The Fed Has Opened the Door to Rate Cuts, Euro Targets 1.2000

Forex

Summary:

The Federal Reserve has cut interest rates by 25 basis points in its latest decision and signaled potential for further reductions, which may weigh on the U.S. dollar and lead to its weakening.

BUY EURUSD

Close Time

CLOSED

1.18301

Entry Price

1.19600

1.17600

1.16486 +0.00060 +0.05%

70.1

Pips

Loss

1.17600

1.17599

Exit Price

1.18301

Entry Price

1.19600

Fundamentals

Today, the Federal Reserve lowered the federal funds target rate by 25 basis points to 4.00%-4.25% during this meeting. Both the statement and economic projections hinted at further room for rate cuts in the future, citing concerns that recent weakness in employment necessitates "a faster easing" to prevent further deterioration in the labor market. The market interpreted this move as the Fed "officially opening the door to rate cuts," implying that short-term U.S. interest rates and real yields will decline, which is directly positive for euro-denominated assets.

Following the Fed's announcement, U.S. Treasury yields generally declined (with the 10-year yield falling to around the 4.0% level), reducing the attractiveness of the U.S. dollar to capital and boosting the risk premium for EUR/USD. Moreover, if the Fed clearly signals a path of quarterly rate cuts for this year, the neutral appeal of the U.S. dollar will be further weakened. This will increase the motivation to allocate to non-U.S. currencies in forex positions. At the same time, market institutions are adjusting their expectations accordingly (some major banks have moved their next rate-cut forecast forward to October), leading to a short-term capital flow bias toward risk assets and higher-yielding eurozone assets.

Technical Analysis

The Fed Has Opened the Door to Rate Cuts, Euro Targets 1.2000_1

Based on the weekly chart, the EUR/USD pair briefly broke above 1.1900 yesterday but faced selling pressure and pulled back. It found support at the 1.1780 level today, where it bottomed out and rebounded. Currently, resistance stays in the 1.1780–1.1900 range. A decisive breakout, followed by confirmation through a pullback, could mark a turning point for short- to medium-term bulls, with further upside targeting the 1.2000 level. On the downside, the first key support is at 1.1780; a break below this level could see the pair decline toward the 1.1730–1.1710 zone.

Trading Recommendations

Trading direction: Buy

Entry price: 1.1820

Target price: 1.1960

Stop loss: 1.1760

Valid Until: October 02, 2025, 23:00:00

Support: 1.1780/1.1730

Resistance: 1.1918/1.2000

Risk Warnings and Disclaimers

You understand and acknowledge that there is a high degree of risk involved in trading. Following any strategies or investment methods may lead to potential losses. The content on the site is provided by our contributors and analysts for information purposes only. You are solely responsible for determining whether any trading assets, securities, strategy, or any other product is suitable for investing based on your own investment objectives and financial situation.

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Manuel

Central Bank

Economic

Summary:

This rebound suggests that the support is being defended, potentially encouraging traders to begin building long positions.

BUY USDCHF

Close Time

CLOSED

0.78904

Entry Price

0.80000

0.78100

0.80463 +0.00008 +0.01%

36.3

Pips

Profit

0.78100

0.79267

Exit Price

0.78904

Entry Price

0.80000

The Swiss National Bank (SNB) is set to announce its next monetary policy decision on September 25, with markets widely expecting rates to remain unchanged at zero. Policymakers have recently shown greater tolerance toward a stronger Swiss franc, arguing that rising costs abroad have helped reduce the extent of its real overvaluation.

Meanwhile, the Producer and Import Price Index fell by 0.6% in August, marking a sharp annual drop of 1.8%. Broader inflation continues to sit comfortably within the SNB’s 0–2% target range, easing the urgency for further policy accommodation.

SNB President Martin Schlegel has downplayed the need for negative rates but reiterated that the central bank remains flexible and ready to adapt to evolving data. The September 25 policy meeting will be pivotal, as updated inflation forecasts and growth risks are expected to guide the bank’s future policy stance.

Across the Atlantic, the Federal Reserve acknowledged growing downside risks to the U.S. labor market, noting that while unemployment remains relatively low, it has edged slightly higher. The policy decision was not unanimous, with Governor Stephen Miran voting in favor of a more aggressive 50 basis-point cut, aligning with some analysts who had anticipated such a move.

During the press conference, Fed Chair Jerome Powell remarked that labor demand has “softened,” while inflation remains “somewhat elevated.” He highlighted that the balance of risks has “shifted,” stressing that monetary policy is well-positioned to respond as needed, though he cautioned that the labor market is “not strong.”

Powell also dismissed speculation about a larger cut, saying there was “no broad support for a 50 basis-point cut today,” and underscored that the Fed is not rushing to ease policy further.

The Fed’s statement reiterated its concerns about downside risks to employment, while acknowledging that price pressures have increased and remain “somewhat elevated.” According to the Summary of Economic Projections (SEP), most officials now expect the federal funds rate to end 2025 at 3.6%, with GDP growth at 1.6% and unemployment rising to 4.5%. Inflation is projected to end the year at 3%, while core PCE is seen holding at 3.1%. Policymakers expect inflation to return to the 2% target by 2028.

U.S. Treasury yields slipped after the Fed delivered its first rate cut since December last year, sparking a rally in risk assets. Investors grew more confident that lower borrowing costs will support the U.S. economy, particularly its lagging labor market, driving Treasury yields lower across the curve.

Recent U.S. data painted a mixed picture for August. Housing Starts tumbled 8.5% month-over-month, wiping out July’s 3.4% gain, dropping to 1.307 million units from 1.429 million — the lowest level since May. Building Permits also fell by 3.7%. In contrast, Retail Sales beat expectations, climbing 0.6% versus a forecast of 0.2%, while the Control Group — a key input to GDP calculations — rose 0.7% following a 0.5% gain in July. Bearish Momentum May Have Bottomed, Setting the Stage for a Rebound_1

Bearish Momentum May Have Bottomed, Setting the Stage for a Rebound_1

Technical Analysis

USD/CHF briefly dipped to 0.7831 during the volatility surrounding the Fed’s decision, pushing the RSI on the 12-hour chart down to 27 — deep in oversold territory. However, this downside move proved short-lived, as the pair rebounded and closed back above the key support level at 0.7875, which was last tested on July 1. This rebound suggests that the support is being defended, potentially encouraging traders to begin building long positions targeting the descending trendline and the psychological resistance zone around 0.8000.

The 100- and 200-period moving averages sit at 0.8018 and 0.8096 respectively, having closely tracked price throughout its downtrend. These levels could become near-term upside targets if bullish momentum strengthens. Should USD/CHF break above the descending trendline and sustain gains, the recovery could extend further. However, a pullback from these resistance levels cannot be ruled out if sellers return to defend the broader downtrend.

Trading Recommendations

Trading direction: Buy

Entry price: 0.7890

Target price: 0.8000

Stop loss: 0.7810

Validity: Sep 26, 2025 15:00:00

Risk Warnings and Disclaimers

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Manuel

Central Bank

Economic

Summary:

Traders may watch for signs of waning bearish momentum, as fading selling pressure could attract dip buyers looking to position for a rebound.

BUY USDX

Close Time

CLOSED

96.630

Entry Price

97.860

95.600

98.930 -0.020 -0.02%

34.0

Pips

Profit

95.600

96.970

Exit Price

96.630

Entry Price

97.860

The Federal Reserve acknowledged mounting downside risks to the labor market, noting that although unemployment remains relatively low, it has shown a slight uptick. The policy decision was not unanimous, as Governor Stephen Miran voted in favor of a deeper 50 basis-point rate cut, aligning with the expectations of some analysts who had anticipated a more aggressive move.

During the post-meeting press conference, Fed Chair Jerome Powell stated that labor demand has “softened,” while inflation remains “somewhat elevated.” He highlighted that the balance of risks has “shifted,” stressing that monetary policy is well-positioned to respond as needed, though he cautioned that the labor market is “not strong.”

Addressing speculation about a larger cut, Powell dismissed the notion, saying there was “no broad support for a 50 basis-point cut today,” and underlined that the Fed is not in a rush to ease policy.

The Fed’s statement reiterated its concerns about downside risks to employment, noting that while the jobless rate is still low, it has risen slightly. On inflation, the central bank remarked that price pressures have increased and remain “somewhat elevated.”

The Summary of Economic Projections (SEP) showed that most officials now expect the federal funds rate to end 2025 at 3.6%, with GDP growth at 1.6% and unemployment rising to 4.5%. Inflation is projected to end the year at 3%, with core PCE seen holding at 3.1%. Policymakers expect inflation to return to their 2% target by 2028.

U.S. Treasury yields fell after the Fed delivered its first rate cut since December last year, triggering a rally in risk assets. Investors grew more confident that lower borrowing costs will support the U.S. economy, particularly the lagging labor market, helping reduce Treasury yields across the curve.

On the economic data front, U.S. figures painted a mixed picture for August. Housing Starts plunged 8.5% month-over-month, erasing July’s 3.4% gain, falling to 1.307 million units from 1.429 million — the lowest since May. Building Permits also declined by 3.7%. In contrast, Retail Sales surprised to the upside, climbing 0.6% versus expectations for a 0.2% increase. The Control Group, which feeds directly into GDP calculations, rose 0.7% after a 0.5% gain the previous month. Oversold Conditions Could Spark a Bullish Rebound_1

Oversold Conditions Could Spark a Bullish Rebound_1

Technical Analysis

The U.S. Dollar Index (USDX) found support as it approached the 95.95 level, which previously acted as a strong base on July 1. From that level, the index staged a rally that peaked near 100 on August 1. Since that local high, USDX has retraced back toward the 95.95 support zone, briefly dipping into it before bouncing higher again. If this level continues to hold in the upcoming sessions, it could serve as the launch point for another upward leg toward 97.86 — the next key resistance area.

This level is particularly notable because the 100- and 200-period moving averages on the 8-hour chart converge around 97.82 and 97.72 respectively, which could act as magnets for price during a potential corrective rally.

Meanwhile, the RSI has dropped to 25.66, firmly into oversold territory not seen in recent months. Traders may watch for signs of waning bearish momentum, as fading selling pressure could attract dip buyers looking to position for a rebound. If buyers manage to sustain the initial rejection from the support zone, bullish momentum could strengthen, paving the way for a potential recovery rally.

Trading Recommendations

Trading direction: Buy

Entry price: 96.60

Target price: 97.86

Stop loss: 95.60

Validity: Sep 26, 2025 15:00:00

Risk Warnings and Disclaimers

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Eva Chen

Central Bank

Commodity

Summary:

Gold extended its rally, hitting a new all-time high near US$3,703. A key bullish trend line is forming, with support at US$3,665 in the 4H timeframe.

BUY XAUUSD

Close Time

CLOSED

3705.12

Entry Price

3850.00

3615.00

4208.97 +11.06 +0.26%

1448.8

Pips

Profit

3615.00

3850.09

Exit Price

3705.12

Entry Price

3850.00

Fundamentals

On Tuesday's late trading, gold prices surged to a record high of US$3,703, as bullish sentiment regained momentum following a four-day narrow consolidation period.

Ahead of Wednesday's Federal Reserve interest rate decision, where a 25-basis-point rate cut is widely anticipated (with a mere 4% probability of a 50-basis-point cut), the U.S. dollar weakened again before the announcement, providing additional support for gold prices.

Furthermore, with rate cut expectations largely priced in, the market awaits the Federal Reserve's forward guidance, with increasing hopes for a dovish stance, which would further bolster gold's performance.

For institutions, Deutsche Bank revised its gold price forecast upwards on Monday, projecting an average price of US$4,000 for the upcoming year, surpassing the previous estimate of US$3,700. The bank suggests that favorable foreign exchange and interest rate conditions could further propel gold prices. In its report, Deutsche Bank noted, "While gold appears overvalued relative to its fair value, we attribute this primarily to robust official sector demand, which we anticipate will persist."

For market analysis, historically, gold prices have demonstrated strong performance during the past three interest rate cut cycles, commencing in January 2000, all implemented to stimulate economic expansion. Consequently, it is crucial to monitor any indications from press conferences: if the Federal Reserve prioritizes the labor market over inflation, the current rate cut cycle may accelerate, potentially increasing bullish bets on gold.

Rate Cut Cycle Resumes, with Institutional Demand Driving the Uptrend_1

Technical Analysis

From a technical perspective, gold prices have demonstrated robust performance this week, following the completion of the anticipated triangle continuation pattern. While potential pauses may occur, the upward trend remains strong, with relative strength momentum yet to signal weakness. Furthermore, the expectation of a continued weak dollar suggests that a timely breakout could see the next resistance level at US$3,734, followed by the potential trend channel resistance at US$3,822, and the technical 'triangle' resistance at US$3,840. A 'typical' historical overbought extreme, 25% above the 40-week moving average, is projected near US$3,915.

Trading Recommendations

Trading Direction: Buy

Entry Price: 3658

Target Price: 3850

Stop Loss: 3615

Valid Until: October 3, 2025 23:55:00

Support: 3658, 3624, 3600, 3577

Resistance: 3703, 3734, 3750, 3789

Risk Warnings and Disclaimers

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Eva Chen

Central Bank

Forex

Summary:

Global markets are poised to react to a dual central bank event on Wednesday, with market participants anticipating interest rate cuts from both the Bank of Canada and the Federal Reserve. While the decisions themselves are largely priced in, the critical element will be the forward guidance provided by policymakers regarding the coming months. The USDCAD is currently trading above the neckline of a "non-bearish" head and shoulders top pattern, and today's policy decisions will be pivotal in determining the asset's trajectory.

SELL USDCAD

Close Time

CLOSED

1.37455

Entry Price

1.34980

1.39000

1.38237 +0.00090 +0.07%

154.5

Pips

Loss

1.34980

1.39000

Exit Price

1.37455

Entry Price

1.39000

Fundamentals

The Bank of Canada is widely expected to cut its policy rate by 25 basis points to 2.50% at its Wednesday meeting. This expectation is bolstered by the August Consumer Price Index, which rose 1.9% year-over-year, falling short of forecasts. Despite elevated core inflation, its stability over three consecutive months has instilled confidence among policymakers that underlying pressures are contained.

Beyond inflation, the economic growth environment has deteriorated significantly. Canada's second-quarter GDP contracted by 0.4% quarter-over-quarter, underperforming the Bank of Canada's own projections. August data revealed a second consecutive month of job losses, accompanied by a rise in the unemployment rate. These signals of weakening demand reinforce the rationale for preemptive easing. Market participants are now focused on whether Governor Macklem will acknowledge the need for further rate cuts before year-end.

According to a Reuters poll, over 70% of economists anticipate at least one more 25-basis-point cut by the Bank of Canada in 2025, with some projecting two additional cuts, potentially bringing the policy rate down to 2.00%. The Bank of Canada's stance, whether it validates these expectations or remains data-dependent, could set the tone for the Canadian dollar's trajectory.

The Federal Reserve is widely anticipated to cut interest rates by 25 basis points to a range of 4.00-4.25%, with futures markets pricing in only a 4% probability of an additional 50 basis points reduction. Market consensus increasingly favors a series of rate cuts in September, October, and December, bringing the target range to 3.50-3.75% by year-end. We will scrutinize the policy statement, the dot plot, and Chairman Jerome Powell's press conference to validate this rate cut trajectory.

Beyond the near term, attention will shift to the pace of easing in 2026 and beyond. June's projections indicate rates falling to 3.6% and 3.4% in 2026 and 2027, respectively, with the long-run neutral rate stabilizing around 3.0%. The critical question is whether the Fed signals a potential move to the 3.00%-3.25% range as early as 2026, implying a more rapid normalization of rates than previously anticipated—a development with significant implications for bonds, stocks, and the dollar.

Bank of Canada and Federal Reserve Take Coordinated Action: Is the USDCAD Facing a Head-and-Shoulders Reversal?_1

Technical Analysis

From a technical perspective, the USDCAD is currently at a critical juncture. A decisive break below 1.3725 would establish a head and shoulders top pattern, confirming the conclusion of the corrective rebound from the 1.3538 low. This would reactivate the larger downtrend, initially retesting 1.3538. A sustained break below this level would open the path towards the 61.8% retracement of the 1.4791 to 1.3538 range.

However, bulls need not panic, as this "head and shoulders top" is not a bearish "head and shoulders top" pattern, given that its right shoulder remains above the left shoulder, and the key neckline has not been breached, thus the bearish "head and shoulders top" pattern is not yet confirmed. It is recommended to use the 50% Fibonacci retracement of the rebound as the entry point.

Trading Recommendations

Trading Direction: Sell

Entry Price: 1.3800

Target Price: 1.3498

Stop Loss: 1.3900

Valid Until: October 2, 2025 23:55:00

Support: 1.3734, 1.3722, 1.3631

Resistance: 1.3798, 1.3863, 1.3892

Risk Warnings and Disclaimers

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Warren Takunda

Traders' Opinions

Summary:

The euro fell further against the Swiss franc on Wednesday, trading near 0.9320 after Eurozone inflation data reinforced the ECB’s cautious stance while Swiss disinflation deepened.

SELL EURCHF

Close Time

CLOSED

0.93200

Entry Price

0.92660

0.93500

0.93733 +0.00071 +0.08%

30.0

Pips

Loss

0.92660

0.93512

Exit Price

0.93200

Entry Price

0.93500

The euro remained under sustained pressure against the Swiss franc on Wednesday, with EUR/CHF trading around 0.9320 in the American session. The pair has extended losses for a second consecutive day, reflecting investors’ growing preference for the Swiss currency as Eurozone inflation data underscored the European Central Bank’s cautious stance on monetary policy.

Eurostat figures released earlier this week showed that core inflation, which excludes volatile components such as food and energy, held steady at 2.3 percent year-on-year in August. The reading was fully in line with both market forecasts and the prior month’s outcome. On a monthly basis, core prices rose 0.3 percent, mirroring July’s increase and pointing to persistent underlying inflationary pressures across the bloc. Headline inflation eased slightly to 2.0 percent from July’s 2.1 percent, undershooting expectations, while monthly price growth decelerated to 0.1 percent against a forecast of 0.2 percent.

The data reinforced the ECB’s policy stance. At its latest meeting, the central bank opted to leave all three of its key interest rates unchanged, signaling that rates are likely at their terminal level. Policymakers acknowledged progress in taming price growth but maintained that restrictive conditions will need to remain in place for a prolonged period. The strategy reflects a central bank caught between its success in lowering inflation and the fragility of growth across major economies in the bloc. For now, the ECB appears committed to a “wait-and-see” approach, betting that time rather than additional tightening will finish the job of restoring price stability.

Markets, however, remain unconvinced about how long the ECB can hold its restrictive posture. With inflation converging closer to the 2 percent target and growth data showing signs of strain, investors have already begun speculating about potential rate cuts in 2025. This uncertainty has weighed heavily on the euro, which continues to lack upside momentum and is vulnerable to further losses if growth indicators soften further.

On the Swiss side, the disinflation narrative remains intact. The Producer and Import Price Index fell by 0.6 percent in August, translating into a sharp 1.8 percent annual decline. Inflation in Switzerland remains comfortably within the Swiss National Bank’s target range of zero to two percent, giving the central bank little reason to act aggressively. Chairman Martin Schlegel recently dismissed the likelihood of returning to negative rates but emphasized the SNB’s readiness to adapt to changing conditions. The next policy meeting on September 25 is expected to shed more light on whether the SNB will adjust its inflation and growth forecasts or maintain its steady hand. For now, the franc continues to draw strength from Switzerland’s solid inflation backdrop and reputation as a safe-haven currency.

Technical Analysis

Technically, EUR/CHF continues to reflect a bearish market structure. On the two-hour chart, the pair has been sliding steadily, with recent price action forming a Cup and Handle pattern near a key support zone. In bearish contexts, such formations typically signal continuation rather than reversal.

Should sellers defend the current levels with conviction, further downside momentum could drive the pair toward the 0.9266 area, a level that traders are eyeing as the next significant target. Upside attempts have been repeatedly capped by near-term resistance, leaving the euro with little room to recover unless a fundamental catalyst emerges to change sentiment.

TRADE RECOMMENDATION

SELL EURCHF

ENTRY PRICE: 0.9320

STOP LOSS: 0.9350

TAKE PROFIT: 0.9266

Risk Warnings and Disclaimers

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Warren Takunda

Traders' Opinions

Summary:

The British Pound is extending gains against the Yen, trading near 200.50 as it eyes 202.00, supported by BoE caution and BoJ dovishness.

BUY GBPJPY

Close Time

CLOSED

199.855

Entry Price

202.000

199.400

207.123 +0.023 +0.01%

103.4

Pips

Profit

199.400

200.889

Exit Price

199.855

Entry Price

202.000

The British Pound extended its winning streak against the Japanese Yen on Monday, with the cross trading at its strongest levels in more than a year. GBP/JPY was last seen near 200.50, up 0.15% on the session and maintaining momentum that has lifted the pair for four consecutive days. The rally underscores two themes that continue to dominate the market: sterling’s resilience across the board and the yen’s ongoing vulnerability as traders brace for major central bank decisions later this week.

Sterling’s strength has been evident in multiple pairs, supported by expectations that the Bank of England will maintain its cautious stance when it meets on Thursday. While markets widely anticipate that policymakers will leave rates unchanged, the persistence of elevated wage growth and sticky inflation in the UK makes it difficult for the bank to adopt an overtly dovish tone. Traders see this as a reason to hold onto long-pound positions, anticipating that the central bank will remain reluctant to signal cuts too aggressively.

The yen’s weakness, on the other hand, is rooted in the Bank of Japan’s unwillingness to deviate significantly from its ultra-loose monetary policy framework. Investors are skeptical that Friday’s BoJ policy announcement will bring meaningful changes, even as Governor Kazuo Ueda continues to highlight the fragility of Japan’s recovery. With U.S. yields still elevated and the BoJ maintaining near-zero interest rates, the yen has remained on the defensive, creating a favorable backdrop for GBP/JPY to test higher ground.

Technical Analysis

Pound Advances to Fresh Yearly Highs Against Yen as Traders Brace for BoE, BoJ Decisions_1

From a technical perspective, GBP/JPY continues to trade within an ascending channel, a structure that highlights ongoing bullish momentum. The recent pullback into the 199.00 to 199.70 area served as an important retest of demand, with buyers stepping in to defend the zone. The rebound from this support suggests that the uptrend remains firmly intact, paving the way for a potential retest of resistance near 200.90. A decisive break above this level could accelerate gains toward the 202.00 region, a psychologically important barrier that also coincides with the upper boundary of the current channel.