A Hesistant FX Market After As-Expected September CPI Release

Technical Analysis

Summary:

Forex currencies have been dormant since the beginning of August as Markets haven’t found what they want in the latest key data reports.

As previously thought, the latest NFP, PPI, and CPI combo reports would have expected to relieve volatility in FX. But volatility there wasn’t.

After receiving all the most influential market data, the next step will be next Wednesday’s FOMC rate decision (September 17).

Prior to the CPI release, expectations for a 50 bps cut were priced at 10% and are now closer to 5%. The 25 bps cut, however, is still priced to be a sure thing.

Indeed, when looking at Market reactions in other assets, it seems that the theme that is developing is one of a less prolonged impact of tariffs.

Despite an as expected 0.3% report, participants bidding on Bonds and Gold point toward a repricing of lower long-run inflationary impact of tariffs (while they are just starting to bite now), which is flattening the US Yield curve.

Until now, pricing has been one of lower short-term inflation expectations versus higher ones in the long run.

Despite the immediate US Dollar selloff, FX currencies are hesitant and hang close to unchanged on the session.

Discover major currency pairs charts and levels, after first peaking at reactions to other asset classes.

An overlook at cross-assets market reactions: Bonds and Gold are loving it, USD corrects.

Cross-Asset charts post-CPI – September 11, 2025 – Source: TradingView

Yen likes the report but still needs more – USDJPY

USDJPY 1H Chart, September 11, 2025, Source: TradingView

The most volatile FX pair is enjoying the ongoing selloff in the US Dollar but has yet to break out of its mid-range pivot zone.

Some ongoing selling might be pushing prices out of this region however this move still has to develop.

Wicky action at the extremes prove that participants are still hesitant on the upcoming direction for currencies.

A 25 bps confirming could still provide some strength to the USD which helps to explain why participants are still looking at each other to see who moves first

Levels to watch for USDJPY:

Mid-range pivot 147.50 to 148.00 (currently trading – Look for breakouts of this zone)
May Range Extremes 148.70 to 149.50 (Daily MA 200)
146.50 Main range Support

AUDUSD – pushing to retest yearly highs

AUDUSD 1H Chart, September 11, 2025, Source: TradingView

AUDUSD has rebounded significantly since its August 1st lows and by evolving in an intermediate upward channel, heads to retest its yesterday and 2025 highs (0.6535).

Some hesitation at the current levels is forming and will be essential to monitor.

Levels to watch for AUDUSD:

2025 Highs Resistance 0.6620 to 0.6650
0.6580 to 0.66 Pivot acting as mid-term support
0.6550 Pivot turned support and low of intermediate channel.

EURUSD – a wicky retest of its range resistance

EURUSD 2H Chart, September 11, 2025, Source: TradingView

EURUSD still evolves within its August range after a failed upside breakout in yesterday’s session.

Buyers have pushed towards a retest of the resistance but seem to be running out of steam.

Levels to watch for EURUSD:

PPI highs 1.17801
1.1750 Immediate Resistance
Session lows and key range pivot 1.1660
1.16 Current main Support

USDCHF – Downfall stalling

USDCHF 2H Chart, September 11, 2025, Source: TradingView

The Swiss franc had strengthened immensely in the beginning of the month which pushed USDCHF towards a retest of its 2025 Main support (0.7916 week lows).

However, despite a selling candle from the data, hesitation comes at the 50-period MA which will also be key to upcoming action: A rejection of the MA could provide a boost to the pair, while a breakdown could also lead to further downside.

Levels to watch for USDCHF:

0.8050 Resistance
0.80 Immediate Pivot and 50-period MA (action stalling here)
0.79 Main Support (latest rebound)
2025 Lows 0.78730

GBPUSD – Liked the report, but hesitant at the highs

GBPUSD 2H Chart, September 11, 2025, Source: TradingView

GBPUSD has, like its European neighbor, been stuck in a 2,000 pip range since the middle of August (1.34 to 1.36).

The buying reaction to the CPI report is once again met with some hesitation as prices are meeting the range resistance.

Watch the immediate low-slope downward channel that may shape today’s price action.

Levels to watch for GBPUSD:

1.36 Main channel Resistance
Key 1.35 Pivot (daily lows, key for buy/sell momentum)
1.34 current Daily pivot (acted as Support)

USDCAD reject its mid-term upward channel

USDCAD 2H Chart, September 11, 2025, Source: TradingView

USDCAD is virtually unchanged after the report – By attaining the upper bound of its upward channel, mean-reversion selling seems to occur but real momentum has yet to materialize.

Levels to watch for USDCAD:

Immediate resistance at Aug Highs 1.38750
1.38 Major resistance turned Pivot
1.3740 Support

Source: ACTIONFOREX

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Adam

Stocks

Technology stocks are rising so far, so fast that some investors are starting to position for the move to lose momentum.

After advancing for five consecutive months, the Nasdaq 100 (^NDX) Index has risen each day but one in September as investors bet on optimism around artificial intelligence and Federal Reserve interest-rate cuts to keep technology stocks moving higher. A gauge of expected volatility in the index hasn’t budged in months. And on Wednesday, infrastructure software giant Oracle Inc. (ORCL) made history with a 36% pop, its biggest gain since 1992.

That’s pushed some investors to bid up put options to protect this year’s gains. The price of hedging against a 10% drop in the Invesco QQQ Trust ETF, the largest exchange-traded fund tracking the Nasdaq 100, over the next month is at the highest since 2022 relative to the cost of protection against a similar rally.

“The market is at highs, volatility is at lows, I think there are a lot of easy arguments to make as to why you should hedge,” said Greg Boutle, head of US equity and derivative strategy at BNP Paribas SA. “September does tend to be a bit seasonally weaker” as well, he added.

Tech Stocks Are Doing So Well Investors Are Starting to Worry_1

It’s sign of growing unease ahead of a string of market-moving events in the next month that include the Fed’s interest rate decision on Sept. 17 and the consumer price index report later on Thursday. The put-to-call skew on QQQ was higher just 8% of the time in recent data, according to Nomura Holdings Inc.

Rising Uncertainty

With exposure to tech high-flyers looking rich by any measure, the more the group goes up, the more investors are forced to hedge against a “tail event” — a potential crash in the market, according to Charlie McElligott, Nomura’s cross-asset strategist. That’s pushing the put-to-call skew even higher at a time when demand for call options remains relatively subdued.

The hedges were likely added to protect long equity portfolios from a potential market decline, says Christopher Jacobson, co-head of derivatives strategy at Susquehanna International Group. To be sure, the put-to-call skew measures a relative cost of put options to calls and not the actual price investors pay for downside protection, which is lower than it was at the peak of trade-war uncertainty in April.

While big volatility gauges aren’t sounding alarms — the VIX Index is hovering below 16 — there is a sense of nervousness that’s evident beyond big tech stocks. On Tuesday, a trader paid around $9.3 million for bearish options on the SPDR S&P 500 ETF Trust, a position that pays out if the S&P falls 3.6% by Sept. 19. And on Monday, an investor bought a long-term hedge against a 58% collapse in the S&P 500 by December 2026 for $13.4 million.

The moves make sense considering stocks often underperform in September, with the market dropping 56% of the time, the most of any month going back to 1927, according to data from Bank of America Corp. (BAC).

For Boutle, the current state of equity markets is similar to 2019, when a strong run in the first six months of the year gave way to pockets of weakness in the second half just after the Fed reduced rates.

He recommends clients buy protection against a 5% drop in the S&P 500 (^GSPC), while selling insurance against a deeper drop he says is unlikely to materialize.

“We’re really focused on shallow hedges rather than the ‘wingier’ ones,” Boutle said.

Source: Bloomberg

Risk Warnings and Disclaimers

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Adam

Bond

Yields are still attractive in the roughly $60 trillion U.S. bond market, but that may change if the Fed resumes rate cuts next week

Investors are chasing yield ahead of the Federal Reserve's rate decision

Investors this month have been rushing to lock in higher yields in the roughly $60 trillion U.S. bond market ahead of next week's Federal Reserve rate decision.

The action has been driven by robust appetite from investors in newly issued corporate bonds in September, but also for yield in other sectors, including previously unloved longer-duration assets.

"Yields are pretty decent right now, but they are going away," said Bryce Doty, a senior portfolio manager at Sit Investment Associates. That belief has been stoking a "fear of missing out," he said, adding that investors also "like the economic porridge," which is "not too hot, not too cold."

"It's just right to get the Fed to cut," Doty said. The labor market may be weakened and consumer delinquencies rising, but he still sees the liquidity spigot from capital markets and expected deregulation in the banking sector keeping a lid on recession fears and any "bloodbath of defaults."

Wednesday's easing wholesale inflation data for August and Friday's weak jobs report were bolstering the case for the Fed to resume its rate-cutting cycle on Sept. 17.

See: Fed is almost certain to cut rates by 25 basis points after months of debate. Why are so many people so unhappy about it?

Yet a "Goldilocks" scenario for the economy remains predicated on inflation having been beaten, said Brij Khurana, a fixed-income portfolio manager at Wellington Management.

That makes Thursday's consumer-price index report for August particularly important. "What upsets that narrative is if inflation starts picking up again," Khurana said.

The odds on Wednesday favored the Fed cutting rates by 25 basis points next week. Yet perhaps more important, traders see the central bank's current policy rate being cut by 150 basis points over the next year - resulting in a range of 2.75%-3% as the most likely outcome, according to the CME FedWatch Tool.

"I do think everyone is focused on generating income," said Khurana, pointing to investor demand that has caused bond spreads to compress, especially in short and intermediate-duration assets, which means investors get paid less to take on credit risks.

In that backdrop, Khurana said it's worthwhile to extend duration in U.S. fixed income and to consider inflation-protected securities. "I don't see a lot of value in U.S. fixed income under seven years of duration," he said.

The trend can be seen elsewhere, with demand growing for highly rated U.S. corporate bonds in the 10- to 15-year maturity bucket, as shown with the yellow line below, according to BondCliQ data. Customers, however, have been selling shorter-duration, three- to five-year assets (red line) in the past 10 trading days.

Investors are snapping up longer-duration 10-15-year corporate bonds.

Mortgage bonds, gold

In addition to demand for longer-duration corporate bonds, spreads in agency mortgage-backed securities also have compressed by about 40-50 basis points over the past few weeks, Khurana said. Along with falling Treasury yields, that's been helping pave the way for an easing of financing conditions in the stalled U.S. housing market.

Read: Mortgage rates dive on reports of worsening U.S. economy: 'We are seeing a lot of interest in refinances'

In addition to the rally in housing debt, BofA Global strategists last week said they were "warming up to the idea" that the Fed could restart buying agency mortgage-backed securities next year. That's a topic MarketWatch explored recently.

See: Here's one way the Fed could lower mortgage rates almost overnight - and it's not the rate cut Trump wants

Meanwhile, concerns about the labor market have sent Treasury yields lower for the policy-sensitive 2-year yield BX:TMUBMUSD02Y, while the benchmark 10-year Treasury rate BX:TMUBMUSD10Y was last pegged at 4.031%, according to Dow Jones Market Data.

Still, with President Donald Trump's tariffs clearly generating revenue this year - meaning that someone must be paying them - it's difficult to gauge where inflation goes from here.

"Over the next six-to-nine months, we are thinking inflation continues to trend higher than what's in current expectations," said Eric Gerster, chief investment officer at AlphaCore Wealth Advisory.

"I think the Fed is in a very difficult spot," Gerster said, adding that with stocks SPX DJIA COMP near all-time highs, a pullback in the near-term wouldn't be terribly surprising, particularly if inflation remains a concern.

That also means investors should think beyond the traditional 60/40 portfolio of stocks and bonds, and include a third, diversifying bucket of investments, according to Gerster. That might include gold, (GC00) GLD - up almost 40% this year - infrastructure or real-estate assets that can help offset inflation risks.

"Over the next five-plus years, gold will continue to be a diversifier," Gerster said, pointing to buying from global central banks in recent years, as well as deficits in the U.S. and beyond, that could potentially place a lot of pressure on rates.

"You need that extra leg," he said. "You can't just rely on 60/40."

Check out: What many investors are looking for in the August CPI data coming out tomorrow

Source: morningstar

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Glendon

Economic

Forex

The Consumer Price Index (CPI) rose 0.4% month-on-month (m/m) in August, a tick ahead of the consensus forecast in Bloomberg and up from the 0.2% m/m gain in July. On a twelve-month basis, CPI was up 2.9% (from 2.7% the month prior).

Energy costs (+0.7% m/m) turned higher last month, while food prices (+0.5% m/m) also firmed due to higher grocery costs (+0.6% m/m). Price growth for ‘food away from home’ was up 0.3%m/m – unchanged from July.

Excluding food and energy, core inflation rose 0.3% m/m (0.35% m/m unrounded), largely matching last month’s gain and meeting the consensus forecast. The twelve-month change held steady at 3.1%.

Price growth of services continued to come in on the hotter side, rising 0.35% m/m, following a similar gain of 0.36% m/m in July. Primary shelter costs rose at its fastest monthly clip in several months, while price growth of non-housing services (+0.4% m/m) remained firm for a second consecutive month.

Higher travel costs (+3.0% m/m) were a big driver of price growth in non-housing services, thanks to a sharp uptick in airfares (+5.9% m/m) and hotels (+2.3% m/m).

Tariff passthrough continued to materialize in core goods prices, which were up 0.3% m/m or its fastest monthly gain since January. Price gains were most notable in apparel (+0.5% m/m), appliances (+0.5% m/m), household furniture and bedding (+0.4% m/m) and new vehicle prices (+0.3% m/m). Used vehicle prices also rose 1.0% m/m, which could in part be driven by consumer switching to used models in an effort avoid paying tariff costs.

Key Implications

Inflationary pressures continued to heat up in August, with broad strength in goods and services inflation. Goods prices are likely to continue to drift higher over the coming months as businesses increasingly pass-on more of the tariff costs. However, further upward pressure on services inflation looks limited against the backdrop of a cooling labor market which is likely to limit upward pressure on wage growth and keep a lid on discretionary services spending.

But nothing is a guarantee, and policymakers will need to balance the risks of reducing the policy rate by enough to breathe some life back into the labor market, but not by so much that they risk unnecessarily stoking inflation. We see the Fed delivering on three quarter-point cuts by year-end, with the first coming at next week’s meeting. We’ve long held this view, and following this morning’s release, Fed futures are pricing in a similar rate-cut path by year-end.

Source: ACTIONFOREX

To stay updated on all economic events of today, please check out our Economic calendar

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Warren Takunda

Economic

NZD is in the red against the majority of its peers after the Reserve Bank of New Zealand (RBNZ) reiterated a committment to deliver two more interest rate cuts this cycle.

"NZD/USD edged lower to near 0.5940. RBNZ Governor Hawkesby reiterated that the bank forecasts the Official Cash Rate (OCR) to fall by another 0.5% to 2.5% by year‑end," says Samara Hammoud, an analyst at Commonwealth Bank of Australia.

Although Hawkesby added that the pace of further interest rate cuts will depend on incoming data and the speed of New Zealand's economic recovery, he made it clear he thinks the stale economy will facilitate the move.

The RBNZ estimates the economy contracted in the second quarter of 2025, but expects growth to resume in the second half of 2025 as household expenditure rises.

Further rate cuts at the RBNZ will likely weigh on the NZ Dollar going forward, particularly against currencies belonging to central banks that are less inclined to cut interest rates from here.

"RBNZ's dovish pivot deals a blow to NZD," says Jason Wong, FX strategist at BNZ, the New Zealand Bank. He explains the Reserve Bank of New Zealand's "dovish pivot" has driven domestic bond yields lower, contributing to the NZD's "laggard" status.

The 'dovish pivot' references the RBNZ's last policy decision, where it cut the Official Cash Rate (OCR) by 25 basis points to 3.0%, but two members of the board dissented from their four colleagues to vote for a larger 50bp cut.

This was the first such vote split in RBNZ history, and signals a clear belief by decision makers that more work must be done to get interest rates lower in order to support the economy.

The decision is a prime driver behind ongoing NZD underperformance, with the currency being the third-biggest loser of 2025, following behind the tariff-implicated U.S. and Canadian dollars.

"While the quarter point cut was no surprise, the catalyst for the move lower in NZD was the debate among the board members between a 25bp and 50bp cut, with two members voting for a 50bp cut. Acting Governor Christian Hawkesby mentioned that the sell-off in the NZD was anticipated and the central bank was comfortable with it," says a note from HSBC.

Source: Poundsterlinglive

To stay updated on all economic events of today, please check out our Economic calendar

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ING

Economic

Forex

Political

Good news for Lisa Cook as a court rules in her favour – but this is far from over

A few weeks ago, President Trump attempted to fire Federal Reserve Governor Lisa Cook for "cause". The identified "cause" was the alleged falsification of mortgage documents prior to her taking up the role of governor. There has been a court hearing on the matter, and we’ve just had the outcome, which is a positive one for Cook. Essentially, the court ruled that "cause" should reflect something done while actually in office, followed by the assertion that a firing based on "unsubstantiated and vague allegations" would "endanger the stability of our financial system". Cook keeps her job and gets to vote at the upcoming FOMC meeting.

But this is not over. The Justice Department is likely to appeal on the theory that even if Cooks' alleged falsification of documents is viewed as minor under some interpretations, it may still be sufficient grounds for removal. In the extreme, this could go all the way to the Supreme Court. And if it did, that court has tended to swing right. Either way, this whole affair does smack of a political agenda to make changes at the Fed by the Trump administration.

A burning question is why the markets have not reacted more negatively? After all, this does smack of political interference. Part of the explanation could lie in the perception that the allegations - while unproven - retain a degree of plausibility in the eyes of investors, at least until definitively dismissed. Some investors may also trust the courts to uphold due process, reinforcing faith in institutional safeguards.However, if Chair Jerome Powell were to get involved as an obstacle, say, for attempting to protect Cook, and were fired on that basis, that would be a whole different story. Take us there, and the market would react more dramatically. In the end, any extreme action taken to undermine Fed independence would be viewed with much suspicion by longer-dated bonds.

The front end does not care about longer-term risks, as it is slavish to where the funds rate goes. By definition, it cannot think beyond two years. But the back end is a deeper thinker, and can worry about second- and third-round effects, and especially on medium-term risks potentially being taken on inflation should the interference with the Fed be seen to be swinging policy too dovish.

This has the potential to get very messy, and could finally tip the back end over the edge – an edge it has thus far resisted crossing, even under significant fiscal pressure. How messy? It's tough to say, but we'd more than likely comfortably take out the previous 10yr and 30yr yield highs seen in this cycle.

Upcoming rate cuts have little to do with the Lisa Cook case, but beyond that this theme is potentially extremely relevant

In the wake of the latest round of weak jobs data and a downbeat assessment on the economy from the Federal Reserve’s own Beige Book report, the market is now convinced the Fed will soon resume cutting interest rates. While this is mostly aside from the Lisa Cook saga, the market’s hunger for cuts has been further fuelled by the prospect that the Fed is set to lean more dovishly in the months ahead as Donald Trump seeks to appoint new members who are more aligned with his thinking that interest rates need to be much lower than they are currently.

The anticipated changes in personnel at the Fed mean there is a perception in the market that the “new” Fed could be seen to be more willing to put the political goals of the president ahead of economic stability, similar to when Richard Nixon pressured Arthur Burns into cutting interest rates ahead of the 1972 election. In combination with a lifting of wage and price controls, this contributed to a spiralling of inflation in subsequent years.

Nonetheless, it is important to point out that no potential Fed candidate has endorsed the president’s call for 200-300bp of immediate interest rate cuts.Stephen Miran is set to be in position for the 17 September FOMC meeting, temporarily filling the governor role vacated by Adriana Kugler after she decided to step down early. Miran has somewhat controversially refused to resign from his current role as chair of the President’s Council of Economic Advisors. Instead, he is taking a temporary period of unpaid leave, raising questions about how independent he can be, given that he will be returning to work for the president in early 2026.

It will then be up to President Trump to name a permanent successor to Kugler, and with the future of Lisa Cook in doubt, plus Jerome Powell’s term as Fed Chair ending in May 2026, the composition of the FOMC will soon look very different to how it started 2025. Nonetheless, we must remember the FOMC is a committee made up of 12 voting members, and while any new members joining in the coming months may be in favour of lower interest rates right now, given the current economic conditions, there is no guarantee that will be the case if the economic situation changes.

Financial markets will also provide a stiff test for new officials. In the UK, the reason that the then newly elected Labour government gave the Bank of England independence in 1997 was to give the new political administration more economic credibility. It was believed that an independent central bank gives financial markets greater confidence that inflation would be more stable at lower levels, and this reduced term premium, which helped deliver lower market interest rates and stronger economic growth than would have been otherwise achieved. If global markets started to question the credibility of US economic policy, this could risk higher borrowing costs and slower growth, which would not be in the president’s best interests as we head towards the mid-term elections.

Source: ING

To stay updated on all economic events of today, please check out our Economic calendar

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Adam

Commodity

Market Overview

WTI crude oil held near $63.55 per barrel on Thursday, extending a three-day advance as geopolitical tensions raised concerns over potential supply disruptions.

Traders balanced this risk premium against U.S. data showing a 3.9 million barrel rise in crude inventories, a sharp increase above expectations that signaled weaker seasonal demand.

Market sentiment was also shaped by speculation of a more dovish Federal Reserve, with looser monetary policy expected to support growth and energy consumption. Overall, crude prices remain caught between rising geopolitical uncertainty boosting supply fears and inventory pressures tempering the outlook.

Natural Gas Price Forecast

Natural Gas (NG) Price Chart

Natural gas is trading near $3.03, showing signs of stabilizing after testing support at $3.00. On the 1-hour chart, the price has pulled back from the upper boundary of its rising channel and is now consolidating near the midpoint. The 50-EMA at $3.06 and the 200-EMA at $3.04 are acting as resistance, keeping upside momentum in check.

The RSI at 38 suggests bearish pressure but also hints that conditions are approaching oversold levels. If buyers defend the $3.00 support, price could rebound toward $3.11 and $3.16, with a breakout extending toward $3.22.

A clean break below $3.00, however, would weaken the channel structure and expose the next downside target at $2.87.

WTI Oil Price Forecast

WTI Price Chart

WTI crude oil is trading near $63.55, holding steady after testing the rising channel support. On the 1-hour chart, price is sitting above both the 50-EMA at $63.30 and the 200-EMA at $63.40, showing short-term stability. The channel pattern highlights support around $62.94 and resistance near $64.07. If momentum continues, a push toward $64.52–$65.08 is possible.

The RSI at 53 signals neutral momentum, suggesting neither side is in control. Candles show smaller bodies after the recent rally, pointing to consolidation.

A break below $62.94 could trigger a move toward $62.45 and $61.94, while holding above current support keeps the bullish channel intact. For traders, this area is key for direction in the next session.

Anyone seeking to strengthen their edge in oil and gas trading can benefit from Why And How To Trade Commodities: A Complete Introduction.

Brent Oil Price Forecast

Brent Price Chart

Brent crude is trading near $67.43, holding above its short-term channel support. On the 1-hour chart, price has broken out of a descending channel and is now following an ascending channel, suggesting improving momentum. The 50-EMA and 200-EMA, both at $67.05, are acting as a strong support base.

Immediate resistance is seen at $67.78 and then $68.43, with a successful breakout paving the way toward $69.12. On the downside, support rests at $66.36 and $65.86.

The RSI at 57 points to steady bullish pressure without being overbought. If buyers defend the $67.20–$67.00 zone, Brent could extend its climb toward the upper channel. A break below $66.36, however, risks weakening the setup.