Global Forex Monitor - September 2025

The dollar eventually stabilized over the course of this summer. The dollar index DXY rebounded throughout July, reaching a peak of 100 before declining again in August to 98. The correction in August resulted from the significant deterioration in the U.S. employment report for July and previous months, which increased the likelihood of a rate cut by the Fed as early as September. In his speech at Jackson Hole, J. Powell expressed his concerns regarding employment, which reinforced expectations for a Fed rate cut.We remain bearish on the dollar given the current environment characterized by weak employment figures, the lack of a strong surge in U.S. inflation related to tariffs, the divergence in monetary policy between the Fed and other major central banks, and the threats to the Fed's independence arising from attacks by D. Trump.After reaching a peak of 1.1839 at the end of June, EUR/USD corrected to 1.1396 at the end of July, before climbing back above 1.16 by the end of August. The movement of EUR/USD is heavily influenced by the performance of the dollar, which has been weakened by the deterioration of the labor market in the U.S. and expectations of a rate cut by the Fed as early as September. In the coming months, EUR/USD will continue to benefit from the dollar's weakness, the monetary policy status quo of the ECB, and the recent improvement in PMI surveys in the eurozone. In the short term, political risks in France may slightly slow the appreciation of EUR/USD, which is expected to reach 1.19 by the end of the year.