FreshForexTeam

Preheader: U.S. yields surge as the advantage shifts back to the U.S. currency

The U.S. dollar is ending the week significantly stronger, but this move is particularly evident across the major currency pairs. On September 25, EURUSD is trading around 1.1370 — its lowest level in two months, while GBPUSD is holding near 1.3220 — close to a three-month low. For the euro, this is already the third consecutive week of declines, while the British pound is having its worst week in roughly four months.

The main momentum is coming from the United States. Following the Fed’s September rate hike, investors are increasingly considering the possibility of further monetary tightening, while a sell-off in U.S. government bonds has pushed long-term yields to their highest levels in more than 20 years. Against this backdrop, the Dollar Index has gained more than 1% this week, but for traders, the more important question is how this move is affecting EURUSD and GBPUSD.

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Why EURUSD continues to decline:

1. U.S. interest rates are becoming more attractive again. The Fed has already raised its rate to 3.75–4.00% and continues to signal the possibility of further tightening. The higher the yield on dollar-denominated assets, the harder it becomes for EURUSD to recover.
2. The ECB is taking a more cautious approach. The European regulator has also raised its rate to 2.50%, but its officials are trying to contain expectations of rapid further hikes. Christine Lagarde has emphasized that rising energy prices alone are not enough to automatically justify tighter monetary policy.
3. Even strong European data are not helping the euro for now. Eurozone business activity in September came in above expectations, yet EURUSD continued to decline. This shows that the divergence in interest-rate expectations and rising U.S. yields are currently more important to the market than individual positive European indicators.

As a result, EURUSD has moved closer to 1.1370. If selling pressure persists, market attention could shift toward the 1.1300 area, while a return above 1.1450 would be the first sign that the current downward move is losing momentum.

Why GBPUSD is falling even faster:

1. The pound’s interest-rate advantage has narrowed. The Bank of England kept its rate at 3.75%, while the Fed raised the upper bound of its target range to 4.00%. The yield differential is therefore providing less support for the British currency.
2. The U.K. economy remains weak. Business activity slowed in September, while demand for workers remains under pressure. This limits the Bank of England’s ability to raise rates too quickly.
3. High energy prices create a double challenge. They add to inflationary pressure while simultaneously reducing household real incomes and potentially slowing economic growth further.
4. The market is already pricing in further tightening. Several future Bank of England rate hikes are partly reflected in current prices, meaning the pound needs new positive catalysts to sustain a recovery.

As a result, GBPUSD has fallen to around 1.3220 and is down approximately 1.25% since the beginning of the week. A move below 1.3200 could increase pressure on the pair, while a return above 1.3300–1.3350 would be the first sign of a potential recovery.

According to FreshForex analysts, as long as U.S. yields remain near multi-year highs, the advantage remains with the dollar, and pressure on EURUSD and GBPUSD may continue.

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The cryptocurrency market is back in the spotlight. On September 21, Bitcoin (BTCUSD) rose above $87,000, continuing its strong recovery after recent fluctuations. The move was not isolated: at the same time, the Nasdaq (#NQ100) once again approached its all-time high, while investor interest in riskier assets increased noticeably.

This makes Bitcoin’s current rise particularly interesting. The market is showing that BTC is now moving not only as an independent crypto asset but also as part of broader risk appetite, alongside the U.S. technology sector.

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Why Is Bitcoin Rising Alongside the Index?

1. The market is buying risk again. After several volatile sessions, investors returned to technology stocks, while the Nasdaq moved back toward record levels. This creates a favorable environment for Bitcoin: when risk appetite increases, cryptocurrencies often attract additional capital inflows.
2. Bond yields are falling. The yield on 10-year U.S. Treasury bonds fell below 5%. This reduces pressure on risk assets and makes instruments such as BTCUSD and #NQ100 more attractive to investors.
3. Oil is no longer putting pressure on the market. Falling oil prices have eased concerns about inflation. The less the market fears another wave of price increases, the more comfortable investors become with growth stocks and cryptocurrencies.
4. Strong momentum in technology is supporting crypto as well. Gains in artificial intelligence-related stocks have once again strengthened confidence in the technology sector. Against this backdrop, Bitcoin is increasingly trading in the same direction as #NQ100 rather than moving independently.

At this point, not only the move above $87,000 matters, but also the nature of the move. While the cryptocurrency market often used to move independently, Bitcoin is now increasingly responding to the same drivers as the U.S. stock market: bond yields, inflation expectations, and overall investor sentiment.

According to FreshForex analysts, as long as risk appetite remains strong, Bitcoin has room for further growth. The current correlation with #NQ100 is supporting buyers: a strong technology sector, falling bond yields, and easing inflation concerns are creating a more favorable environment for BTCUSD. If BTCUSD holds above $87,000, the next psychological target for buyers could be $90,000, while a breakout above this level could open the way toward the $92,000–93,000 area.

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BTCUSD: FLAT.

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We did not see a continuation of the growth during the past trading day, although Bitcoin tried very hard. In the end, there was not enough strength for this final push and the price went in the opposite direction.

At the same time, the opportunity for another update of the local maximum, along with it, for the full completion of the development of the impulse in wave (v), is still preserved, as there has been no intersection with the first wave yet.

It is quite possible that buyers will attempt to make this move in the near future, so selling is not recommended for now.

In the current situation, it is worth watching how events will develop and acting when a clear picture appears.

Investment idea: FLAT.

XAUUSD: BUY 4293.47-4347.77, TP1-4402.07, TP2-4561.37.

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Long-term trend: long. The maximum accumulation of volume for the current contract is located in the range with quotes 4390.00–4425.00. Currently, investment operations on XAUUSD are being executed below this range, indicating buyer weakness.

Medium-term trend: long. The maximum accumulation of volume for the medium-term trend is located in the range with quotes 4366.00-4375.00. Currently, investment operations on XAUUSD are being executed below this range, indicating buyer weakness.

The area of favorable buy prices from the perspective of margin support is located between zones 1/4 and 1/2 built from the maximum of 09/18/2026.

Quote of the upper boundary of zone 1/4–4347.77.

Quote of the upper boundary of zone 1/2–4293.47.

Intraday targets: update of the maximums from 09/18/2026–4402.07.

Medium-term targets: test of the lower boundary of the GWCZ–4561.37.

Trading recommendations: buys from the favorable price range upon formation of a reversal pattern.

Buy: 4293.47–4347.77, Take Profit 1–4402.07, Take Profit 2–4561.37.

XAUUSD: SELL 4370.00, SL 4400.00, TP 4295.00

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The main factor for gold this week remains the Fed's tightening policy. After raising the rate to 3.75–4.00%, the market anticipates further regulatory steps, and the yield on US ten-year Treasury bonds remains around 5%. High yields on interest-rate instruments limit the attractiveness of gold.

Geopolitical tensions in the Middle East sustain safe-haven demand and can restrain XAUUSD from falling. However, as long as inflation risks support expectations of further rate hikes, the monetary-fiscal factor remains more significant. Against this backdrop, the baseline weekly scenario suggests downward pressure on gold.

Trading idea: SELL 4370.00, SL 4400.00, TP 4295.00

#SP500: SELL 7675, SL 7725, TP 7550

The US stock market begins the week between the resilience of the technology sector and rising borrowing costs. Following the Fed's rate hike, investors are assessing the probability of further policy tightening, while Treasury bond yields remain high. This creates pressure on company valuations and limits the potential of the broad market.

Demand for tech stocks and expectations of stable corporate earnings are currently mitigating this effect. Negotiations between the US and China could also support sentiment. Nevertheless, with yields remaining at elevated levels, the market's sensitivity to capital costs stays high, so the baseline scenario allows for a decline in #SP500.

Trading idea: SELL 7675, SL 7725, TP 7550

#BRENT: SELL 98.10, SL 100.10, TP 94.10

Brent starts the week lower amid signs of recovering supplies from Saudi Arabia and hopes for diplomatic contacts between the US and Iran. Saudi export flows increased in September, and shipments through the Strait of Hormuz remain steady. This reduces the immediate risk premium for supply disruptions.

However, the situation in the Middle East remains the main source of uncertainty: new attacks could quickly revive concerns about supply, and the IEA points to ongoing tension in the oil balance. Yet, given the current recovery of flows and sustained diplomatic expectations, the baseline weekly scenario allows for further declines in #BRENT.

Trading idea: SELL 98.10, SL 100.10, TP 94.10

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EURUSD:

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The euro begins the session without clear support after the ECB previously raised rates by 25 basis points. The decision itself has already been largely priced in, and the regulator's recent comments indicate caution regarding further tightening, primarily due to high energy costs. For EUR/USD, this reduces the strength of the local factor in favor of the single currency.

The dollar retains stronger short-term momentum. On September 16, the Fed raised its rate range to 3.75?4.00%, and most officials expect at least one more hike by year-end. Additional support for the US currency comes from fresh statements indicating that inflation remains too high, so the market continues to price in the possibility of further policy tightening.

The interest rate differential still favors the US, while for the eurozone, expensive energy simultaneously poses inflationary and economic risks. Despite the previous sessions' decline in EUR/USD, the dollar factor does not appear fully exhausted. With current expectations maintained, the priority remains a moderate continuation of the pair's decline.

Trading idea: SELL 1.1485, SL 1.1515, TP 1.1410

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Event to watch today:

09:30 EET. JPY - Bank of Japan Press Conference

USDJPY:

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The Bank of Japan raised its rate from 1.00% to 1.25%, reaching the highest level in 31 years. The decision was made by a majority of seven to two and aimed at limiting the risk of exceeding the inflation target. However, the hike was already expected by the market, so the fact of tightening did not provide the yen with sustained strengthening, and USD/JPY remained above 156.

The interest rate differential between the US and Japan has narrowed but remains significant. The Fed raised its target range to 3.75–4.00% and sent a stronger signal regarding future actions. Against this backdrop, carry trades continue to support the dollar, especially if Bank of Japan comments do not convince the market of readiness to accelerate subsequent hikes.

Upside potential for USD/JPY is limited by further normalization of Bank of Japan policy and authorities' sensitivity to yen weakness. Nevertheless, the initial reaction shows that the anticipated rate hike was largely already priced in. As long as the US regulator maintains a higher rate and allows for further tightening, the basic fundamental scenario remains in favor of moderate pair growth.

Trade idea: BUY 156.20, SL 155.80, TP 157.20

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The gold market has once again surprised investors. After the Fed raised its interest rate by 25 basis points to 3.75–4.00% on September 16, gold did not continue falling. Instead, it reversed higher. On September 17, XAUUSD gained around 1.6% and rose toward $4,330 per ounce, even though prices had fallen to approximately six-week lows just the day before.

At first glance, this reaction may seem illogical: higher interest rates usually strengthen the dollar and reduce gold’s appeal. But this time, the market reacted differently — and that is the key to understanding the current move.

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Why Is Gold Rising Despite Higher Rates?

1. The rate hike had already been priced in. The Fed’s decision itself did not come as a surprise to the market. Therefore, after the announcement, some market participants began closing their previous short positions in gold.
2. Investors are focused not on the hike itself, but on what comes next. The Fed has indeed maintained a hawkish tone and left the door open to another rate hike before the end of the year. However, the market has already started assessing how far the regulator can actually go if the economy begins to slow down.
3. The oil rally has paused. Reduced pressure from oil prices has somewhat eased concerns about another wave of inflation. This is important for gold because it lowers the risk of even more aggressive Fed tightening.
4. Demand for safe-haven assets remains strong. Despite the rate hike, geopolitical tensions in the Middle East and overall nervousness in global markets have not disappeared. This continues to support interest in gold as a safe-haven asset.

For the market, it is now important not only to consider the current interest-rate level, but also how quickly the Fed can continue tightening without causing serious damage to the economy and stock market. This is why gold has an opportunity to recover: investors have seen that a hawkish Fed decision does not necessarily mean an automatic continuation of the XAUUSD sell-off.

According to FreshForex analysts, the current gold recovery shows that the market is still willing to buy XAUUSD dips when signs of stabilization emerge. If prices hold above the $4,300 area, buyers may attempt to extend the move toward $4,400–4,500.

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BTCUSD: BUY 79500, SL 77300, TP 90000.

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Bitcoin continues to remain under pressure from which it is trying to break out. This attempt is obviously the reason for the observed weak growth of the asset, and therefore, with a high degree of probability, it has a corrective nature.

In this case, further on, this growth will quickly be replaced by another sharp downward price movement, which will lead to the completion of the development of the assumed corrective wave (iv).

There is no need to rush to make any trading decisions in this situation. However, since the downside potential within the forming correction remains insignificant, it is recommended to start looking for possible entry points for buying.

At the moment, the most safe level for this decision is 79500.

Investment idea: BUY 79500, SL 77300, TP 90000.

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It took just one trading session for the semiconductor sector to lose nearly 6% of its value. On September 14, the PHLX Semiconductor Index fell 5.9%, while #NVIDIA shares dropped around 3.4% and #Micron fell more than 5%. The pressure spread across the broader technology market as well, with the Nasdaq ending the day lower.

The main trigger came from warnings issued by AI company executives. Following concerns about the risks of technology developing too quickly, investors seriously began asking for the first time in a while: what will happen to chipmakers if massive spending on artificial intelligence starts to slow down?

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What spooked investors:

1. The market has started reassessing future demand. #NVIDIA and #Micron have been among the biggest beneficiaries of data center construction and growing demand for computing power. Even a hint of a potential slowdown in AI investment is prompting investors to take a more cautious view of future processor and memory sales.
2. High interest rates are adding pressure. The yield on 10-year US government bonds briefly exceeded 5%, while expectations of another Fed rate hike remain elevated. The more expensive money becomes, the harder it is for technology stocks to justify high valuations.
3. Investors are taking profits after a strong rally. The semiconductor sector remains one of the year's top performers and, even after the sell-off, is still up around 57% since January. Against this backdrop, the emergence of a new risk provided a convenient reason to close some profitable positions.

The problem for the market is that current high valuations of technology companies already largely assume that AI investment will continue growing rapidly. As companies consistently increased spending on equipment and data centers, this scenario worked in favor of chipmakers. Now, the market has to consider the opposite possibility as well.

At the same time, it is still too early to talk about the end of the AI boom. Demand for computing power remains high, and a single day of selling does not change the long-term trend. However, the nearly 6% decline showed just how sensitive the sector has become to any doubts about the future pace of artificial intelligence spending.

According to FreshForex analysts, as long as pressure on chipmakers persists, it will be harder for #NQ100 to reach new highs. If US Treasury yields remain around 5% and concerns about a slowdown in AI investment intensify, pressure on the technology index could continue.

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