Created on September 15, 2025

• The US dollar rallied a bit against the Japanese yen in the early hours of trading on Friday, as we are threatening the 200 Day EMA.
• By doing so, it looks as if the market is trying to sort itself out and determine whether or not it can break to the top of the range that we have been in.
• That range, defined as ¥146.50 on the bottom in ¥149 on top, has held quite nicely for several weeks now. It’s also worth noting that the 200 Day EMA is sitting in a very flat angle, suggesting that we just don’t have anywhere to be.

Federal Reserve

The Federal Reserve has an interest rate decision on Thursday of next week, and it’s very likely that we will continue to see a fine line to walk, as although they are expected to cut interest rates on Thursday, the reality is that people will be watching the statement and the press conference very closely, because it could potentially give us a bit of a “heads up” as to where we are going over the next several months. The interest rate differential between the United States and Japan still remain very large, but if they start to shrink bed, then traders may try to reprice the entire situation. Ultimately, this is a market that has been stuck in a range, and it might take the Federal Reserve to finally break it out of that range.

Ultimately, I am in favor the US dollar at the moment due to the interest rate swap, and I think a lot of people will continue to simply cash in the swap return at the end of every day, and that might be part of what has been keep in the market somewhat lifted. As long as that’s the case, I continue to buy on dips, and wait to see whether or not we can break out and above the ¥149 level.

Want to trade our USD/JPY forex analysis and predictions? Here’s a list of forex brokers in Japan to check out.

Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.

The price of (EURUSD) rose in its last intraday trading, to breach the resistance level at 1.1730, supported by its continued trading above EMA50, and under the dominance of the bullish trend and its trading alongside bias line on the short-term basis, besides the emergence of the positive signals on the (RSI), despite reaching overbought levels, reinforcing the rise in the near-term basis.

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The EURJPY pair ended its last attempts with clear failure, to breach 173.50 barrier, which forces it to delay the bullish attack and begin forming bearish correctional waves, to settle near 172.90.

The price might keep forming correctional trading to gather some of the gains, to target 171.60, keeping its main stability within the bullish channel that appears in the above image, while its success in breaching the barrier and holding above it will allow it achieve more of the gains, to reach 174.25 followed by the next main target at 175.20.

The expected trading range for today is between 171.60 and 173.50

Trend forecast: Fluctuated within the bullish track

Created on September 15, 2025

• The euro has shown itself to be rather bullish in the early part of the trading session here on Friday as it looks like we are trying to break to the upside.
• All things being equal you can make an argument for an ascending triangle that we are trying to break out of but at this point, I think it is a situation where traders are basically trying to find some type of yield.
• You do get a positive swap while holding this pair to the upside. If we do pull back the uptrend line from the ascending triangle and the 50 day EMA offer support somewhere, we’ll just call it the 172 yen level to the upside. This isn’t a clearcut level, rather an “area of interest” I am watching if we take off to the upside.

A Major Level Above

The 175.50 yen level is an area that had been a swing high back in the middle of 2024. And I think there might be a little bit of market memory in that area causing some resistance, but there’s really nothing on this chart to suggest that we can get there. And if you take the measured move of the triangle itself, you’re looking at about 177 yen as a target.

I have no interest in shorting this market unless we break down below the 169.70 level. At that point, one would have to assume that the yen is strengthening against many other currencies, not just the Euro.

All things being equal, you have to pay close attention to the risk appetite. And if risk appetite continues to be fairly decent, that should send this market higher because of course the Euro is considered to be riskier than the Japanese yen.

Begin trading our daily forecasts and analysis. Here is a list of Forex brokers in Japan to work with.

Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.

– Written by


Frank Davies

STORY LINK Euro to Dollar Forecast: EUR/USD Gains Capped, 1.20 Still in Sight

The Euro to Dollar exchange rate (EUR/USD) edged higher to 1.1750 on Thursday before fading back towards 1.1700 as traders weighed mixed US inflation data against rising expectations of Fed rate cuts.

While the ECB held rates at 2.00% and signalled its cutting cycle is likely over, the Fed’s shift towards prioritising the weak labour market keeps medium-term EUR/USD forecasts pointed higher, with banks still eyeing 1.20.

EUR/USD Forecasts: Tentative Gains Only

The Euro to Dollar (EUR/USD) exchange rate strengthened to near 1.1750 on Thursday before stalling and drifting back towards 1.1700.

UoB commented; “The rebound has scope to extend but given that there has been no significant increase in upward momentum, any advance is likely to be limited to a test of 1.1760. The major resistance at 1.1790 is not expected to come under threat.”

Scotiabank maintains a positive underlying EUR/USD outlook; “We see limited resistance ahead of 1.18 and the July 1 high 1.1829. We look to a near-term range bound between 1.1650 and 1.1750.”

Yield spreads will remain a key element, although political developments will also be monitored closely with Fitch due to announce its French credit rating update late on Friday.

According to Scotiabank; “A credit downgrade may provide additional turbulence for French OATs, however we feel it important to highlight that markets are already pricing considerable credit risk for France as its 10Y yield now trades in tandem with Italy’s.”

ING considers that yield spreads will hurt the dollar; “our model shows that the greenback is expensive relative to the latest short-term rate swings against most of the G10. We expect dollar weakening as the Fed starts cutting, even if now priced in, as cheaper funding costs can further encourage USD selling for hedging purposes.”

The bank still expects medium-term EUR/USD gains to 1.20.

As far as Federal Reserve policy is concerned, there are strong expectations that the central bank will cut interest rates next week and the dollar lost ground on Thursday even though inflation data was mixed.

Rabobank commented; “The market reaction underscores that the Fed’s (perceived) reaction function has shifted from inflation to the labour market. Fed funds futures-implied odds of rate cuts rose, even as the central bank is still somewhat torn between above-target inflation and the cooling jobs market.”

In contrast, there are fresh doubts whether the ECB will sanction further cuts, underpinning Euro yields.

The ECB held interest rates at 2.00% at the latest policy meeting, in line with consensus forecasts.

There was little in the way of formal guidance, but comments from bank President Lagarde were significant.

According to Lagarde, the outlook for the economy is now more balanced and she stated that the process of disinflation had ended.

Following the comments, there were further doubts whether the central bank would cut interest rates again in the current cycle.

According to Danske Bank; “With growth holding up better than expected core inflation above the 2% target due to sticky wage growth, and the outlook for fiscal easing in 2026 we do not expect the ECB to deliver a final cut in the coming six months, contrary to market expectations.”

It added; “We keep our call that the ECB will not make any policy rate changes in 2025 or 2026.”

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TAGS: Currency Predictions Euro Dollar Forecasts

I wrote on 7^th September that the best trades for the week would be:

1. Long of the S&P 500 Index if we saw a daily (New York) close above 6,515. This set up Tuesday, and from there over the rest of the week the price rose by 0.91%.
2. Long of Gold or following a daily (New York) close above $3,500 for more cautious traders. Gold rose by 1.43% over the week.
3. Long of Silver or following a daily (New York) above $40 for more cautious traders. Silver rose by 3.05% over the week.

These trades produced an overall gain of 5.57%, equal to 1.86% per asset.

A summary of last week’s most important data:

1. US CPI – the month-on-month rate was a fraction higher than expected, at 0.4% instead of 0.3%, although the annualized rate reached 2.9% as expected. Despite the slightly higher rate, US stock markets gained following this data, and the US Dollar also declined.
2. US PPI- the data was much lower than expected, showing a month-on-month contraction of 0.1% while an increase of 0.3% was widely expected. This may have reinforced bullishness in US stock markets as it gave a tailwind to US rate cuts.
3. US Preliminary UoM Inflation Expectations – 4.8% as expected.
4. US Preliminary UoM Consumer Sentiment – this was lower than expected, with some analysts seeing the US heading into a period of “stagflation” where inflation remains elevated but growth collapses.
5. European Central Bank Main Refinancing Rate & Monetary Policy Statement – rates were kept on hold as expected.
6. UK GDP – zero growth, as expected.
7. US Unemployment Claims – worse than expected, at 263k about 30k higher than the consensus forecast.

A narrative of slowing growth in the USA is building.

There was more directional volatility than has been usual over recent weeks. Perhaps the Forex market is starting to wake up.

There were record highs in Gold and in the major US stock market indices the S&P 500 and the NASDAQ 100, and a 14-year high in Silver. The US economy is seen as starting to weaken, and this has boosted the market’s expectation of Fed rate cuts at its next meetings. Markets now see a 100% chance of a cut in September, an 85% chance of a cut in October, and a 79% chance of a cut in December – a bit higher than the sentiment this time last week. There is even a minority expecting a 0.50% rate cut at the next meeting later this calendar month. These expectations are dovish and should logically weaken the US Dollar over the coming weeks, in line with the Greenback’s long-term bearish trend, and strengthen US stock markets, in line with that bullish trend.

This is likely to be a good time to trade or invest.

The coming week will almost certainly be busier, because there are four major central bank policy meetings, as well as some other key data including inflation readings. This is likely to produce a further increase in volatility, building on last week’s increase.

This week’s important data points, in order of likely importance, are:

1. Federal Reserve Policy Meeting
2. Bank of Japan Policy Meeting
3. Bank of England Policy Meeting
4. Reserve Bank of Canada Policy Meeting
5. US Retail Sales
6. UK CPI
7. Canadian CPI
8. US Unemployment Claims
9. New Zealand GDP
10. Australian Unemployment Rate

It is a public holiday in Japan on Monday.

For the month of September 2025, I forecasted that the EUR/USD currency pair will rise in value if we get a daily close above $1.1806.

This has not yet set up.

I made no weekly forecast last week.

There were no unusually large price movements in currency crosses last week, so I have no weekly forecast this week.

The Australian Dollar was the strongest major currency last week, while the Japanese Yen was the weakest. Volatility was higher last week, with 26% of the most important Forex currency pairs and crosses changing in value by more than 1%. Next week’s volatility is likely to increase as we have four major central bank policy meetings, and at least two of them are expected to produce rate cuts.

You can trade these forecasts in a real or demo Forex brokerage account.

Last week, the US Dollar Index printed yet another bearish pin bar (the fourth consecutive one!), so we are now seeing extremely bearish price action, which is in line with the long-term bearish trend. Lower prices in the US Dollar look likely technically with all these repeated upper wics, however the price action is congested within its current area which may mean there is not much further downside to come. But a short-term fall is supported by more dovish market sentiment which arose last week following worse than expected US PPI data, even though the CPI data was a tick higher than expected.

Markets are now expecting rate cuts at each of the forthcoming Fed meetings remaining in this calendar year, with some even expecting a rate cut of 0.50% at the meeting this month. There is increasingly a feeling that the Fed has come to cutting rates a bit late. So. sentiment might be working with the trend and could trigger a downwards move now to the next support level at 94.61. We have a Fed meeting this week and a rate cut then is practically a certainty, so we might see Dollar action at or before this event.

I think it is wise to trade with the long-term trend and short-term price action right now, so trades short and not long of the US Dollar will probably be a good idea over the coming week.

The AUD/USD currency pair rose strongly last week, powering up to new 11-month high prices. It was the strongest weekly rise since June, and the price closed quite near its high. These are bullish signs.

The Australian Dollar has gained mostly as a risk proxy, with stock markets mostly rising and risk-on sentiment remaining bullish. It was the biggest-gaining currency of last week. The Aussie has also benefited from higher than expected inflation data recently which has effectively ruled out any rate cuts over the near term, and this has helped to increase its value.

On the other side of this pair, the US Dollar is in a long-term bearish trend and has shown bearish price action over recent weeks as it fails again and again to rise. Although there is little momentum lower, the price does look likely to break down and it is a valid trend.

For these reasons, I think there is further upside here, although it is important to be careful when trying to trend the Aussie as it tends not to trend very reliably. The key level to watch out for is probably $0.6654 – if we get a sustained break above that, we could see a further significant gain, as that is the initial strong technical obstacle. However, Wednesday’s Fed meeting might cause volatility which could send the price into unpredictable areas.

The S&P 500 Index had a great week, rising strongly and closing not far from the top of its range well into blue sky at a new record high, almost touching 6,600. The way the price was able to overcome the big round number at 6,500 was another bullish sign.

US stock markets are rising strongly due to increasing expectation that the Fed will make at least 0.75% worth of rate cuts over the rest of 2025, and on the bearish price action and trend we are seeing on the other half of this trade – the US Dollar.

The index has risen by about 10% since the start of 2025 and by 36% since the April low caused by the Trump tariff panic. It is an open question how much further the current bull run will go, but betting against new record highs in the US stock market is a brave and probably foolish move, unless it’s a cautious play in individual underperforming stocks.

I am bullish on the S&P 500 Index.

The NASDAQ 100 Index had a great week, rising strongly and closing very near the top of its range well into blue sky at a new record high, above 24,000. The way the price was able to overcome the big round number at 6,500 was another bullish sign, as was this tech index’s outperformance of the broader S&P 500 Index, while showing more bullish price action, too.

US stock markets are rising strongly due to increasing expectation that the Fed will make at least 0.75% worth of rate cuts over the rest of 2025, and on the bearish price action and trend we are seeing on the other half of this trade – the US Dollar.

The index has risen by about 14% since the start of 2025 and by 47% since the April low caused by the Trump tariff panic. These are above-average numbers, even in a bull market, especially the increase from April. It is an open question how much further the current bull run will go, but betting against new record highs in the US stock market is a brave and probably foolish move, unless it’s a cautious play in individual underperforming stocks.

I am very bullish on the NASDAQ 100 Index.

Silver had a stunning week, showing another outsize rise in value, again closing near the top of its weekly range, and powering up to a new 14-year high. It also outperformed Gold and all other precious metals. These are bullish signs, as is the general weakness in the US Dollar and that currency’s long-standing bearish trend on the other side of this trade, and the breakout from the linear regression analysis shown within the price chart below.

With Silver’s outperformance against Gold, it is probably worth being bold on the long side here.

Having said, if you are only just entering a new long trade here, as the move is quite extended, a smaller position size might be wise. Bulls might also be wary of the major quarter-number just ahead at $42.50.

I am very bullish on Silver.

Gold rose last week to print a new all-time high price just below $3,675. However, it is worth noting that Gold underperformed Silver, and left a bit of an upper wick on the weekly candlestick, as can be seen in the price chart below.

The long-term bullish trend and break to new record highs are bullish factors, as is the bearish trend in the US Dollar and the strong US stock market, as the US stock market has tended to be positively correlated with Gold, to the surprise of many who it as a hedge against inflation or whatever.

It may be that we are due a pullback, but I think the combination of rising stock markets and a likely more aggressive rate cutting approach from the Fed, could provide the bullish sentiment needed to drive this strong advance to even higher all-time high prices.

For anyone who is only entering a long trade now, it might be wise to use a smaller position size to account for any sudden high-volatility snapback towards lower prices.

I am bullish on Gold.

I see the best trades this week as:

1. Long of the S&P 500 Index.
2. Long of the NASDAQ 100 Index.
3. Long of Silver.
4. Long of Gold.

Ready to trade our weekly Forex forecast? Check out our list of the best Forex brokers.

– Written by


Frank Davies

STORY LINK Pound to Dollar Forecast: GBP Struggles at Resistance, USD Awaits Huge FED Risk

The Pound to Dollar (GBP/USD) exchange rate stalled below key resistance at 1.3590 on Friday after UK GDP data showed zero growth in July.

Sterling briefly touched 1.3580 in Asia but retreated towards 1.3550, with flat domestic growth and weak manufacturing tempering gains.

Dollar sentiment remains fragile after a sharp rise in US jobless claims, while markets are almost fully pricing a Fed rate cut next week against steady Bank of England policy.

GBP/USD Forecasts: Advance Stalls at Key Resistance

The Pound to Dollar (GBP/USD) exchange rate hit highs just above 1.3580 in Asia on Friday before a limited retreat to test support below 1.3550.

The immediate focus will still be on the key resistance area at 1.3590/1.3600.

Traders remain convinced that the Fed will cut interest rates next week with no change from the Bank of England while the wider economic debate continues.

Scotiabank notes that any break higher could trigger gains towards 1.38.

UoB commented; “A break above this level is not ruled out, but based on the current momentum, GBP is unlikely to be able to maintain a foothold above this level.”

The dollar was undermined on Thursday by a jump in US jobless claims which triggered fresh concerns over the labour market.

The ONS reported that UK GDP was unchanged in July after0.4% growth for June, in line with consensus forecasts.

The services sector recorded marginal growth for the month, but this was offset by a 0.9% retreat in industrial production.

Manufacturing output dipped to the lowest level since January with significant weakness in pharmaceuticals.

Deutsche Bank chief UK economist Sanjay Raja noted difficulties associated with tariffs; “as the US trade war catches up with the UK, global headwinds will gather pace, weakening the UK’s external backdrop”.

PwC chief economist Barret Kupelian added “Looking ahead, we may see a replay of last autumn’s script: private-sector firms paring back spending in the run-up to the Autumn Budget, creating a headwind for headline growth into year-end. This isn’t a cliff edge, but it is a gear change, at least for now.”

The latest Bank of England inflation expectations survey recorded an increase in long-term expectations to 3.8% from 3.6% in the May survey, the highest reading since 2019.

The combination of subdued growth and inflation concerns will trigger further difficulties for the Bank of England.

There are strong expectations that the Bank of England will leave rates on hold at 4.00% at next Thursday’s policy meeting.

ING commented; “September’s meeting almost certainly won’t result in another rate cut, with policymakers instead poised to keep rates at 4% on 18 September. But the prospect of a November cut hangs in the balance, and this meeting will be heavily scrutinised for hints on whether officials are still considering further easing this year.”

There are very strong expectations of a Fed rate cut next week with traders pricing in over a 90% chance of a 25 basis-point cut.

According to Danske Bank; “Markets have flirted with the idea of the Fed delivering a larger 50bp cut at the September meeting after disappointing jobs growth over the summer, but we still think a more gradual approach is better suited for the current environment.”

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TAGS: Pound Dollar Forecasts

EUR/USD Price Analysis: Bulls Eye 1.1830 as Fed Cut Cycle Looms and Lagarde Signals Confidence

Euro Regains Momentum Above 1.1700

EUR/USD is trading around 1.1733, recovering from repeated failures near 1.1780, a level that has capped upside attempts across September. Support zones at 1.1710 and 1.1660 remain in play, with buyers defending each dip as dollar momentum stalls. The move follows a bullish breakout from an inverse head-and-shoulders pattern and a bull pennant, both signaling that structural support for euro strength remains intact.

ECB Signals End of Disinflation, Shifting Policy Narrative

European Central Bank President Christine Lagarde stated the “disinflationary process is over”, suggesting the eurozone economy is stabilizing. The ECB has likely reached the end of its easing path, a stark contrast to the Federal Reserve preparing to cut rates. This divergence sets the tone for relative currency performance, giving EUR/USD bulls fresh conviction. Eurozone fundamentals remain fragile, but the absence of further ECB cuts supports the euro at a time when the dollar’s policy premium is fading.

Fed Policy Path to Define Dollar Weakness

Markets are pricing a 94% probability of a 25bp cut at the September 17 FOMC meeting, with expectations of three additional cuts into 2026. U.S. labor data has softened sharply, with jobless claims hitting 263,000 and the Bureau of Labor Statistics revising 911,000 jobs lower for the prior year. Nonfarm payrolls at 22,000 in August reinforced the view that U.S. growth is slowing. Inflation at 2.9% year-over-year remains sticky, but the market believes the Fed cannot maintain restrictive policy without risking recession.

Technical Landscape Points Toward Breakout

The near-term ceiling between 1.1780 and 1.1789 remains the critical breakout zone. A close above this region would expose the three-year high at 1.1830, a level that could trigger momentum buying. The 1.1748 Fibonacci retracement acts as interim resistance, while the 1.1710 zone offers short-term higher-low support. If EUR/USD breaks below 1.1660, it would disrupt bullish structure and shift the bias back toward a dollar-driven retracement. For now, the series of higher highs and higher lows supports continuation.

Speculative Positioning and CFTC Data

CFTC figures show net long euro positions rising to €125.7K contracts, up from €119.6K the prior week. This steady build reflects speculative appetite aligning with the technical backdrop. Dollar positioning has weakened across commodities and equities, reinforcing the narrative of a softer greenback into year-end.

Macro Events That Could Trigger Volatility

The upcoming FOMC meeting is the defining catalyst. A hawkish tone could delay EUR/USD’s breakout, while confirmation of a dovish path would accelerate euro gains. U.S. retail sales, the Empire State manufacturing survey, and weekly jobless claims remain key short-term drivers. On the European side, inflation indicators and PMI surveys will determine if Lagarde’s confidence holds weight or if eurozone weakness resurfaces.

Verdict on EUR/USD

Verdict: BUY — With EUR/USD defending 1.1700 and bulls positioned for a push toward 1.1830, the balance of technical and macro data favors further upside. Dollar weakness tied to labor cracks and Fed easing supports a bullish stance. Any sustained break above 1.1780–1.1789 unlocks a path to 1.1830, while downside invalidation sits at 1.1660.

That’s TradingNEWS

GBP/USD Under Fed Cut Pressure and UK Stagnation Risks

Sterling ended the week trading at 1.3556, slightly softer after hitting a daily high of 1.3580, as the US Dollar (USD) attempted to recover modest ground. The latest U.S. inflation figures showed CPI rising from 0.3% to 0.4% month-on-month, with the annual figure firm at 2.9%, confirming that prices remain elevated above the Fed’s 2% target. At the same time, U.S. unemployment claims rose unexpectedly, highlighting cracks in the labor market. These dual signals—sticky inflation but weaker jobs—pushed markets to fully price in a 25 bps Federal Reserve rate cut in the upcoming policy meeting. The pound capitalized on the weaker dollar tone, but lackluster U.K. macro data capped gains.

Labor Market and UK Growth Outlook Weigh on Sterling

The U.K. Office for National Statistics reported that GDP growth stalled in July after a 0.4% expansion in June, while factory activity softened. Traders remain cautious ahead of this week’s employment and inflation releases, which will determine whether the Bank of England (BoE) accelerates easing or continues its gradual approach. Current swaps price a 33% chance of another rate cut before year-end, but that probability will shift depending on wage growth data and retail sales momentum. Fiscal concerns have also pressured gilt markets, keeping a lid on sterling rallies despite broader dollar weakness.

Fed Policy Shift Dominates GBP/USD Sentiment

The GBP/USD (FX:GBPUSD) pair remains highly sensitive to Fed dynamics. With unemployment claims rising and CPI stable, traders see Wednesday’s Fed decision as pivotal. A dovish cut, paired with forward guidance pointing to more easing, could drive GBP/USD toward 1.3595 resistance and set up a test of the 1.3787 high. However, if the Fed signals a one-off adjustment without a full easing cycle, the dollar could stabilize, leaving sterling vulnerable to domestic weakness.

Technical Setup and Key Levels

Technically, GBP/USD trades above both its 200-day SMA at 1.3087 and the 50-day SMA at 1.3464, keeping the medium-term bias tilted upward. Momentum indicators lean bullish with RSI holding above 50, but price action shows repeated rejection near 1.3595, a swing high that capped rallies in August. A decisive break above would expose 1.3787, while failure here risks a retracement toward 1.3332 support. Deeper losses could test the 1.3200 region, a level that bulls defended earlier in the summer.

Comparisons with Dollar Index and Cross-Currencies

The U.S. Dollar Index (DXY) trades at 97.615, holding just above its support at 97.253. Its inability to reclaim the 50-day SMA at 98.121 confirms that broad dollar weakness is still a theme. EUR/USD holds steady at 1.1735, benefitting from the same dollar softness, while USD/JPY trades at 147.67, underpinned by yields. The pound’s relative outperformance hinges on U.K. releases, but against a weakening greenback, GBP/USD remains better positioned than sterling’s performance versus the euro or yen.

Forward Outlook and Volatility Triggers

The upcoming Fed meeting on Wednesday, coupled with U.K. labor market data, will define the near-term trajectory for GBP/USD. Traders will also track U.S. retail sales, as any sign of consumer slowdown could reinforce easing bets and weigh on the dollar further. If sterling clears 1.3595 resistance, markets will quickly shift to test 1.3787; a failure could pull the pair back into the 1.33–1.34 consolidation zone. With gilts under pressure and U.S. fiscal uncertainty climbing, volatility is expected to rise, making this week’s sessions highly consequential for positioning.

Buy, Sell, or Hold Verdict

At 1.3556, GBP/USD sits at an inflection point. With Fed cuts imminent, the dollar remains vulnerable, giving sterling a tactical advantage. However, the stagnant U.K. growth backdrop and fiscal concerns limit the longer-term bullish case. Near-term technicals argue for further upside if 1.3595 breaks, setting up a push to 1.3787, but the risk of a pullback into the 1.3332–1.3400 band remains high if resistance holds. Based on current conditions, GBP/USD carries a Buy bias in the short term, but only while Fed easing dominates. Should U.K. data weaken further, the pair risks flipping to a Hold as domestic headwinds reassert themselves.

That’s TradingNEWS

USD/JPY Battles 148.00 as Political Turmoil in Japan Weighs on the Yen

The USD/JPY pair closed the week trading at 147.58, staging a recovery after dipping to 146.29 earlier in the week. The move came as the resignation of Prime Minister Shigeru Ishiba injected political instability into Japan, clouding expectations around the Bank of Japan’s tightening path. With U.S. yields still holding firm and Japanese rates anchored near 0.5%, the widening policy divergence continues to favor the dollar, even as the pair remains locked between 146.00 and 149.00 since early August.

Political Uncertainty Complicates Bank of Japan Outlook

Ishiba’s sudden departure reshaped the landscape ahead of the October 4 leadership vote. Market chatter suggests a conservative replacement could revive rate hike speculation, sending USD/JPY lower toward 145.00, while a reflationary candidate could embolden BoJ doves, clearing the way for another test of 149.50–150.00. Current expectations for a BoJ rate hike by early 2026 have eased slightly, with Bloomberg consensus lowering the odds of an October move from 42% to 36%. Until clarity emerges, yen weakness is likely to persist, especially with inflation easing from 4.0% in January to 3.1% in July, reducing urgency for near-term hikes.

Fed Policy and U.S. Data Shape Dollar Demand

Across the Pacific, the Fed’s next move is pivotal. Markets are pricing a 25 bps cut at next week’s meeting, with a further 50 bps by year-end as job growth falters. The U.S. economy added just 22,000 jobs in August, averaging 29,000 over three months, well below the 100,000 needed to hold unemployment steady. With the unemployment rate at a four-year high of 4.3%, the Fed has scope to ease, though inflation at 3.1% y/y still sits above the 2% target. A dovish Fed could drag the dollar lower, but unless cuts are deeper than expected, yield spreads remain decisively in the greenback’s favor.

Joint U.S.–Japan Statement Reinforces Market Stability

Finance Minister Katsunobu Kato and U.S. Treasury Secretary Scott Bessent reaffirmed that FX levels should be market-determined and that sharp volatility is undesirable. The statement underscored policymakers’ preference for stability, but with political upheaval at home and a yawning yield gap, traders are betting volatility will persist. The message capped USD upside briefly, but failed to generate lasting yen support.

Consumer Sentiment and U.S. Dollar Index Trends

The University of Michigan’s Consumer Confidence Index, due later, is expected at 58, marginally below August’s 58.2. A sharp downside surprise would reinforce dovish Fed bets and weigh on USD/JPY, potentially dragging the pair back to 146.30 support. However, the DXY index climbed 0.2% on Friday, suggesting dollar demand remains resilient. A rebound toward 98 in the DXY would likely push USD/JPY to retest 148.60 resistance.

Technical Picture: Neutral Bias but Key Levels in Play

Technically, the bias in USD/JPY remains neutral as long as the pair holds below 149.12 resistance. A firm break under 146.29 confirms that the rebound from 139.87 has already topped at 150.90, opening a projection target of 144.42. On the upside, a sustained move through 149.12 sets the stage for another run at 150.90, with longer-term upside capped near 161.94, last year’s high. Indicators show RSI steady above 50, MACD near the zero line but edging positive, and price action still above the 200-day SMA, signaling underlying dollar strength.

Industrial Output, Trade, and Inflation Pressures in Japan

Japan’s July industrial production fell 1.6% month-on-month, erasing part of June’s 2.1% rise, a setback that weakens the case for immediate BoJ tightening. Declining output risks undermining wage growth and consumer spending, further complicating inflation dynamics. While imported inflation remains a concern due to yen weakness, the overall downward trend in domestic prices is giving the BoJ little urgency to tighten prematurely. Still, former policymakers warn that rates are “too low,” and the risk of imported inflation could push the bank to reconsider in 2026.

Volatility Ahead of Fed and BoJ Decisions

With the Fed meeting set for September 17 and the BoJ decision on September 18–19, USD/JPY traders face a high-volatility stretch. A dovish Fed combined with a hawkish BoJ could drive the pair toward 145.00, while the opposite mix—hawkish Fed commentary and dovish BoJ signals—would likely push USD/JPY back above 149.50 and potentially 150. For now, the broad range between 146.00 and 149.50 holds, but the election outcome and rate policy divergence mean breakout risks remain elevated.

Buy, Sell, or Hold Verdict on USD/JPY

At 147.58, USD/JPY remains a battle between political uncertainty in Japan and monetary divergence with the U.S. Elevated U.S. yields, a 4%+ Fed funds rate, and weakening Japanese growth argue for continued yen weakness unless the BoJ signals an earlier rate hike. With support anchored at 146.30 and resistance at 149.12–150.00, the risk-reward leans bullish in the near term. Based on current fundamentals and technicals, USD/JPY is a Buy above 147.00, targeting 148.60–149.50, with downside risks emerging only if Fed cuts accelerate or Japan’s political outcome strengthens hawkish BoJ expectations.

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