Dollar Index (DXY) faces a key test from upcoming PPI and CPI – potential reactions

Forex

Summary:

DXY holds sideways before PPI/CPI. Weak data → supports bigger Fed cuts, dollar down. Strong data → delays cuts, dollar up. Key zones: 97.40–97.80 support, 98.50–100.00 resistance.

Some contradicting headlines are influencing the US Dollar in a battle of wits right ahead of quintessential inflation data.

Markets have been unable to provide a clear answer on how the upcoming FOMC (September 17th) and its rate cut expectations will affect the future outlook for the Dollar.

The thesis had been that despite negative news (Jerome Powell's change in tone at Jackson Hole or the recent Non-Farm Payrolls), traders have failed to sell the US Dollar convincingly, with the DXY doomed in sideways action.

The freshly released downward revisioned BLS report (bearish for the USD) and the rising tensions in the Middle East with Israel-Hamas war taking another turn (bullish for the USD) are once again prevented a clear path ahead for the Greenback.

However, some interesting technical patterns might be getting into play as we approach the surely decisive pair of inflation reports in the US PPI (8:30 E.T. tomorrow) and Thursday's CPI report.

Let's take a look at the Dollar Index.

How could the data influence the US Dollar? Potential reactions

The upcoming PPI report should bring back memories of the previous humoungous beat in the past month (0.9% vs 0.2% exp) pushing inflation expectations higher for the consecutive University of Michigan surveys (the FED hates that).

This comes as Participants started to be less and less cocnerned by tariffs and their impact.

Despite hurting producers before consumers, fears are that Producer Prices increases will repercutate in upcoming CPI releases, highlighting Thursday's number even more.

A relatively weak PPI could help to support current sentiment quite largely, indicating that the past month increase was just a one off – This should support a 50 bps cut further (Dollar down).

However an upward beat should do just the reverse and add to the anxiety (Dollar up)

CPI will really be in focus however as Participants look to see if the higher producing costs have started to bite in consumers pockets.

Reactions should be similar to the PPI, but their extent could be much larger: A higher inflation for Consumers should prevent a 50 bps entirely, towards more gradual cut and spark stagflation fears.

US Dollar could hence maintain its sideways movement.

Dollar Index intraday outlook

Dollar Index 4H Chart

US Dollar Index (DXY) 4H Chart, September 9, 2025

Last week's data has brought some renewed selling momentum as bears have managed to form a downward tight bear channel (bear candles overlapping each other).

The weekly open hence formed a small gap to test the July support/pivot zone, and this morning of action actually saw a decent rebound, undoing some of the bear advantage.

Arriving at a key technical standpoint, bears entering here could take the hand by rejecting the 97.60 to 97.80 range lows (break-retest style).

Keep in mind that action will be swift tomorrow (expect spikes) and prices may just dawdle around until then.

Key levels of interest for the Dollar Index:

Support Levels:

97.40 to 97.80 Range Support (currently getting tested)

Last Pivot before run-higher 97.15 Zone acting as Key Support

2025 Lows Major support 96.50 to 97.00

Resistance Levels:

98.00 Mid-Range pivot

98.50 to 98.80 Resistance Zone

Mid-line of the ascending channel and psychological level 99.50

100.00 Main resistance zone

Dollar Index 30m Chart

Dollar Index (DXY) 30M Chart, September 9, 2025

Looking closer to the short-timeframe, the support zone that is currently trading will be a major test for bulls.

Managing to hold the lows of the current support (97.40, immediate short-term support) would indicate balanced action, which would be more in the bulls favor after failing to hold lower.

On the other hand, sellers appearing at the immediate short-term resistance (97.70) could trigger break-retest selling reactions.

Source: marketpulse

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Adam

Commodity

Gold prices are near steady and silver prices lower near midday. Profit taking is featured today after gold earlier in the day hit new contract/record highs. Silver prices are lower, also on profit taking after hitting a 14-year high on Monday. Bullish fundamentals and bullish technical charts are likely to continue to fuel the bull market runs in both precious metals. December gold was last up $1.80 at $3,679.00. December silver prices were down $0.517 at $41.385.

The key outside markets today see the U.S. dollar index firmer, while crude oil futures are higher and trading around $63.25 a barrel. The yield on the benchmark 10-year U.S. Treasury note is presently around 4.1%.

Mild profit taking in gold after new all-time high set earlier today_1

Technically, December gold futures bulls have the strong overall near-term technical advantage. Bulls’ next upside price objective is to produce a close above solid resistance at $3,750.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $3,550.00. First resistance is seen at $3,700.00 and then at today’s contract high of $3,715.20. First support is seen at today’s low of $3,665.30 and then at $3,650.00. Wyckoff's Market Rating: 8.5.

Mild profit taking in gold after new all-time high set earlier today_2

December silver futures bulls have the solid overall near-term technical advantage. A bull flag pattern has formed on the daily bar chart. Silver bulls' next upside price objective is closing prices above solid technical resistance at $45.00. The next downside price objective for the bears is closing prices below solid support at $38.00. First resistance is seen at this week’s high of $42.355 and then at $43.00. Next support is seen at this week’s low of $41.08 and then at last week’s low of $40.555. Wyckoff's Market Rating: 8.5.

Source: kitco

Risk Warnings and Disclaimers

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Adam

Commodity

Silver prices continue to trade near their highest levels in 14 years as investment demand becomes a driving force in the marketplace. However, silver’s industrial component continues to attract significant attention and volatility.

Late last week, President Donald Trump issued an executive order clarifying tariff exemptions for some important metals, including gold, graphite, tungsten, and uranium. However, analysts note that silver did not make the official list.

This uncertainty has caused a sharp rise in silver’s lease rate. Bernard Dahdah, Precious Metals Analyst at Natixis, said that silver’s go-forward rate is at unusual levels, currently in negative territory around 1.2%.

“In layman’s terms, it means that the party borrowing silver is actually willing to pay rather than earn interest from the counterparty with which it will swap its USD for silver. Meanwhile, those leasing out silver are earning around 5.5% on a 3-month basis,” he said.

Dahdah noted that lease rates in silver started to rise again—highlighting renewed tightness in the marketplace—after the precious metal was added to the U.S. government’s critical minerals list last month.

He added that silver’s new status could attract the attention of President Donald Trump, who ordered an investigation into critical minerals in April.

“Since this announcement, the silver Exchange for Physical (EFP, COMEX vs. London spot) has gone from a historic average of 25 cents to as much as $1.1/oz, suggesting very strong U.S. demand for the physical material. This demand for physical is in turn reducing the pool of available leasable material in London and, as such, lifting silver’s lease rate,” he said.

According to reports, this is the fifth time this year that silver lease rates have spiked.

Some analysts note that this tightness in the silver market is not surprising, as physical inventories within the London Bullion Market Association are at exceptionally low levels.

In a recent note, commodity analysts at TD Securities said that silver inventories could be depleted within seven months. If investment demand in silver-backed exchange-traded funds picks up, those stockpiles could dry up within four months.

Tightness in the market can also be seen in the arbitrage between futures contracts in New York and London spot prices. December silver futures are currently trading 55 cents above spot.

Although tightness in the silver market could persist, Dahdah said that he expects lease rates to ease within the next month. While the risk of silver being subject to tariffs is elevated, some analysts believe this is unlikely to happen.

Domestic silver production only accounts for three-quarters of domestic demand, and the U.S. needs to import about 1,000 tonnes of silver a year.

“The Section 232 investigation on critical minerals is scheduled to be released around mid-October and is likely to include recommendations on silver (which might include adding tariffs, or not),” Dahdah said. “This could be the point after which the silver lease rate retreats rapidly. An earlier public statement of reassurance would have the same impact.”

Source: kitco

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Kevin Du

Energy

With interest rates in freefall in recent days, but reversing modestly this morning, traders were wondering if today's auction of $58BN in 3 year paper would accentuate the modest reversal or extend on the positive momentum observed over the past week. The answer was resoundingly the latter, and here's why.

First, the auction stopped at high yield of 3.485%, down sharply from 3.669% last month, and the lowest since Sept 2024 when the Fed was about to cut rates by a jumbo 50bps on another huge downward jobs revision print. The auction stopped through the When Issued 3.492% by 0.7bps, and following 3 straight tailing auctions, was the biggest through since Feb 2025.

The bid to cover was an impressive 2.726%, up 20bps from August and the highest since February.

The internals were even more impressive, with Indirects taking down a near record 74.24%, up from 53.99% in August and the 2nd highest on record!

And with Directs awarded 17.39%, Dealers were left with just 8.37%, the lowest on record.

Overall this was a blowout 3Y auction, easily one of the top 3 on record, and the bond market certainly liked it: with yields moving higher after today's record negative revision (on expecations of steepening that will follow the inflation that rate cuts usher in) we have seen renewed buying across the curve.

Source: Zero Hedge

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Adam

Commodity

Middle East Situation

Oil jumped after an Israeli attack in Qatar escalated the conflict in the Middle East, the source of about a third of the world’s supplies, increasing the geopolitical risk premium for crude.

West Texas Intermediate climbed as much as 2.3% to top $63 a barrel after the Israel Defense Forces conducted a strike in Doha targeting the senior leadership of Hamas, which has been declared a terrorist group by the US and Europe. Several blasts were heard in the city, according to media reports, and Qatar said the attack violated international law.

Oil Advances as Israel’s Strike in Qatar Revives Risk Premium_1

Oil Gains on Israeli Strike in Qatar | The attack escalated a nearly two-year long conflict in the Middle East

The strike is the first Israeli attack in Doha since the beginning of the nearly two-year long conflict that has roiled global oil markets. The incident stands to jeopardize US efforts to reach a peace deal between Israel and Hamas, which could have siphoned any remaining Middle East risk premium out of crude. Israel said it takes full responsibility for the attack and that it was a “wholly independent” operation.

Qatar has reinforced its role as an international middleman throughout the Israel-Hamas conflict, at one point helping to mediate a short-lived ceasefire between the warring sides. Doha also has drawn criticism from Israeli and American leadership for its willingness to host Hamas’ political bureau.

Oil’s underwhelming reaction to the armed conflict between Israel and Iran in June signals that Tuesday’s rally may be brief, said Karen Young, a senior research scholar at Columbia University’s Center on Global Energy Policy.

“We’ve really disaggregated regional conflict risk from oil price until there is an escalation that directly targets oil infrastructure or movement,” she said. However, “this is going to have long-term ramifications on Israel’s ability to have regional partners, particularly in energy deals.”

The trading session has shifted the focus from OPEC’s plans to bring back idled production faster than initially planned, which have spurred expectations a glut will form late this year. Crude is down about 12% this year and has traded between $62 to $66 for most of the past month.

Oil had already climbed on Tuesday before the Israeli strike, following equities higher amid mounting expectations the Federal Reserve will lower borrowing costs. US stocks have since pared gains.

Source: Bloomberg

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Adam

Economic

Wall Street's main indexes were largely subdued on Tuesday after closing near record highs in the previous session, while a downwards payrolls revision kept intact bets of interest rate cuts from the Federal Reserve.

The U.S. economy likely created 911,000 fewer jobs in the 12 months through March than previously estimated, the government said, suggesting that job growth was already stalling before President Donald Trump's aggressive tariffs on imports.

Bets on a 25 basis point cut, that was already priced in, were intact while ones on a jumbo 50 bps reduction remained at about 8.2%, as per CME's FedWatch tool.

Labor market indicators recently have already cast concerns across the minds of investors and Fed officials alike, with nonfarm payroll data for July and August confirming weakening labor market conditions.

"Investors are hoping that each one of these individual data points will add up to a consistent picture that will be able to support the Fed cutting rates," said Peter Andersen, founder of Andersen Capital Management.

"The market is getting set up to have a tremendous disappointment if the Fed doesn't take action."

At 12:02 p.m. ET, the Dow Jones Industrial Average (.DJI) rose 41.99 points, or 0.09%, to 45,556.94, the S&P 500 (.SPX) lost 2.52 points, or 0.04%, to 6,492.63 and the Nasdaq Composite (.IXIC) fell 12.99 points, or 0.06%, to 21,785.71.

Israel's attack on Hamas leaders in Qatar's capital city, Doha, pushed oil prices higher, lifting the energy sector (.SPNY) 1.1%.

UnitedHealth (UNH.N) gained 6.7% after the health insurer said it expects enrollment in top-rated Medicare insurance plans to be in line with its expectations, keeping the Dow afloat.

On the flip side, the Philadelphia Housing Index (.HGX) fell 3.1% after four sessions of gains.

Markets will be parsing through a producer inflation reading on Wednesday and a consumer prices reading on Thursday to gauge the impact of Trump's tariff policies, and whether a case could be made for a bigger rate cut.

The three main indexes finished Monday's session on a higher note, with the tech-heavy Nasdaq closing at a record, lifted by a rally in chip major Broadcom (AVGO.O).

Wall Street has had a broadly positive start to September, a month deemed historically bad for U.S. equities, with the benchmark index losing 1.5% on average since 2000, data compiled by LSEG showed.

In other stocks, Nebius (NBIS.O) soared about 43.6% after the AI infrastructure firm signed a $17.4 billion deal with Microsoft (MSFT.O). Rival CoreWeave (CRWV.O) also rose 4.2%.

Class B shares of Fox Corp and News Corp dipped 6% and 3.4% respectively. Rupert Murdoch and his children reached an agreement that will give the eldest son Lachlan Murdoch control over the media empire.

Albemarle (ALB.N) plunged 11.3%, the biggest decliner on the S&P 500, on easing supply concerns after Chinese battery giant CATL expects to resume production at a lithium mine.

Quarterly results from cloud service provider Oracle (ORCL.N) after the market's close will be parsed for additional insights into AI demand across the technology sector.

The S&P 500 posted 15 new 52-week highs and no new lows, while the Nasdaq Composite recorded 75 new highs and 55 new lows.

Declining issues outnumbered advancers by a 1.78-to-1 ratio on the NYSE and by a 1.59-to-1 ratio on the Nasdaq.

Source: reuters

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

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Olivia Brooks

Political

The European Union is working with the U.S. as it prepares to announce its latest round of sanctions on Russia, sources told CNBC.

Despite diplomatic efforts over the summer, Russia's more than three-year-long war in Ukraine is not showing any signs of coming to an end. In fact, Moscow has recently stepped up its offensive and on Sunday launched its biggest air attack on Ukraine, hitting a key government building.

European officials are now working on their 19th package of sanctions against Moscow, with one EU official, who did not want to be named as the measures are not yet finalized, telling CNBC these will be presented at the "end of the week [or] early next week." The package will then have to be formally approved by the 27 members of the EU.

The European Commission and member states started informal discussions about the measures over the weekend, and a delegation of EU officials also traveled to Washington D.C. to coordinate energy-related measures with the Trump administration.

"It is clear that energy dependency on Russia will be targeted more vehemently," a second EU official, who did not want to be named due to the sensitivity of the topic, told CNBC. "The Commission will work with the U.S. on this, especially on the Druzhba pipeline," they said, referring to the transit pipeline that delivers Russian oil to Hungary and Slovakia, two EU member states with close links to the Kremlin.

U.S. involvement

One key consideration for Europe is potential sanctions on countries that buy Russian energy, including China.

"This is the big question," the first EU official said, adding that for the moment it is unclear whether the bloc will move in this direction.

The European Union has previously sanctioned some Chinese banks for enabling the circumvention of measures imposed on Russia.

The FT reported Monday that European officials are considering secondary sanctions against China, a major buyer of Russian oil and gas.

The U.S., meanwhile, recently imposed tariffs on India for buying energy from Moscow.

The first EU official said the U.S. is, for now, "focused on pushing us to phase out Russian oil and gas faster than the current deadline." The bloc is currently aiming to end its purchases of Russian oil by 2028.

As part of a recent trade agreement between the EU and the United States, the 27-member state bloc agreed to purchase $750 billion of American energy.

The EU's latest package of sanctions against Moscow is also expected to see more Russian vessels listed as part of its "shadow fleet," and to limit the movement of Russian diplomats and tourists.