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xtrememarkets
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EUR/USD edges higher as US shutdown concerns pressure the Dollar
The EUR/USD pair rose more than 0.20% on Monday, supported by renewed concerns about a potential US government shutdown. Despite improved sentiment data in the Eurozone, the common currency’s advance remained modest. At the time of writing, the pair trades near 1.1726, after touching a daily low of 1.1701.
Dollar weakens amid political deadlock in Washington
The US Dollar slipped against most G10 currencies as political uncertainty in Washington weighed on investor sentiment. President Donald Trump met with Democratic leaders from both the House and Senate, but the discussions revealed deep divisions.
Senate Democratic leader Chuck Schumer said, “We have large differences,” while House Democratic leader Hakeem Jeffries stressed that his party would not support a partisan Republican bill that threatens healthcare. Meanwhile, Vice President J.D. Vance told Bloomberg that the US is heading toward a shutdown following stalled talks.
Fed comments mixed; US housing data supports outlook
Earlier in the session, US housing data surprised to the upside, with Pending Home Sales jumping 4% in August, far above the 0.3% expected, and reversing July’s slight decline.
Federal Reserve officials, however, struck mixed tones:
St. Louis Fed President Alberto Musalem described inflation expectations as “somewhat high,” while noting labor market weakness.
Cleveland Fed President Beth Hammack maintained that inflation remains too high and continues on the wrong path.
New York Fed President John Williams highlighted that policy is restrictive but still effective in easing inflationary pressures, while acknowledging gradual labor market softening.
Eurozone sentiment improves but stays subdued
In Europe, September data showed Consumer Confidence rising slightly to -14.9 from -15.5, though still below long-term averages. Industrial Confidence eased to -10.3 but beat forecasts, while Services Sentiment slipped to 3.6, missing expectations.
Key events ahead
Markets now shift focus to this week’s upcoming data releases, including:
ADP Employment Report
ISM Manufacturing PMI
Initial Jobless Claims
September Nonfarm Payrolls
Fed fund futures currently show an 89% chance of a 25-bps rate cut in October, with just an 11% probability of a larger 50-bps move.
Technical outlook: EUR/USD steady near 1.1740
The pair has logged two consecutive bullish sessions, hovering around the 20-day Simple Moving Average at 1.1740. The Relative Strength Index (RSI) remains neutral, hinting at possible consolidation.
A break above 1.1740 could open the way to 1.1800, followed by the yearly high at 1.1918.
On the downside, a drop below 1.1700 may expose 1.1650, with the next key support at the 100-day SMA near 1.1599.
The EUR/USD pair rose more than 0.20% on Monday, supported by renewed concerns about a potential US government shutdown. Despite improved sentiment data in the Eurozone, the common currency’s advance remained modest. At the time of writing, the pair trades near 1.1726, after touching a daily low of 1.1701.
Dollar weakens amid political deadlock in Washington
The US Dollar slipped against most G10 currencies as political uncertainty in Washington weighed on investor sentiment. President Donald Trump met with Democratic leaders from both the House and Senate, but the discussions revealed deep divisions.
Senate Democratic leader Chuck Schumer said, “We have large differences,” while House Democratic leader Hakeem Jeffries stressed that his party would not support a partisan Republican bill that threatens healthcare. Meanwhile, Vice President J.D. Vance told Bloomberg that the US is heading toward a shutdown following stalled talks.
Fed comments mixed; US housing data supports outlook
Earlier in the session, US housing data surprised to the upside, with Pending Home Sales jumping 4% in August, far above the 0.3% expected, and reversing July’s slight decline.
Federal Reserve officials, however, struck mixed tones:
St. Louis Fed President Alberto Musalem described inflation expectations as “somewhat high,” while noting labor market weakness.
Cleveland Fed President Beth Hammack maintained that inflation remains too high and continues on the wrong path.
New York Fed President John Williams highlighted that policy is restrictive but still effective in easing inflationary pressures, while acknowledging gradual labor market softening.
Eurozone sentiment improves but stays subdued
In Europe, September data showed Consumer Confidence rising slightly to -14.9 from -15.5, though still below long-term averages. Industrial Confidence eased to -10.3 but beat forecasts, while Services Sentiment slipped to 3.6, missing expectations.
Key events ahead
Markets now shift focus to this week’s upcoming data releases, including:
ADP Employment Report
ISM Manufacturing PMI
Initial Jobless Claims
September Nonfarm Payrolls
Fed fund futures currently show an 89% chance of a 25-bps rate cut in October, with just an 11% probability of a larger 50-bps move.
Technical outlook: EUR/USD steady near 1.1740
The pair has logged two consecutive bullish sessions, hovering around the 20-day Simple Moving Average at 1.1740. The Relative Strength Index (RSI) remains neutral, hinting at possible consolidation.
A break above 1.1740 could open the way to 1.1800, followed by the yearly high at 1.1918.
On the downside, a drop below 1.1700 may expose 1.1650, with the next key support at the 100-day SMA near 1.1599.
xtrememarkets
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GBP/USD Advances Above 1.3450 Amid Rising Fed Rate Cut Expectations
GBP/USD extends its rally for the fourth straight session, trading near 1.3460 during Wednesday’s Asian session. The pair remains supported as the US Dollar (USD) weakens on the back of soft labor market data, which has heightened expectations of Federal Reserve (Fed) rate cuts. According to the CME FedWatch Tool, markets are now pricing in a 97% chance of a rate cut in October and a 76% probability of another reduction in December.
US Job Openings data signaled further cooling in the labor market, with vacancies edging up slightly to 7.23 million in August from 7.21 million, while the hiring rate slipped to 3.2%—its lowest since June 2024. Layoffs, however, remained subdued. Traders now turn their focus to September’s ADP Employment Change and ISM Manufacturing PMI, though releases may be disrupted by the ongoing US government shutdown.
The shutdown, which has left around 750,000 federal employees furloughed, came after Congress failed to pass funding bills. The US Labor Department confirmed that its statistics agency will suspend key data releases, including Friday’s nonfarm payrolls report, if the shutdown continues.
Meanwhile, the Pound Sterling (GBP) found support from stronger-than-expected UK GDP figures. Data released Tuesday showed that the UK economy expanded by 1.4% year-on-year in Q2, beating the earlier estimate of 1.2%. Quarter-on-quarter growth was confirmed at 0.3%, in line with initial projections.
Still, Sterling’s upside could be capped after Bank of England (BoE) Deputy Governor Dave Ramsden signaled support for a potential rate cut, citing growing concerns in the labor market. He added that inflationary pressures are likely to ease further, suggesting current policy settings remain restrictive.
GBP/USD extends its rally for the fourth straight session, trading near 1.3460 during Wednesday’s Asian session. The pair remains supported as the US Dollar (USD) weakens on the back of soft labor market data, which has heightened expectations of Federal Reserve (Fed) rate cuts. According to the CME FedWatch Tool, markets are now pricing in a 97% chance of a rate cut in October and a 76% probability of another reduction in December.
US Job Openings data signaled further cooling in the labor market, with vacancies edging up slightly to 7.23 million in August from 7.21 million, while the hiring rate slipped to 3.2%—its lowest since June 2024. Layoffs, however, remained subdued. Traders now turn their focus to September’s ADP Employment Change and ISM Manufacturing PMI, though releases may be disrupted by the ongoing US government shutdown.
The shutdown, which has left around 750,000 federal employees furloughed, came after Congress failed to pass funding bills. The US Labor Department confirmed that its statistics agency will suspend key data releases, including Friday’s nonfarm payrolls report, if the shutdown continues.
Meanwhile, the Pound Sterling (GBP) found support from stronger-than-expected UK GDP figures. Data released Tuesday showed that the UK economy expanded by 1.4% year-on-year in Q2, beating the earlier estimate of 1.2%. Quarter-on-quarter growth was confirmed at 0.3%, in line with initial projections.
Still, Sterling’s upside could be capped after Bank of England (BoE) Deputy Governor Dave Ramsden signaled support for a potential rate cut, citing growing concerns in the labor market. He added that inflationary pressures are likely to ease further, suggesting current policy settings remain restrictive.
xtrememarkets
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GBP/USD extends gains above 1.3430 as US shutdown weighs on Dollar
The GBP/USD pair advances modestly to around 1.3435 during Friday’s Asian session, supported by weakness in the US Dollar (USD). The Greenback comes under pressure as signs of a slowing US labor market emerge and the federal government enters a shutdown. Notably, the September Nonfarm Payrolls (NFP) report will not be released due to the shutdown, though the ISM Services PMI and final S&P Global Services PMI remain on schedule for later in the day.
Expectations of a softer US job market reinforce the case for additional Federal Reserve (Fed) rate cuts this year. The CME FedWatch tool shows markets have nearly fully priced in a 25 basis point cut at the upcoming policy meeting, which would bring rates to the 3.75%–4.00% range.
Meanwhile, the political standoff over government funding looks set to drag on. Senate Democrats are likely to block the GOP-backed short-term funding bill again in tomorrow’s vote, with no weekend session planned. Uncertainty surrounding the shutdown adds further downside pressure on the USD and lends support to the major pair.
On the UK side, Bank of England (BoE) officials continue to deliver mixed policy signals. Deputy Governor Sarah Breeden warned of risks tied to “higher for longer” rates, suggesting that the recent uptick in headline inflation may not persist and cautioning about potential damage from prolonged tight policy. Earlier this week, Deputy Governor Clare Lombardelli stressed the need for caution in assuming inflation shocks are only temporary. These conflicting messages could limit the Pound’s upside and cap further gains against the Dollar.
The GBP/USD pair advances modestly to around 1.3435 during Friday’s Asian session, supported by weakness in the US Dollar (USD). The Greenback comes under pressure as signs of a slowing US labor market emerge and the federal government enters a shutdown. Notably, the September Nonfarm Payrolls (NFP) report will not be released due to the shutdown, though the ISM Services PMI and final S&P Global Services PMI remain on schedule for later in the day.
Expectations of a softer US job market reinforce the case for additional Federal Reserve (Fed) rate cuts this year. The CME FedWatch tool shows markets have nearly fully priced in a 25 basis point cut at the upcoming policy meeting, which would bring rates to the 3.75%–4.00% range.
Meanwhile, the political standoff over government funding looks set to drag on. Senate Democrats are likely to block the GOP-backed short-term funding bill again in tomorrow’s vote, with no weekend session planned. Uncertainty surrounding the shutdown adds further downside pressure on the USD and lends support to the major pair.
On the UK side, Bank of England (BoE) officials continue to deliver mixed policy signals. Deputy Governor Sarah Breeden warned of risks tied to “higher for longer” rates, suggesting that the recent uptick in headline inflation may not persist and cautioning about potential damage from prolonged tight policy. Earlier this week, Deputy Governor Clare Lombardelli stressed the need for caution in assuming inflation shocks are only temporary. These conflicting messages could limit the Pound’s upside and cap further gains against the Dollar.
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