Dollar Holds Above 100 Amid Fed Hike Bets as Sterling & Euro Trade Quietly

The US dollar is holding above the 100 level at the start of the week as markets continue to assess the possibility of further Federal Reserve (Fed) tightening. The Dollar Index (DXY) is trading around 100.23, while rate-futures markets implied roughly a 55% probability of another rate increase in October during early Monday trade.

Fresh comments from Minneapolis Fed President Neel Kashkari added to the policy debate over the weekend. Kashkari said inflation remains too high across the US economy and specifically cited persistent pressures in services. His comments kept the possibility of further Fed tightening in focus. US Treasury yields also remain elevated after rising sharply last week as investors reassessed the likely path of US rates.

Against that backdrop, GBP/USD is trading below 1.3400 around 1.3375 to 1.3390, while EUR/USD is near 1.1475 to 1.1485. Both pairs remain close to recent lows, while relative US rate expectations remain an important consideration for currency markets. Brent crude has meanwhile fallen towards $102 a barrel despite continued Middle East tensions, amid reports of increased oil supply from the Gulf.

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GBP: GBP/USD Holds Below 1.3400 Amid Fed Rate Bets

GBP/USD: 1.3381 | EUR/GBP: 0.8576

GBP/USD is trading around 1.3381 at the start of the week, remaining below 1.3400 as markets continue to price the possibility of another Federal Reserve (Fed) rate increase in October. Rate-futures markets implied roughly a 55% probability of another October increase, while the Dollar Index was holding above 100.

With no major UK economic release scheduled today, attention remains on US rate expectations and broader market conditions. The pair remains close to the lower end of its recent range after last week’s decline, while elevated US Treasury yields continue to keep the relative US rate backdrop in focus.

EUR/GBP is trading around 0.8576, broadly within its recent range. The cross has shown limited movement at the start of the week, with the euro also trading cautiously amid political uncertainty in Germany and a relatively light European data calendar.

Further Fed commentary and forthcoming UK economic data are among the developments markets may assess this week.

Key technical reference levels for GBP/USD: resistance sits near 1.3435, followed by 1.3460, while support sits around 1.3355, followed by 1.3300.

Key technical reference levels for EUR/GBP: resistance sits near 0.8580, followed by 0.8600, while support sits around 0.8572, followed by 0.8555.

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EUR: EUR/USD Holds Near Recent Lows Amid Fed Rate Expectations

EUR/USD: 1.1478

EUR/USD is trading around 1.1478, close to recent lows as markets continue to assess the prospect of another Federal Reserve (Fed) rate increase. As per the official reports, the euro broadly steady this morning, while the Dollar Index remains above 100 and interest-rate markets price roughly a 55% probability of another Fed hike in October.

The euro also starts the week against a more cautious European political backdrop. Germany’s CDU recorded heavy losses in state elections over the weekend. The euro was broadly steady in early Monday trading following the results, while markets continued to focus on US and Eurozone rate expectations.

European bond yields also moved higher on Friday, while EUR/USD stayed below 1.1500. ECB President Christine Lagarde is scheduled to deliver opening remarks at an ECB roundtable later today, while preliminary Eurozone PMI data are due later in the week.

For EUR/USD, markets continue to assess expectations for further Fed tightening relative to expectations for the ECB policy path, alongside developments in Germany.

Key technical reference levels for EUR/USD: resistance sits near 1.1486, followed by 1.1529, while support sits around 1.1426, followed by 1.1350.

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USD: Fresh Fed Signals Keep October Hike Debate Alive

DXY: 100.23

The Dollar Index (DXY) is trading around 100.23 at the start of the week, holding above the 100 level as markets continue to assess the possibility of another Fed rate increase in October. Rate-futures markets implied roughly a 55% probability of another increase at the October meeting during early Monday trading.

Fresh comments from the Minneapolis Fed President kept inflation concerns in focus over the weekend. Kashkari said inflation remains too high across the US economy and specifically cited persistent pressures in services. His comments add to the debate over whether further tightening may be needed after last week’s rate increase.

US Treasury yields also remain elevated after rising sharply on Friday as markets reassessed the Fed rate path. Shorter-term US Treasury yields moved higher, while DXY remained above 100 as markets continued to assess the prospect of further Fed tightening.

Attention today turns to further Fed commentary and the Chicago Fed National Activity Index. Further Fed commentary, Treasury yields and incoming US economic data remain among the factors being assessed in relation to expectations for the October meeting.

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Other Currencies: Yen Steadies as Intervention Watch Returns

USD/JPY: 157.24 | GBP/JPY: 210.38 | AUD/USD: 0.7128 | NZD/USD: 0.5728

USD/JPY is trading around 157.24 after a volatile end to last week. The yen steadied after reports that Japanese officials conducted rate checks, which increased market speculation over the possibility of further currency intervention. The yen fell by around 2% last week before recovering part of those losses.

At Friday’s post-meeting press conference, Bank of Japan (BoJ) Governor Kazuo Ueda discussed the conditions that could affect future policy decisions. Ueda said further increases, including potentially larger or consecutive moves, would depend on inflation developments, without giving firm guidance on the timing of the next move.

GBP/JPY is trading around 210.38, while intervention developments and expectations for Japanese interest rates remain relevant market considerations.

AUD/USD is holding near 0.7128, while NZD/USD trades around 0.5728. The Chinese yuan has meanwhile strengthened to its highest level in more than three and a half years ahead of the scheduled meeting between US President Donald Trump and Chinese President Xi Jinping on Thursday, while broader regional currency moves remain relatively subdued.

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Current Rate Table

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Market Lookahead

Monday, Sep 21

• USD – Fed President Goolsbee Speech

Tuesday, Sep 22

• USD – Fed Vice Chair Jefferson Speech
• USD – Fed President Williams Speech

Wednesday, Sep 23

• EUR – Germany & Eurozone HCOB Composite & Services PMI (Sep)
• GBP – S&P Global Composite & Services PMI (Sep)
• USD – S&P Global Services PMI (Sep)

Thursday, Sep 24

• EUR – Germany Ifo Business Climate (Sep)
• USD – Initial Jobless Claims

Friday, Sep 25

• USD – Durable Goods Orders (Aug)

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