Forex Today: US Dollar consolidates weekly gains ahead of mid-tier data
Here is what you need to know on Friday, September 25:
The US Dollar (USD) Index extended its weekly rally and touched its highest level since late July near 101.40 before entering a consolidation phase and correcting lower toward 101.00 on Friday. The US economic calendar will feature Durable Goods Orders data for August and the University of Michigan (UoM) will publish a revision to the September Consumer Sentiment Index.
US Dollar Price This week
The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the strongest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.93% | 1.27% | 0.77% | 1.16% | 1.34% | 1.01% | 0.85% | |
| EUR | -0.93% | 0.36% | -0.13% | 0.23% | 0.41% | 0.09% | -0.07% | |
| GBP | -1.27% | -0.36% | -0.59% | -0.13% | 0.05% | -0.27% | -0.43% | |
| JPY | -0.77% | 0.13% | 0.59% | 0.41% | 0.54% | 0.23% | 0.08% | |
| CAD | -1.16% | -0.23% | 0.13% | -0.41% | 0.24% | -0.17% | -0.30% | |
| AUD | -1.34% | -0.41% | -0.05% | -0.54% | -0.24% | -0.32% | -0.54% | |
| NZD | -1.01% | -0.09% | 0.27% | -0.23% | 0.17% | 0.32% | -0.16% | |
| CHF | -0.85% | 0.07% | 0.43% | -0.08% | 0.30% | 0.54% | 0.16% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
Hawkish comments from Federal Reserve (Fed) officials helped the USD continue to outperform its rivals on Thursday, while the benchmark 10-year US Treasury bond yield climbed above 5.2% for the first time since June 2007.
Paulson flags risk of further Fed tightening as inflation stays stubbornly high
Philadelphia Federal Reserve (Fed) President Anna Paulson delivered a distinctly hawkish message in the American session on Thursday, with an FXS Speechtracker score of 8.1/10, notably stronger relative to the historical average of 7/10.
By stressing that the US central bank may need to raise interest rates again, that the September hike merely moved policy into a better inflation-fighting posture, and that underlying inflation remains stubbornly high amid resilient growth and AI-driven price pressures, the speech clearly leaned toward additional tightening risk. The commitment to doing what is needed to return inflation to 2% and the remark that the best that can be said is that inflation has not worsened underscored a bias toward keeping policy restrictive for longer.
USD support builds as US yields rise ahead of payrolls risk
FX strategists at OCBC note that the backdrop remains broadly supportive for the Dollar, with “resilient US economic data, elevated energy prices and persistent inflation concerns” continuing “to drive Treasury yields higher, underpinning the USD while weighing on rate-sensitive and carry-oriented assets.” They add that labour-market dynamics could further reinforce this trend, warning that “with initial jobless claims trending lower through the month, the risk of an upside payrolls surprise is increasing.”
EUR/USD moves sideways below 1.1400 in the European morning on Friday after posting marginal losses on Thursday.
GBP/USD holds steady above 1.3200 following a four-day slide that saw the pair lose more than 1% since the beginning of the week.
USD/JPY stays under bearish pressure in the European morning on Friday and trades near 158.00 after posting gains for five consecutive days and reaching its highest level in four weeks above 159.00 on Thursday.
Gold fluctuates in a narrow channel below $4,300 in the early European session and loses more than 2% on a weekly basis.
Gold slides as safe-haven appeal wanes despite market turbulence
Analysts at UOB Group note that spot gold "fell to $4,275.03/oz, down 2.44% on the week," marking a notable setback for the metal. They highlight that the move "underscored the metal’s unusual failure to attract safe-haven demand despite heightened cross-asset volatility and geopolitical uncertainty," pointing to a rare decoupling between Gold and traditional risk-off dynamics in the current environment.
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
Author
Eren Sengezer
FXStreet
As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.
