Dollar Weakens as Fed Cut Bets Grow | 9th September 2025

Dollar Slides on Fed

The U.S. dollar continued to soften as traders doubled down on expectations of aggressive Federal Reserve rate cuts, pushing the Dollar Index below 97.50. Precious metals and commodities gained support from the weaker greenback, while equities across Asia showed a mixed performance. Key developments from Japan, including tariff adjustments and OPEC+ supply signals, added further direction to markets.

Silver Price Forecast (XAG/USD)

Current Price and Context

XAG/USD trades around $41.50, extending gains as growing market odds of a jumbo Fed rate cut after soft U.S. labor data have pressured the dollar. Softer real yields and heightened safe-haven demand have attracted buyers into silver, though the metal is meeting resistance after a rapid run—suggesting short-term consolidation or profit-taking could appear before the next leg higher. Overall momentum remains bullish while Fed signals and U.S. inflation data are digested.

Key Drivers

Geopolitical Risks: Elevated global uncertainty continues to support precious metals as insurance trades.

US Economic Data: Weak NFP and other soft labor prints have increased rate-cut expectations, underpinning silver.

FOMC Outcome: Growing market pricing for aggressive Fed easing is a primary bullish driver for XAG/USD.

Trade Policy: No immediate trade shock; any improvement in global trade could add industrial demand support.

Monetary Policy: Dovish Fed expectations (lower rates, falling real yields) favor non-yielding assets like silver.

Technical Outlook

Trend: Bullish, but showing early signs of short-term consolidation after sharp gains.

Resistance: $41.80 → $42.20.

Support: $41.00 → $40.40.

Forecast: Hold above $41.00 to keep bullish bias; a clean break above $41.80 opens the path to $42.20+, while a failure below $41.00 risks a pullback toward $40.40.

Sentiment and Catalysts

Market Sentiment: Cautiously bullish — dips being bought, rallies trimmed.

Catalysts: U.S. CPI/PPI, Fed communications and minutes, upcoming employment data, and shifts in real yields.

US Dollar Index Forecast (DXY)

Current Price and Context

The US Dollar Index (DXY) has slipped below 97.50, pressured by growing expectations of aggressive Fed rate cuts following recent weak labor data. Traders are increasingly betting on a jumbo move from the FOMC, which has undermined dollar demand despite its safe-haven status. With yields sliding and risk appetite mixed, the greenback remains vulnerable ahead of key U.S. inflation data and further labor market indicators.

Key Drivers

Geopolitical Risks: Ongoing global uncertainty offers some haven demand, but policy expectations dominate.

US Economic Data: Weak jobs reports and softening momentum in growth data have added to dovish Fed bets.

FOMC Outcome: Markets now price in a higher likelihood of a larger-than-expected cut at the next meeting.Trade Policy: Stable trade backdrop provides little support to the dollar versus the pressure from Fed repricing.

Monetary Policy: Fed easing trajectory is in sharp contrast to more stable peers, keeping DXY under pressure.

Technical Outlook

Trend: Bearish short-term, pressured by dovish Fed expectations.

Resistance: 97.80 → 98.20.

Support: 97.20 → 96.80.

Forecast: Sustained trade below 97.50 exposes 97.20/96.80; only a recovery above 97.80 eases downside pressure.

Sentiment and Catalysts

Market Sentiment: Bearish bias — rate-cut bets weigh, sentiment cautious ahead of CPI data.

Catalysts: U.S. CPI, PPI, retail sales, Fed commentary, and risk sentiment shifts.

Nikkei Forecast

Current Price and Context

The Nikkei 225 (JP225) pulled back from record highs, reflecting mixed sentiment across Asian equities. While China’s trade surplus provided some support for regional risk appetite, profit-taking in Japanese stocks and caution over U.S. monetary policy weighed on the index. Investors remain wary ahead of U.S. inflation data and Fed decisions, with volatility expected as global growth concerns linger.

Key Drivers

Geopolitical Risks: Regional political uncertainty and trade negotiations continue to affect sentiment.

US Economic Data: Weak NFP data heightens Fed rate cut bets, influencing global equity flows.

FOMC Outcome: Anticipation of a jumbo Fed cut is driving broader market positioning.

Trade Policy: Positive China trade figures support sentiment but are offset by concerns over U.S. tariffs.

Monetary Policy: Loose Fed outlook is equity-friendly, but yen stability could cap Nikkei gains.

Technical Outlook

Trend: Consolidation after strong gains.

Resistance: 40,800 → 41,200.

Support: 40,200 → 39,800.

Forecast: A sustained dip below 40,200 may trigger deeper correction; a rebound above 41,000 could revive bullish momentum. 

Sentiment and Catalysts

Market Sentiment: Neutral to slightly cautious — investors balancing Fed bets with profit-taking.

Catalysts: U.S. CPI data, Fed commentary, and yen fluctuations remain key drivers for the Nikkei.

USD/JPY Forecast

Current Price and Context

The USD/JPY pair traded steadily near 147.00 as markets digested Japan’s announcement that U.S. tariffs on Japanese goods will be reduced by September 16. While the yen found limited upside from this trade policy shift, broader moves were capped by expectations of aggressive Fed rate cuts and Japan’s cautious monetary stance. Traders are balancing the supportive trade headlines with lingering uncertainty around BoJ policy.

Key Drivers

Geopolitical Risks: U.S.–Japan trade relations improving with tariff cuts, supportive for Japanese exporters.

US Economic Data: Recent weak NFP data continues to weigh on the dollar outlook.

FOMC Outcome: Market firmly pricing in jumbo rate cuts, undermining USD strength.

Trade Policy: Tariff cuts could boost Japan’s export sector, a medium-term yen-positive factor.

Monetary Policy: BoJ remains cautious on tightening, limiting yen upside despite supportive trade developments.

Technical Outlook

Trend: Sideways consolidation near recent highs.

Resistance: 147.80 → 148.20.

Support: 146.40 → 145.80.

Forecast: Tariff news may lend mild support to yen, but USD/JPY likely remains rangebound until clearer Fed guidance.

Sentiment and Catalysts

Market Sentiment: Neutral — traders weighing U.S. rate cut bets against Japanese trade positives.

Catalysts: U.S. CPI release, tariff implementation, and BoJ commentary will guide next moves.

WTI Crude Oil Forecast

Current Price and Context

WTI crude oil (WTI/USD) extended gains above $62.00 as OPEC+ signaled a slowdown in production growth. The move reinforced expectations of tighter supply conditions heading into Q4, even as global demand remains uneven. A softer U.S. dollar on heightened Fed rate cut bets added further support, pushing oil prices to fresh multi-week highs.

Key Drivers

OPEC+ Policy: Reduced production growth strengthens near-term price support.

US Dollar Weakness: DXY retreat below 97.50 provides a tailwind for dollar-denominated commodities.

Global Demand: Mixed outlook as China stabilizes while Europe shows signs of slowing demand. EUR/USD support.

Geopolitical Risks: Ongoing supply-side risks in the Middle East and Russia continue to add volatility.

Fed Policy Outlook: Aggressive U.S. rate cut expectations supporting commodities via weaker USD.

Technical Outlook

Trend: Bullish bias in the short term.

Resistance: $63.20 → $64.00.

Support: $61.50 → $60.80.

Forecast: Prices likely to remain supported above $62.00 with potential extension toward $64.00 if supply curbs persist.

Sentiment and Catalysts

Market Sentiment: Bullish — supply curbs outweigh near-term demand concerns.

Catalysts: EIA weekly inventory data, OPEC+ updates, and Fed policy signals will steer momentum.

Wrap-up

Markets remain in a wait-and-see mode as investors digest fresh signals from central banks, trade developments, and commodity flows. The dollar’s weakness keeps safe-haven and commodity assets supported, while equities show mixed resilience amid shifting policy expectations. With upcoming U.S. data likely to guide sentiment, traders will be closely watching for cues that could reinforce or challenge the prevailing dovish Fed outlook.

Ready to trade global markets with confidence? Join Moneta Markets today and unlock 1000+ instruments, ultra-fast execution, ECN spreads from 0.0 pips, and more! Start now with Moneta Markets!