Forex Market Forecast for September 2024

With the Federal Reserve hinting at a rate cut, the questions now are how fast and by how much? Here are the key points to watch in September:

• On September 18, the Fed will announce its interest rate decision, with investors eagerly awaiting a rate cut.
• September is considered a month when the dollar performs well. Could we see a pullback in some pairs?
• With the BoJ raising rates, the JPY has performed well against the dollar and may be set to continue in September.

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US Dollar

All eyes are on the Federal Reserve’s interest rate announcement on September 18. Fed Chair Jerome Powell said at Jackson Hole that “the time has come for policy to adjust.” As a result, investors are now deliberating over the size of the potential rate cut. Even so, one factor to consider is that the US dollar tends to perform well in September. Overall, we expect some volatility in the USD this upcoming month.

Key Levels

• EURUSD: Higher – 1.1240, Lower – 1.0955
• GBPUSD: Higher -1.3400, Lower – 1.3000
• USDJPY: Higher -141.65, Lower -149.40

Euro

The euro was a strong performer against the USD in August. Given the seasonal trends, whether that run can continue into September is another question. Currently, the trend is moving higher despite a pullback over the last few days (As of August 30). A continued move higher could see the EURUSD move to 1.12. However, a decline in September could cause the price to break back below the 1.10 level. With falls in German and Spanish inflation, there is an increased chance the ECB could cut rates again in September.

Key Levels

• EURUSD: Higher – 1.1240, Lower – 1.0955
• EURGBP: Higher – 0.8620, Lower – 0.8350

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British Pound

As mentioned last month, we saw the GBP rising in August, and that’s what we got, with a move above the 1.32 level. It has since pulled back, although the uptrend still looks strong. However, with USD seasonal strength in September at play, there is the potential for a turnaround. The BoE reduced rates in August; its next announcement is on September 19. A continued bullish move for the GBP could see it climb as high as 1.34 in September. However, a decline means the 1.30 level could be in play.

Key Levels

• EURGBP: Higher – 0.8620, Lower – 0.8350
• GBPUSD: Higher -1.3400, Lower – 1.3000

Japanese Yen

It was another strong month for the Japanese yen against the USD and euro, and although there has been a recent pullback, the trend is very much to the downside. The Bank of Japan’s Deputy Governor Ryozo Himino recently said the central bank’s stance is that it will continue to raise interest rates if inflation stayed on course. However, they will monitor financial markets with the “utmost vigilance.”

Key Levels

• USDJPY: Higher -141.65, Lower -149.40
• EURJPY: Higher – 163.90, Lower – 154.44

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