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The dollar hits a new low in more than two months, facing the test of Federal Reserve resolution

Post time: 2025-09-17 views

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Hello everyone, today XM Foreign Exchange will bring you "[XM Foreign Exchange Market Analysis]: The US dollar hits a new low in more than two months, and meets the test of the Federal Reserve's resolution." Hope it will be helpful to you! The original content is as follows:

On the Asian session on Wednesday, the US dollar index fluctuated downward, the US dollar fell across the board on Tuesday, hitting its four-year low against the euro, and investors firmed their bets on the Fed's interest rate cut this week. At 2:00 am on Thursday, the Federal Reserve will announce its interest rate decision, and the Federal Reserve Chairman will attend a press conference at 2:30 am on Thursday, Beijing time, and investors need to pay attention. Before the interest rate decision, investors need to pay attention to U.S. real estate market data and news related to Sino-US trade negotiations. Trump will pay a state visit to the UK, and investors also need to pay attention.

Analysis of major currency trends

U.S. dollar: As of the time of issuance, the US dollar index hovered around 96.69. The intersection of technology and fundamentals has made the support range of the US dollar 96.9500-97.0724 the focus of the current focus. If the price stabilizes here, the rebound may test the middle track; but if it is lost, the downside space will be further opened, and the expansion of the debt-to-exchange gap will become a catalyst. www.vifu.netpared with the historical market, such as the tragic decline of the US dollar in the first half of the year, the current adjustment is more timely, due to the clear shift in the Fed's path. Looking ahead to the next week, US Treasury yields are expected to continue to fluctuate in the range of 4.001-4.086, but if the meeting confirms the dovish path, the holding of the lower rail support will open a rebound channel, and the release of long-term dividends may push the yield center down to around 4.00%. The US dollar index faces a clearer short test, and the response of the previous low of 96.9500 will become the key. If it is lost, the pullback at the 97.00 mark will be opened, coupled with the transmission of the outflow of funds in the bond market, the index may test the deeper range of 96.50.

The dollar hits a new low in more than two months, facing the test of Federal Reserve resolution(图1)

Euro: As of press time, the euro/dollar hovers around 1.1859, adding to the bet that the Fed will resume a loose cycle this week as investors sell the dollar, the euro/dollar rose to 1.1878 on Tuesday, a four-year high. The dollar is under pressure as market participants await the Fed’s decision and a press conference by Fed Chairman Jerome Powell. Traders ignore good data on U.S. retail sales and industrial production, pushing the euro/dollar up more than 100 points, to its highest level since 2021. Next, EUR/dollar trading Those will pay attention to the release of inflation data in the euro zone. Technically, the Relative Strength Index (RSI) shows that momentum is still bullish and has not yet met the overbought conditions, supporting further gains. If the EUR/USD breaks through 1.1900, the next key resistance will be 1.1950 and 1.2000. On the contrary, if the break below 1.1850, the previous year's highs will be 1.1829 and 1.1800 will be exposed. In the case of further weakness, the next support will be 1.1750 and 20-day simple moving average (SMA) 1.1704.

The dollar hits a new low in more than two months, facing the test of Federal Reserve resolution(图2)

GBP: As of press time, GBP/USD hovered around 1.3645, with GBP (GBP) rising more than 0.30% as the US dollar (Greenback) fell to a ten-week low, according to the US dollar index (DXY). The two-day meeting of the Federal Open Market www.vifu.netmittee (FOMC) is expected to cut interest rates. Traders' focus turned to the Fed's decision on Wednesday. Market participants have fully expected a 25 basis point cut, although a few people are paying attention to a 50 basis point cut. Except for the decision In addition, Fed officials will also update their economic forecasts and pave the way for interest rates in the www.vifu.neting months. Technically, the short-term trend of the pound remains bullish as it trades close to the 20-day index moving average (EMA), about 1.3520. The 14-day relative strength index (RSI) breaks through 60, indicating strong upward momentum. Looking down, the August 1 low of 1.3140 will serve as a key support range. Looking upward, the July 1 high approaches 1.3800 will serve as a key resistance.

The dollar hits a new low in more than two months, facing the test of Federal Reserve resolution(图3)

Summary of news from the foreign exchange market

1. The United States and India restarted trade negotiations. Both sides said the talks were "positive"

The United States and India said that trade negotiators from both sides held "positive" talks in New Delhi on Tuesday. The two sides are seeking to ease tensions after U.S. President Donald Trump imposed 50% tariffs on India last month. After a one-day talks, the Indian government said in a statement, the two countries agreed to "strengthen efforts" to reach a trade agreement. The statement said the discussion "is positive and future-oriented and covers all aspects of the trade agreement." The U.S. Embassy in New Delhi said in another statement that U.S. Assistant Trade Representative Brendan Lynch held a "active meeting" with India's chief negotiator Rajesh Agrawal to discuss future steps in bilateral trade negotiations. The two countries are seeking to resolve their differences after Trump imposed the highest tariffs on India in Asia to punish its trade barriers and purchase Russian oil. Another team of U.S. defense officials and Boeing executives will also arrive in India this week to negotiate a sale of a naval reconnaissance aircraft worth about $4 billion.

2. The EU and Indonesia reach a trade agreement

The EU and Indonesia have concluded negotiations on a trade agreement and plan to sign the agreement next week. Both sides are accelerating their efforts to reduce their dependence on the United States. Officials in Brussels and Jakarta said European www.vifu.netmission Vice President Sevjovich plans to go to Indonesia to sign the agreement on September 23. U.S. President Trump's import tariffs accelerate negotiations. Washington has forced Jakarta to fully accept the 19% tariff rate, and also forced Brussels to agree to the 15% tariff rate for most products.

3. Fed Mickeyboard: Powell's attitude toward the job market this week may indicate the future policy direction

The latest article by Nick Timiraos: "The Fed rate cut this week is basically a foregone conclusion, and investors will focus on whether Powell will further advance his recent stance turn. Investors will pay close attention to a key message: Will Powell and his colleagues set the total rate cuts this year three times, or will they maintain expectations in June (at that time the job market seemed more stable, and minority officials expected to cut interest rates twice)? Last month, in a highly-watched speech, Powell's concerns about the job market exceeded the inflation concerns of some colleagues at that time. The question now is: A weak non-farm employment report in August was released Will Powell further strengthen this worry after Bangladesh? If he does this, it will confirm the market's expectations of "continue interest rate cuts in the next few meetings", but it may also need to overcome the concerns of some colleagues, who are unwilling to promise such a rapid policy shift due to doubts about "neutral interest rate levels" and "whether interest rates should be adjusted to neutral levels".

4. ECB Management www.vifu.netmittee Eskriva: Uncertainty is lingering, and the ECB must maintain flexibility

ECB Management www.vifu.netmittee Eskriva said that despite inflation being controlled, uncertainty still exists, so the ECB must be ready to take action on interest rates at any time. Eskriva said, "We need to be very flexible and ready to act in any direction in monetary policy. “Even if our core vision is becoming a reality, it does not mean that the uncertainty factor has been eliminated. "The ECB has already suggested that it is not inclined to cut further interest rates after eight times a year.The increase in consumer prices is basically consistent with the 2% target, and visibility in the eurozone economy has increased after Brussels and Washington reached a trade deal. “Anti-inflation is successful,” Eskriva said. "Two or three years ago, the situation was www.vifu.netplicated. The current 2% interest rate is reasonable for us."

5. The UK put aside the steel zero tariff quota plan to the United States and instead talked about "permanent 25% tariffs". According to the Financial Times, British Prime Minister Stamer has put aside the idea that "British steel exports to the United States enjoy a certain quota zero tariff" and tends to negotiate with Trump to fight for a "permanent" 25% tariff treatment for all UK steel exports. Starmer's allies revealed that if Britain's steel exports can receive a fixed tariff www.vifu.netmitment of 25%, it will provide the industry with "certainty" and give it a www.vifu.netpetitive advantage - because this rate is only half of the 50% tariff paid by other countries. British government officials said that the current 25% preferential tariffs enjoyed by British steel as "permanent treatment" has not yet formed a "formal agreement", but is expected to be announced during Trump's three-day state visit on Tuesday.

Institutional View

1. Bank of America Survey: The pound has become the highest valuation currency in the past decade

Bank of America Global Fund Managers Survey in September showed that the pound is considered the highest valuation currency in the past decade. The survey results show that 12% of investors (net ratio) currently believe that the pound is overvalued, while the figure was www.vifu.net 3% a month ago believed that the pound was undervalued and that valuation expectations have reversed significantly. This means that the current overvalued pound has reached its peak since December 2015. Data from the London Stock Exchange Group (LSEG) shows that as of this month (relevant survey statistics period), the pound sterling exchange rate against the US dollar has risen by about 1%; since the beginning of this year, the cumulative increase of sterling sterling against the US dollar has reached 9%.

2. Strategist: The Bank of England may not cut further interest rates this year

Ebury strategist Matthew Ryan said in the report that the Bank of England is likely to not cut further interest rates this year, and this position may provide solid support for the pound. Ryan pointed out that data released on Tuesday showed that the UK labour market is still reducing jobs at a startling rate. But he believes that the unreliability of the data and the uncertainty that www.vifu.netes with the upcoming autumn budget mean that the Bank of England will not rashly draw conclusions. Meanwhile, the UK inflation rate continues to rise, far higher than the Bank of England’s 2% target set by the Bank of England. Ryan said the situation was not www.vifu.netpatible with the rate cut. The Bank of England's next interest rate decision will be announced on Thursday.

3. Yuxin Bank: The market has fully digested the policy differences between the central banks of Europe and the United States and Europe, and it is difficult for Europe and the United States to rise sharply. Analysts at Yuxin Bank Investment Research Institute said in the report that since the market has fully digested the interest rate expectations between the Federal Reserve and the European Central Bank, the euro-US dollar exchange rate is likely to be difficult to rise further sharply. Analysts point out that in 2026Forward interest rates for the full year have been included in relevant expectations—including the European Central Bank's interest rate unchanged and the Federal Reserve's rate cut of about 150 basis points. They further said: "Combined with our latest benchmark scenario forecast for the Federal Reserve, we currently set the euro-dollar target exchange rate in the fourth quarter of 2025 to 1.20, and the fourth quarter of 2026 to 1.23."

The above content is all about "[XM Foreign Exchange Market Analysis]: The US dollar hits a new low in more than two months, and meets the test of the Federal Reserve's resolution". It was carefully www.vifu.netpiled and edited by the editor of XM Foreign Exchange. I hope it will be helpful to your trading! Thanks for the support!

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