.

Across the Pacific, the Japanese yen drew support from comments by Bank of Japan Governor Kazuo Ueda. He noted that wage increases are broadening beyond large corporations and are likely to accelerate further amid tight labor conditions. His remarks have strengthened expectations that the BoJ could raise interest rates in the coming months. Traders will now look to Thursday’s Tokyo Consumer Price Index data, which could validate Ueda’s concerns about persistent inflation. A stronger reading may heighten pressure on the BoJ to tighten policy further, offering additional support for the yen.

Adding to the backdrop, Japan’s Economy Minister and chief trade negotiator Ryosei Akazawa stated ahead of his U.S. visit that he intends to request an executive order from Washington to lower reciprocal tariffs on automobiles—a move that could have trade and currency implications.

USDJPY recently faced downward pressure after approaching the 148.04 level—a zone that has repeatedly triggered selling momentum in recent sessions. Should this pattern repeat, a fresh leg lower could develop, targeting the rising trendline that coincides with support near 146.61. The price reaction at this level will be critical: a rebound could mark another attempt to defend the broader uptrend, while a clean break below may open the door for a deeper correction.

Adding weight to the bearish case, the 100- and 200-period moving averages on the 4-hour chart sit at 147.55 and 147.78 respectively. With USDJPY recently closing below these moving averages, downside momentum may continue to strengthen toward the next support zone. On the flip side, if the pair manages to reclaim the 148.00 threshold, buyers could eye the 148.81 resistance as the next upside target.

Trading direction: Sell

Entry price: 147.45

Target price: 146.65

Stop loss: 148.50

Validity: Sep 05, 2025 15:00:00

West Texas Intermediate (WTI) crude futures on the New York Mercantile Exchange (NYMEX) hovered cautiously near Tuesday’s low of $63.00 per barrel during Wednesday’s European trading session, reflecting a market in wait-and-see mode ahead of fresh U.S. inventory data and escalating geopolitical tensions that could weigh on global oil demand.

Market participants are closely monitoring the weekly U.S. Energy Information Administration (EIA) report for the week ending August 22, with expectations pointing to a modest decline in crude stockpiles. Analysts surveyed by industry sources anticipate a 2 million barrel reduction, a slowdown from the 6.01 million barrel draw reported last week. While inventories are expected to continue their decline, the pace of reduction has moderated, indicating that underlying demand may be softening.

Adding to market unease, U.S. President Donald Trump announced on Tuesday a sharp increase in tariffs on imports from India, imposing a 50% levy on Indian purchases of Russian crude. The tariff measure, set to take effect at 12:01 a.m. EDT (09:31 p.m. IST) Wednesday, has raised questions over the trajectory of global oil demand. India, one of the world’s largest oil importers, could see demand for energy soften if the tariffs disrupt supply chains or make Russian crude less competitive. Note that while Indian refiners have diversified their sources in recent years, a sudden cost shock from U.S. tariffs could temporarily curtail buying, adding bearish pressure on crude prices.

On the technical front, WTI crude continues to trade within a cautiously bullish framework. Prices have been forming higher highs and higher lows on intraday charts, reflecting an underlying uptrend, but momentum remains fragile. The $64.00 level is emerging as a crucial pivot; a sustained move above this zone could open the door to a short-term target of $65.24.

Conversely, a breach below $63.338 on the four-hour chart could signal a breakdown of the bullish structure, potentially triggering a renewed slide toward lower support levels and invalidating the current uptrend.

BUY WTI

ENTRY PRICE: 63.50

STOP LOSS: 61.60

TAKE PROFIT: 67.00

The U.S. dollar staged a modest rebound against the Japanese yen during Asian trading hours on Wednesday, with USD/JPY climbing back toward 147.60 after slipping in the previous session. The recovery, however, remains fragile, as traders increasingly question the Federal Reserve’s independence following a dramatic political intervention in Washington.

On Tuesday, President Donald Trump announced he was removing Federal Reserve Governor Lisa Cook from her post, marking the first time in the institution’s 111-year history that a sitting president has ousted a central bank governor. The move sent shockwaves through financial markets, raising fears that the White House could seek to exert direct influence over monetary policy at a time when inflation management and rate decisions remain critical for the global economy.

Market analysts note that the removal of Cook opens the door for Trump to reshape the Fed’s decision-making. According to reports from Reuters, a vacancy on the seven-member board gives the president an opportunity to tilt the balance of power in favor of nominees aligned with his economic agenda. Trump has already advanced White House economist Stephen Miran for a temporary role set to expire in January and has floated him as a potential permanent replacement for Cook. The Wall Street Journal further reported that David Malpass, former president of the World Bank, is also being considered for the high-profile appointment.

The uncertainty comes at a delicate moment for the dollar. While resilient U.S. data has supported the greenback in recent weeks, questions over the Fed’s credibility could restrain further gains. “Markets are not just trading data anymore,” one Tokyo-based strategist remarked. “They are trading politics—and political interference in the Fed is a major red flag for investors who rely on the institution’s independence.”

Meanwhile, the Japanese yen has found some support from developments at home. Japan’s political backdrop, often a source of volatility, appears to be stabilizing following a recent surge in approval for Prime Minister Shigeru Ishiba. A Yomiuri newspaper poll published Monday showed Ishiba’s support rising 20% despite his coalition’s loss of a parliamentary majority in July. The rebound in public backing is seen as improving policy continuity at a time when the government is navigating economic reform and foreign trade negotiations.

In a sign of Japan’s ongoing economic engagement, Asahi TV reported Wednesday that Akazawa, Japan’s top trade negotiator, will return to the United States on Thursday to discuss fresh Japanese investment initiatives. The talks come amid heightened scrutiny of global trade relations and Washington’s evolving stance on Asian partnerships.

Beyond politics, traders are also bracing for key Japanese economic data later this week, with Tokyo’s Consumer Price Index (CPI) and Retail Trade figures due Friday. These releases could prove pivotal in shaping expectations for the Bank of Japan, which has been cautiously adjusting its ultra-loose monetary policy stance.

From a technical perspective, USD/JPY is showing signs of resilience. The pair managed to bounce higher in recent intraday trading, aligning with a broader bullish short-term trend. Momentum indicators, including the Relative Strength Index (RSI), suggest the currency pair has successfully worked off overbought conditions, providing scope for further gains. Moreover, the pair’s recent move above the 50-day Exponential Moving Average (EMA50) has alleviated some negative pressure, improving the prospects for an extended advance.

Key resistance lies at 148.90, a level that has acted as a significant consolidation zone in recent weeks. A decisive daily close above this threshold would invalidate the current bearish bias and shift sentiment firmly toward the upside. Should such a breakout occur, traders anticipate follow-through gains toward 149.75, with 150.20 emerging as the next major upside target.

BUY USDJPY

ENTRY PRICE: 148.00

STOP LOSS: 147.100

TAKE PROFIT: 150.200

Following a decline to 146.57 last Friday, the USDJPY has rebounded this week. On Tuesday, we observed a bounce from oversold conditions as the asset was briefly sold off to the 147.00 level, suggesting a potential end to the downtrend and a likely continuation of the rally from Friday's low. Subsequently, the price action aligned with our expectations, resulting in a breakout above the 147.94 consolidation on Wednesday.

Currently, the price appears to be range-bound. Today, we anticipate further upside for the USDJPY, with bulls targeting a test of last Friday's sell-off starting point.

1-3 Week Outlook: As highlighted, recent price volatility has failed to establish a sustained directional bias, resulting in a mixed outlook for the U.S. dollar. We anticipate a robust rebound, potentially supported by the 146.50 level, which has formed a strong support, with the rally ultimately targeting a test above the 150.00 level.

The USDJPY experienced a modest recovery on Wednesday, yet remained within the 146.20-148.76 range. The intraday bias remains neutral. A breach of the weekly high at 148.77 by the bulls would shift focus towards the 200-day SMA at 149.00, followed by the August high of 150.91. Further advances could target the March high of 151.30 and the weekly high of 154.79.

On the downside, a break below 146.20 would resume the decline from 150.90. This would also suggest the completion of the rally from 139.87. Confirmation could be expected with a further decline towards the 142.667 support level.

Trading Direction: Buy

Entry Price: 147.75

Target Price: 150.50

Stop Loss: 146.45

Valid Until: September 11, 2025 23:55:00

Support: 147.68, 147.00, 146.57

Resistance: 148.42, 148.77, 149.19