The USD is trading higher, with USDJPY extending its climb toward the next key target at 153.397, the 61.8% retracement of the range from the July 2024 high. Yesterday, the pair pushed decisively above the 50% retracement at 150.757 and broke through a swing area between 150.75–151.307, reinforcing bullish momentum. With the trend firmly to the upside, short-term sellers looking for opportunities will need to focus on the 5-minute chart, watching for breaks below the 100/200-bar moving averages and retracement levels of the most recent leg higher. While such moves may not shift the broader trend, they could provide buyers with a reason to pause and allow sellers a small tactical win.
The EURUSD and the GBPUSD both moved to new lows for the week before rebounding.
In the video, I take a look at the three major currency pairs, the EURUSD, USDJPY and GBPUSD from a technical perspective and outline the bias and risk/target levels for each.
In other news overnight as NA traders enter for the day, the Reserve Bank of New Zealand surprised markets with a larger-than-expected 50 basis point cut to its Official Cash Rate, lowering it from 3.0% to 2.5%. While a 25bp reduction had been widely anticipated, policymakers opted for a bigger move, citing prolonged spare capacity in the economy and weak activity through mid-2025. The Committee emphasized that while inflation is currently near the top of its 1–3% target band, it expects inflation to ease back toward the 2% midpoint by the first half of 2026. Officials highlighted risks on both sides of the outlook, noting the potential for more persistent inflation but also weaker growth. They left the door open to further cuts if needed to ensure inflation stabilizes around the target, with financial conditions set to remain sensitive to the current and expected path of the OCR. Markets reacted swiftly, with NZD/USD marked down on the decision.
In Germany, industrial production fell sharply in August, dropping 4.3% month-on-month—much worse than the 1% decline expected. The weakness was concentrated in the automotive sector, where output plunged 18.5% due to factory closures and model changeovers. Over the June–August period, production was down 1.3% compared to the previous three months, highlighting a broader slowdown. The steep decline has raised concerns that Germany could face another quarter of economic contraction, following a 0.3% drop in GDP during Q2A slew of ECB officials spoke today:
- Georg Muller emphasized that eurozone inflation is now at the level policymakers want, reinforcing confidence in the ECB’s current stance. He described the economy as being on a gradual path of recovery, with the base case pointing to steady improvement over time.
- Olli Rehn cautioned that while the current situation looks stable, medium-term downside risks to inflation are emerging. He pointed to the stronger euro and stabilization in wage and services inflation as key factors and underscored the need for a cautious, meeting-by-meeting, data-driven approach to monetary policy.
- José Luis Escrivá argued that interest rates are already at an appropriate level and further forward guidance is unnecessary. He said inflation risks are balanced overall, but warned that US trade disruptions could be inflationary. He reaffirmed that the ECB’s meeting-by-meeting strategy preserves full optionality, allowing flexibility if conditions change.
- Joachim Nagel took a more positive view, stressing that current monetary policy is well-calibrated. He noted that inflation is close to the 2% target and is expected to remain near that level in the coming years, leaving the ECB in a comfortable position.
With the government still in shutdown mode and key economic data on hold, Fed officials are stepping in to fill the gap with a busy day of remarks. A number of policymakers are scheduled to speak, ensuring markets get no shortage of Fedspeak. Adding to the spotlight, the central bank will also release the minutes from its recent meeting, where rates were cut by 25 basis points. Below is the schedule of speakers and times:
- 1320 GMT / 0920 US Eastern time St. Louis Federal Reserve Bank President Alberto Musalem gives welcome remarks before the 2025 Community Banking Research Conference at the Federal Reserve Bank of St. Louis.
- 1330 GMT / 0930 US Eastern time Federal Reserve Board Governor Michael Barr speaks at the 2025 Community Banking Research Conference in St. Louise, Missouri.
- 1800 GMT / 1400 US Eastern time Federal Reserve releases FOMC minutes
- 1915 GMT / 1515 US Eastern time Federal Reserve Bank of Minneapolis President Neel Kashkari speaks before Day 1 of the Center for Indian Country Developments 10-Year Anniversary Event and Data Summit
- 2030 GMT / 1630 US Eastern time Federal Reserve Bank of Minneapolis President Neel Kashkari hosts a fireside chat before Day 1 of the Indian Country Development’s 10-Year Anniversary Event and Data Summit
- 2145 GMT / 1745 US Eastern time Federal Reserve Board Governor Michael Barr speaks on community development and Indian Country the Federal Reserve Bank of Minneapolis Center for Indian Country Development 10th Anniversary and Data Summit
- 2315 GMT/ 1915 US Eastern time Federal Reserve Bank of Chicago President Austan Goolsbee speaks before virtual Chicago Payments Symposium 2025
Silver moved above the $49 level for the first time and made another high going back to 2011. The all-time intraday high price from 2011 comes in at $49.83.
Gold is up an additional $51 or 1.39% and extend back above the $4000 level at $4036.
Crude oil is up $0.87 or 1.41% $62.60.
Bitcoin extended to a new all-time high price this week at $126,272. Yesterday, it rotated back to the downside to a low of $120,648. The current price is back higher with the digital currency currently trading at $122,918.
The US stock indices are higher after falling yesterday and NOT closing at a new record:
- Dow industrial average is up 86.02 point
- S&P index is up 7.16 point
- NASDAQ index is up 23.52 points
Looking at the US yield curve, yields are lower to start the day despite the rise in the US dollar. At 1 PM, the U.S. Treasury will auction off 10 year notes – its 2nd coupon auctions for the week. The 3-year note auction yesterday was met with strong demand especially from domestic buyers. A snapshot of the ocher currently shows:
- 2-year yield 3.563%, -0.8 basis points
- 5 year yield 3.690%, -1.5 basis points
- 10 year yield 4.099%, -2.7 basis points
- 30 year yield 4.691%, -3.5 basis points
This article was written by Greg Michalowski at investinglive.com.