September Shifts and Market Crosswinds.

  • USD: Quiet climb higher; September tax season and dollar seasonality could support range trading.

  • EUR: CPI in focus, but unlikely to shift ECB trajectory—any extra cut is more probable this year than next.

  • GBP: Sterling near two-week highs, supported by dollar weakness; testing 1.36 depends on BoE tone and US jobs data.

  • Fed outlook: 25bp cut expected mid-September; weak payrolls could raise bets on a deeper 50bp move.

  • Market mood: Dollar resilience contrasts with soft data risks; euro and pound both trapped in narrow ranges for now.

USD: Seasonal tailwinds on standby?
The dollar is inching higher in quiet trade, with little reaction to news that US tariffs were ruled illegal. Treasury yields are a touch firmer, while equity futures dip slightly. Focus this week is on labour data, starting with today’s ISM manufacturing print—expected to rise modestly to 49.0, though still signalling weakness. Prices paid and employment sub-indices may draw interest, but are unlikely to drive major dollar moves.

Beyond data and the anticipated 25bp Fed cut on 17 September, two factors could underpin the greenback. First, a pause in China’s renminbi appreciation: the PBoC has kept USD/CNY stable, and geopolitical tensions could see Washington target BRICS with fresh tariffs. This would weigh on EM FX, where positioning is crowded. Second, September seasonality: corporate tax deadlines mid-month can create dollar demand, and historically DXY has rallied in 7 of the last 10 Septembers. For now, 97.50 DXY support looks intact, suggesting range trading ahead.

EUR: CPI in the spotlight
Markets are tuned into today’s eurozone CPI, expected to show headline at 2.1% YoY and core easing to 2.2% YoY. The ECB remains split: hawks resist cuts below neutral, while doves fret over undershooting inflation. We doubt today’s data will shift rate expectations much—markets still see a cut in Q2 next year. Yet with German fiscal stimulus likely to kick in then, any extra ECB easing window looks more likely this year.

EUR/USD trades steadily around 1.1700, with positioning risk its biggest vulnerability. US labour data could spark volatility, but for now, expect consolidation between 1.1650–1.1750.

GBP: Pound edges higher
Sterling has strengthened to two-week highs near 1.3540, with scope to test 1.36. Dollar weakness—fed by political uncertainty, Fed independence concerns, and tariff risks—has provided the backdrop. Gold and CNY strength reinforce this defensive dollar narrative.

Resistance sits near 1.3590, with UoB expecting a tighter trading band of 1.3420–1.3560. ING sees potential for GBP/USD to probe 1.3600 on a hawkish BoE tone, though sustaining gains looks difficult, as their base case still includes a 25bp cut in November.

This week’s direction will hinge on US jobs data. Consensus sees payrolls rising 75k in August, unemployment ticking up to 4.3%—the highest since late 2021. Markets price an 85%+ chance of a September Fed cut, with a weak print fuelling speculation of a larger 50bp move.

*All rates shown are indicative of interbank rates and should only be used for indication purposes only. It is important to note that foreign exchange rates fluctuate and that rates may vary depending on the amount and the base currency that is purchased or sold. Rates are correct as of 8:00am UK time. CentralFX are not responsible for the rates shown.