Fed Cut Near, Outlook Still Cloudy (12.09.2025)

The 10-year Treasury yield pushed toward 4.2%, its highest level since early September, as uncertainty around the Fed’s 2026 path increased.

A cut is expected this week, but persistent inflation keeps caution in play. The 30-year yield neared 4.8%, while mixed signals (stronger confidence but weaker hiring) added strain. Talk of a more dovish future Fed Chair also unsettled sentiment.

The DXY hovered just under 99 with roughly an 87% chance of a 25-bp cut now priced in. Still, the outlook for 2026 remains unclear, with expectations leaning toward a hawkish cut. Delayed US data, including JOLTS, jobless claims, and trade figures, will help shape the broader picture, alongside rate decisions in Australia, Canada, and Switzerland.

Euro Rises as ECB Signals Outshine Fed Cut

The euro traded just above $1.1640, staying close to its strongest levels since mid-October after ECB official Isabel Schnabel suggested that the Bank’s next move could lean higher. She pointed to firmer growth signs and rising inflation pressures, indicating that December projections may shift upward. With the eurozone maintaining steady momentum, expectations still point to unchanged ECB rates through 2026, while US pricing reflects a high probability of a 25-bp cut and additional easing next year.

EUR/USD holds support at 1.1600, while resistance comes in at 1.1680.

Yen Challenged After GDP Revision

The yen hovered near 155.8 per dollar after a volatile start to the week. A strong earthquake briefly pressured the currency, followed by a downward GDP revision that reinforced support for Prime Minister Takaichi’s large-scale spending agenda. These shifts complicate the BOJ’s near-term path, though expectations still lean toward a December rate increase. Governor Ueda’s London remarks will offer the next cue on normalization.

USD/JPY meets resistance at 156.20, with solid support at 155.30.

Gold Firm as China Extends Buying Streak

Gold traded around $4,190 per ounce, holding steady as markets position for the Fed’s policy update. Pricing reflects an 87% chance of a 25-bp cut, with two more expected in 2026, while updated forecasts and Powell’s remarks will shape the longer-term view. JOLTS data and China’s 13th straight month of reserve accumulation add further interest.

Gold holds support near $4,160, while the first resistance aligns around $4,240.

Pound Strong Near Six-Week High

Sterling hovered close to $1.33, remaining near last week’s six-week high after an improved Services PMI and a well-received budget from Finance Minister Reeves. Markets still lean toward a BoE cut next week, with another projected by June, while the Fed is poised to ease as well.

GBP/USD carries support at 1.3300, with the first resistance marked at 1.3360.

Tight Supply Anchors Silver Momentum

Silver stayed near $58 per ounce, consolidating within a narrow six-day range after its late-November breakout. Strong physical conditions, tight inventories, steady ETF inflows, and firm demand from the solar sector continue to support the metal, while the expected 25-bp Fed cut shapes sentiment for the days ahead. A move above $60 could trigger the next phase of the rally.

Silver holds support around $56.90, while initial resistance comes in near $59.00.