The US dollar is strengthening against all G10 currencies and most emerging-market currencies, as traders focus on economic data, central-bank expectations and several key technical levels across the FX market.
The euro has fallen toward $1.14 despite stronger-than-expected preliminary September PMI data from the eurozone. The Japanese market is set to reopen tomorrow after the holiday, while the dollar has moved back toward JPY158, close to the level reached before concerns over possible Japanese intervention emerged last week.
Meanwhile, expectations for improved oil supply have helped keep November WTI crude below $90 a barrel, although interest-rate markets have remained relatively stable.
Dollar Strength Keeps Pressure on Major Currencies
The broad dollar advance is visible across both developed and emerging-market currencies. Traders are also monitoring upcoming economic releases and central-bank decisions, making Economic Calendar Events particularly important for the next phase of the market.
EUR/USD Approaches $1.14
The euro extended its decline to around $1.1430 yesterday before moving slightly above $1.1405 today, marking its lowest level since late July.
Options worth approximately €1.8 billion at $1.14 expire today, while the $1.1400 area also coincides with a trend line connecting the late-June and late-July lows.
A sustained break below $1.1400 could bring the $1.1350 area into focus.
The euro’s decline comes despite stronger-than-expected preliminary September PMI figures, suggesting that the current dollar move is being driven more by relative monetary-policy expectations and broader dollar demand than by a simple deterioration in eurozone economic data.
USD/JPY Moves Toward 158
The dollar traded within roughly a one-yen range below JPY157.80 yesterday before moving higher today.
The pair is approaching JPY158, a level that was briefly exceeded last Friday before reports of Japanese authorities checking market rates increased concern about possible intervention.
Above JPY158, the next resistance area is around JPY158.20, while the 200-day moving average near JPY158.45 represents another important technical level.
The yen remains highly sensitive to expectations surrounding the Bank of Japan, making developments covered in Central Banks particularly important for USD/JPY traders.
Sterling Falls Toward July Lows
Sterling was sold to almost $1.3320 yesterday and continued lower today, moving below $1.3280.
The decline has taken GBP/USD to its lowest level since July 29. Options worth nearly £500 million at $1.3315 expire today and may have added to selling pressure.
The next technical area is around $1.3265–$1.3275.
Canadian Dollar Extends Its Decline
The Canadian dollar remains under pressure, with USD/CAD reaching slightly above CAD1.4090 after moving through the early-August high near CAD1.4080.
The spread between US and Canadian two-year yields has also widened significantly. The US two-year premium over Canada increased by almost four basis points to approach 150 basis points, its widest level since March 2025.
The next important technical area for USD/CAD is around CAD1.4100–1.4130.
Australian Dollar Tests $0.7080
The Australian dollar has repeatedly fallen below $0.7100, although buyers have stepped in around that level during recent sessions.
Despite those rebounds, each recovery has produced a lower high. AUD/USD has now declined to approximately $0.7080, close to last week’s low near $0.7075.
A convincing break below that level could expose the $0.7045 area.
Rate expectations remain an important factor. The futures market is pricing in a probability of more than 85% for an RBA rate hike next week, with roughly a 50% probability of another increase before the end of the year. The upcoming employment report could therefore become an important test for those expectations.
Emerging-Market Currencies Face Dollar Pressure
The dollar’s strength is also affecting several emerging-market currencies.
Mexican Peso Comes Under Further Pressure
Long Mexican peso positions continue to face pressure as the dollar advances.
USD/MXN reached MXN17.3165 yesterday before moving toward MXN17.40 today, its highest level since late July.
The 200-day moving average near MXN17.42 is now an important technical reference. A break above that level could open the way toward MXN17.55, although momentum indicators are already becoming stretched.
Dollar Moves Higher Against Offshore Yuan
The dollar rose for the first time in four sessions against the offshore yuan yesterday and reached a four-day high near CNH6.7090 during European trading.
The 20-day moving average is slightly above CNH6.71, and the dollar has not settled above that level since July 9.
The People’s Bank of China also fixed the dollar higher, setting the reference rate at CNY6.7468, compared with CNY6.7459 the previous day.
The upcoming US-China summit is therefore another factor traders are watching alongside monetary and trade developments.
Indian Rupee Declines
The Indian rupee weakened for the first time in six sessions.
The dollar initially opened lower near INR95.5675, but recovered during the session and finished close to its highs.
At the same time, several institutions have raised their expectations for Indian economic growth. S&P and Fitch lifted their FY27 growth forecasts to 7.0% and 6.9%, respectively, while the Asian Development Bank raised its forecast to 7% from 6.6% previously.
Expectations for at least one rate increase during the current fiscal year are also supporting the view that India’s monetary-policy outlook remains important for the rupee.
Equities, Bonds, Gold and Oil
Currency markets are not moving in isolation. Equity markets are mixed, while government bond yields remain relatively stable and precious metals continue to react to changes in the dollar and interest-rate expectations.
Global Equities Trade Mixed
Asian markets were mixed. China, Hong Kong and Singapore declined, while Taiwan, South Korea, Australia and India advanced, although several markets finished well below their session highs.
Europe’s Stoxx 600 was down around 0.2%, potentially marking its first decline of the week, while US equity-index futures were narrowly mixed.
Treasury Yields Remain Relatively Stable
Benchmark 10-year government bond yields were mixed across Europe.
The 10-year Gilt yield was slightly more than one basis point lower, while the 10-year US Treasury yield was almost unchanged at just below 4.96%.
The relative stability in yields contrasts with the stronger moves in several currency pairs, indicating that the latest dollar advance is not being accompanied by an equally large move across the broader interest-rate market.
Gold and Silver Recover From Recent Lows
Gold recovered from a three-day low just below $4,295 yesterday and returned toward the $4,360 area during the North American afternoon.
The metal is currently trading within yesterday’s range but with a heavier bias.
Silver also recovered after falling to a three-day low slightly below $64.60. It later settled above Monday’s high near $67.05, but the initial rebound has not yet produced sustained follow-through buying.
WTI Remains Below $90
November WTI crude oil declined for a fifth consecutive session yesterday.
WTI had settled at $100.75 on September 15, but closed near $90.50 yesterday, falling below its 20-day moving average near $90.55 for the first time since August 7.
Today, the market has remained relatively quiet, with WTI struggling to move materially above yesterday’s close while holding above the previous session’s low near $88.65.
Expectations for improved supply and progress in negotiations have helped limit upward pressure on oil prices.
PMI Data Becomes a Key Market Driver
The latest preliminary PMI figures provide an important cross-market comparison as traders assess economic momentum and future monetary-policy decisions.
US PMI
The US manufacturing PMI has remained at 53.9 for three consecutive months.
The services PMI has also strengthened over recent months, rising from 50.7 in May to 56.5 in August.
The composite PMI increased for three consecutive months through August and stood at 56.0, compared with 52.7 at the end of last year.
These figures are important for the dollar because stronger private-sector activity can influence expectations for US growth and the Federal Reserve’s future policy path.
Eurozone PMI
The eurozone’s preliminary September PMI was stronger than expected.
The manufacturing PMI remained at 52.7, while the services PMI increased to 53.0 from 51.6, reaching its highest level since November last year.
The composite PMI rose to 53.1 from 52.0 in July and August, compared with 51.5 at the end of last year.
Despite these relatively firm figures, EUR/USD remains under pressure as the dollar maintains broad strength.
UK PMI
The UK’s preliminary PMI data was mixed.
Manufacturing PMI increased to 52.0 from 51.7, while services PMI declined to 51.7 from 52.5.
The composite PMI also weakened, although it remained above the level recorded at the end of last year.
The mixed UK data leaves the pound particularly sensitive to incoming economic releases and expectations surrounding the Bank of England.
Australia PMI
Australia’s PMI data was weaker.
Manufacturing PMI declined sharply to 49.3 from 52.0, marking the first reading below 50 since March.
Services PMI also weakened for the second consecutive month, falling to 51.4 from 53.2 in August and 53.6 in July.
The composite PMI declined to 50.8, compared with 52.7 in August and 53.2 in July.
The deterioration in business activity makes the upcoming employment report especially important for expectations surrounding the Reserve Bank of Australia.
Central Banks and the US-China Summit Remain in Focus
The Trump-Xi summit is receiving significant market attention, although expectations for an immediate breakthrough appear limited.
The most likely near-term focus is whether the existing tariff truce is extended. The current agreement is not scheduled to expire until early November, reducing the immediate pressure for a major decision.
At the same time, the central banks of Switzerland, Norway and Sweden are scheduled to meet tomorrow.
Market expectations for a Norges Bank rate hike have changed noticeably. A week ago, swaps were pricing in slightly less than a 50% probability of a hike, while current pricing has moved to slightly above 50%.
That shift in rate expectations could increase volatility in the Norwegian krone around the decision.
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Conclusion
The US dollar remains broadly supported, with EUR/USD, GBP/USD, AUD/USD and several emerging-market currencies under pressure. The next major catalysts are PMI data, central-bank decisions, employment data and developments in US-China trade relations.
At the same time, traders are watching USD/JPY near 158, EUR/USD around 1.14, USD/CAD near 1.41 and AUD/USD around 0.7080 as key technical reference points.
Market Impact
The current setup remains supportive of the US dollar, particularly against currencies where domestic rate expectations are less hawkish. A sustained move above 158 in USD/JPY could keep the yen under pressure but may also increase intervention risk, while a break below 1.14 in EUR/USD would put further focus on lower technical levels. Softer Australian PMI data could weigh on AUD/USD if employment data also disappoints, while stable US yields combined with firm US activity would continue to support the dollar. Gold and oil remain sensitive to the dollar, yields and changing inflation expectations.
FAQ
Why is the US dollar strengthening?
The dollar is benefiting from broad demand and changing expectations around interest rates, while several major currencies remain under pressure.
What is happening to EUR/USD?
EUR/USD has moved toward 1.14, its lowest level since late July, despite stronger eurozone PMI data.
Why is USD/JPY approaching 158?
The yen remains under pressure as traders assess the Bank of Japan’s policy outlook and the possibility of Japanese intervention.
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