Daily Forex Pulse — September 25, 2026

FX OVERVIEW

The U.S. dollar remains the dominant force across FX, supported by hawkish Federal Reserve expectations, higher Treasury yields, and broad policy divergence. The main exceptions are currencies with idiosyncratic support, notably the won and Singapore dollar, while geopolitical energy risks keep volatility asymmetric and limit confidence in high-beta carry trades.

MAJOR PAIRS

EURUSD — EURUSD has fallen below 1.14 toward 1.1355, with support clustered at 1.1320–1.1330, as firm Fed expectations and rising U.S. yields contrast with an increasingly cautious ECB. Weak German sentiment, French fiscal deterioration, and a 110bp French-German spread reinforce the bearish bias despite resilient Eurozone activity; deeply oversold conditions may produce a tactical rebound, but the broader trend remains lower.

GBPUSD — GBPUSD is trading near 1.3210 as a sharp deterioration in the UK fiscal position overwhelms BoE hawkish rhetoric. August borrowing reached £18.27 billion, eroding fiscal headroom and undermining confidence in future rate hikes; a break below 1.3140 would expose 1.3038, although an RSI near 24 leaves the pair vulnerable to a short-term correction.

AUDUSD — AUDUSD has recovered toward 0.7020 after a sharp selloff, but remains below the 20-period EMA at 0.7108 and retains a bearish technical structure. The strong August jobs gain of 39.5K has almost fully priced a 25bp RBA hike to 4.60%, making the decision a binary catalyst: a hawkish surprise could drive a rally, while a cautious delivery would likely send the pair through 0.7000 toward 0.6945 and 0.6865.

USDJPY — USDJPY remains biased higher as the BoJ’s 1.25% rate hike is viewed as insufficient to close the U.S.-Japan yield gap. Thirty-year highs in JGB yields and growing doubts about the BoJ’s capacity for further tightening weaken the yen, while U.S. pressure over yen depreciation raises the risk of abrupt intervention-driven volatility.

USDCHF — The SNB’s decision to hold rates and remove its language indicating an increased willingness to intervene signals a softer tolerance for franc strength. That dovish recalibration, combined with possible further Fed tightening, supports a move toward 0.85 in USDCHF and leaves the franc’s safe-haven premium vulnerable.

USDCAD — USDCAD retains an upside bias as the Fed’s tightening path contrasts with a Bank of Canada holding pattern. CIBC sees the pair reaching 1.42 in Q4 2026, with the near-term driver remaining the widening rate differential; prospective U.S.-Canada trade normalization offers only a longer-term offset.

USDKRW — USDKRW has fallen from around 1,390 to 1,360 as exporters sold dollars ahead of the Chuseok holiday. The move has strengthened the won despite broader dollar firmness, but the support is likely tactical and vulnerable to renewed dollar demand if external risk sentiment deteriorates or local policy expectations shift.

USDSGD — USDSGD has consolidated near 1.2800 after its recent rise, with the Singapore dollar supported by expectations of a more hawkish MAS stance. Further tightening guidance would reinforce downside pressure in the pair and make SGD one of the more resilient Asian currencies.

CENTRAL BANK WATCH

  • Federal Reserve: Markets assign roughly a 70% probability of an October hike, with a separate assessment pointing to a 58% chance of two further hikes. Persistent hawkish guidance and higher Treasury yields remain the core support for the dollar.
  • Reserve Bank of Australia: A 25bp hike to 4.60% is nearly fully priced after the strong August employment report. The key risk is the communication: a hawkish signal could lift AUD, while a cautious hike would amount to a dovish repricing.
  • Swiss National Bank: The SNB held rates and removed its reference to an increased willingness to intervene, marking a dovish shift and reducing official support for franc strength.
  • Bank of England: Markets still price roughly 100bp of tightening over the coming year, including a 67% probability of a November hike, but Governor Bailey’s caution and fiscal deterioration have made those expectations poor support for sterling.
  • Bank of Japan: The 1.25% hike has been judged insufficiently aggressive. Elevated JGB yields and policy fatigue leave the yen exposed, although any intervention or change in depreciation policy could generate sharp two-way moves.
  • Monetary Authority of Singapore: Expectations of additional tightening are supporting SGD and keeping USDSGD capped around 1.2800.

MACRO DRIVERS

  • U.S. rate dominance: Fed tightening expectations and higher Treasury yields are sustaining broad dollar demand against the euro, pound, yen, franc, and Canadian dollar.
  • Fiscal risk is widening Europe’s currency discount: French fiscal stress and weak UK public finances are undermining EUR and GBP even where domestic activity or central bank rhetoric remains relatively firm.
  • Energy and geopolitical risk remain an asymmetric threat: Houthi attacks near Saudi infrastructure and severely reduced Strait of Hormuz traffic could trigger an oil spike, revive inflation fears, and amplify demand for the dollar.
  • Low realized volatility masks breakout risk: EURUSD’s five-year-low realized volatility alongside elevated implied volatility points to a compressed market vulnerable to a sharp move after U.S. data, an oil shock, or geopolitical escalation.

POSITIONING IDEAS

Bullish

  • USDCHF: Long bias toward 0.85 after the SNB removed its stronger intervention language and the Fed retained a hawkish outlook.
  • USDJPY: Favor upside while the BoJ’s tightening remains insufficient to close the yield gap and U.S. pressure keeps yen depreciation risks elevated.
  • USDCAD: Buy dips while the Fed-BoC policy divergence persists and the market continues to price a materially weaker Canadian dollar.
  • USDSGD: Downside bias in the pair, or long SGD, if MAS reinforces expectations of additional tightening.

Bearish

  • EURUSD: Sell rallies while EURUSD remains below 1.14 and the Fed-ECB divergence, French fiscal stress, and wider sovereign spreads persist. A break of 1.1320–1.1330 would confirm renewed downside momentum.
  • GBPUSD: Maintain a short bias below 1.3273, with a break of 1.3140 targeting 1.3038 as fiscal deterioration overwhelms BoE tightening expectations.
  • AUDUSD: Favor selling rallies below 0.7108. The RBA decision is the main upside risk, but a merely delivered hike would likely disappoint given how fully it is priced.
  • CHF: Short franc exposure is supported by the SNB’s reduced intervention commitment and the prospect of further Fed tightening.

This content is for informational purposes only and does not constitute financial, investment, or trading advice. Always consult a qualified financial professional before making any investment decisions.