IC Markets Europe Fundamental Forecast | 10 September 2025

IC Markets Europe Fundamental Forecast | 10 September 2025

What happened in the Asia session?

During today’s Asia session, markets demonstrated strong risk-on sentiment driven primarily by three key factors: China’s deflation data reinforcing Fed easing expectations, Japan’s improved manufacturing outlook following US trade deals, and continued optimism around AI-driven technology growth. South Korean equities led regional gains on domestic policy reform hopes. At the same time, commodity markets saw divergent moves with gold hitting new records on rate cut bets and oil rising on Middle East tensions. Combining dovish Fed expectations, improving Asia-Pacific sentiment, and technology sector momentum created a supportive backdrop for risk assets.

What does it mean for the Europe & US sessions?
September 10, 2025, presents a critical juncture for global markets as the U.S. releases key inflation data that will influence Federal Reserve policy decisions. With 88% probability of a rate cut next week, focus shifts to whether data supports aggressive easing. China’s deeper deflation adds to global economic concerns, while record gold prices reflect heightened uncertainty. European markets continue modest gains despite French political turmoil, and Asian equities rally on rate cut hopes.

The Dollar Index (DXY)

Key news events today

Core PPI m/m (12:30 pm GMT)

PPI m/m (12:30 pm GMT)

What can we expect from DXY today?

The US dollar finds itself at a crossroads on September 10th, 2025, with traders maintaining cautious positioning ahead of crucial inflation data. While rate cut expectations for next week’s Fed meeting appear solidified, the magnitude remains in question. The dollar’s technical position suggests continued vulnerability, particularly if inflation data fails to challenge dovish Fed expectations. Key support levels around 97.15-97.40 will be critical to watch, while any upside surprise in inflation could trigger a relief rally toward 98.00 resistance.

Central Bank Notes:

• The Board of Governors of the Federal Reserve System voted unanimously to maintain the Federal Funds Rate in a target range of 4.25% to 4.50% at its meeting on July 29–30, 2025, keeping policy unchanged for the fifth consecutive meeting.
• The Committee reiterated its objective of achieving maximum employment and inflation at the rate of 2% over the longer run. While uncertainty around the economic outlook has diminished since earlier in the year, the Committee notes that challenges remain and continued vigilance is warranted.
• Policymakers remain highly attentive to risks on both sides of their dual mandate. The unemployment rate remains low, near 4.2%–4.5%, and labor market conditions are described as solid. However, inflation remains somewhat elevated, with the PCE price index at 2.6% and a core inflation forecast of 3.1% for year-end 2025, up from earlier projections; tariff-related pressures are cited as a contributing factor.
• The Committee acknowledged that recent economic activity has expanded at a solid pace, with second-quarter annualized growth estimates near 2.4%. However, GDP growth for 2025 has been revised downward to 1.4% (from 1.7% projected in March), reflecting expectations of a slowdown in the coming quarters.
• In the revised Summary of Economic Projections, the unemployment rate is expected to average 4.5% in 2025, and headline PCE inflation is forecast at 3.0% for the year, with core PCE at 3.1%. Policymakers continue to anticipate that inflation will moderate gradually, with ongoing risks from tariffs and global conditions.
• The Committee reaffirmed its data-dependent and risk-aware approach to future policy decisions. Officials stated they are prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede progress toward the Fed’s goals.
• As previously outlined, the Committee continues the measured run-off of its securities holdings. The pace of balance sheet reduction, which slowed since April (monthly redemption cap on Treasury securities reduced from $25B to $5B, while holding agency MBS cap steady at $35B), was left unchanged this month to support orderly market functioning and financial conditions.
• The next meeting is scheduled for 16 to 17 September 2025.

Next 24 Hours Bias
Medium Bearish

Gold (XAU)

Key news events today

Core PPI m/m (12:30 pm GMT)

PPI m/m (12:30 pm GMT)

What can we expect from Gold today?

Gold’s performance on Wednesday, September 10, 2025, reflects a market taking a brief pause after achieving record highs while maintaining its strong underlying bullish momentum. The precious metal continues to benefit from a powerful combination of dovish Federal Reserve expectations, geopolitical uncertainties, persistent central bank buying, and dollar weakness. While technical indicators suggest some short-term consolidation may be warranted, the fundamental drivers supporting gold’s rally remain firmly in place, positioning the metal for potential further gains as key economic data and Fed policy decisions unfold in the coming days.

Next 24 Hours Bias

Medium Bullish

The Euro (EUR)

Key news events today

No major news event

What can we expect from EUR today?

The euro faces a complex landscape on September 10, 2025, characterized by the ECB’s likely pause in rate cuts, continued political instability in France, and ongoing trade tensions with the U.S. While technical indicators suggest potential for further EUR/USD appreciation, structural challenges, including slow implementation of competitiveness measures and political fragmentation, pose medium-term risks. The ECB’s Thursday decision and accompanying guidance will be crucial for determining the euro’s near-term trajectory, with markets particularly focused on signals about future policy direction amid evolving global economic conditions.

Central Bank Notes:

• The Governing Council kept the three key ECB interest rates unchanged at its July 24 meeting, maintaining the main refinancing rate at 2.15%, the marginal lending facility at 2.40%, and the deposit facility at 2.00%, following eight consecutive cuts preceding this decision.
• The decision to hold rates steady was driven by evidence that inflation is stabilizing near the Governing Council’s medium-term target of 2%. Policymakers communicated that further rate moves would be data-dependent, explicitly refraining from pre-committing to any future path amid persistent global and domestic uncertainties.
• According to the latest Eurosystem staff projections, headline inflation is expected to remain around 2.0% for 2025, with projections indicating 1.6% for 2026 and a rebound to 2.0% in 2027. Downward revisions from previous forecasts primarily reflect lower energy price assumptions and a stronger euro. Inflation excluding energy and food is seen averaging 2.4% in 2025 and 1.9% in 2026–2027, little changed from prior projections.
• Real GDP growth for the Eurozone is forecast at 0.9% in 2025, 1.1% in 2026, and 1.3% in 2027. The projections note that a strong first quarter offsets a weaker outlook for the rest of 2025. While business investment and exports are dampened by ongoing trade policy uncertainties—including recent U.S. tariff measures—rising government investment, particularly in defense and infrastructure, is expected to progressively underpin growth.
• Household spending should be supported by firm real income gains and a still-solid labor market. More favorable financing conditions are expected to help strengthen the economy’s resilience to further global shocks. Wage growth, although still elevated, continues to moderate, with profit margins partially absorbing cost pressures.
• Amid significant geopolitical and economic uncertainty, the Governing Council underscored its commitment to ensuring inflation stabilizes sustainably at the 2% target. The ECB reiterated it would pursue a meeting-by-meeting, data-dependent approach to its monetary policy stance.
• Future rate decisions will be guided by the assessment of incoming economic and financial data, the outlook for inflation and underlying inflation dynamics, and the effectiveness of monetary policy transmission. The Council continues to stress that it is not pre-committed to any specific rate trajectory.
• The asset purchase program (APP) and pandemic emergency purchase programme (PEPP) portfolios are continuing to decline in an orderly and predictable way, as the Eurosystem has ceased reinvesting principal payments from maturing securities.
• The next meeting is on 11 September 2025

Next 24 Hours Bias

Weak Bullish

The Swiss Franc (CHF)

Key news events today

SNB Chairman Schlegel speaks (11:45 am GMT)

What can we expect from CHF today?

The Swiss Franc demonstrates exceptional strength on September 10, 2025, driven by safe-haven demand amid global uncertainties and solid domestic economic fundamentals. While facing headwinds from 39% US tariffs, Switzerland’s inflation remains within target ranges, supporting the SNB’s decision to maintain accommodative monetary policy. Chairman Schlegel’s hawkish stance on negative rates provides additional currency support, with the upcoming September 25th meeting expected to confirm policy stability. The franc’s outperformance against traditional safe havens like the yen reflects its enhanced status in the current risk environment.

Central Bank Notes:

• The SNB eased monetary policy by lowering its key policy rate by 25 basis points, from 0.25% to 0% on 19 June 2025, marking the sixth consecutive reduction.
• Inflationary pressure has decreased further as compared to the previous quarter, decreasing from 0.3% in February to -0.1% in May, mainly attributable to lower prices in tourism and oil products.
• Compared to March, the new conditional inflation forecast is lower in the short term. In the medium term, there is hardly any change from March, putting the average annual inflation at 0.2% for 2025, 0.5% for 2026, and 0.7% for 2027.
• The global economy continued to grow at a moderate pace in the first quarter of 2025, but the global economic outlook for the coming quarters has deteriorated due to the increase in trade tensions.
• Swiss GDP growth was strong in the first quarter of 2025, but this development was largely because, as in other countries, exports to the U.S. were brought forward.
• Following the strong first quarter, growth is likely to slow again and remain rather subdued over the remainder of the year; the SNB expects GDP growth of 1% to 1.5% for 2025 as a whole, while also anticipating GDP growth of 1% to 1.5% for 2026.
• The SNB will continue to monitor the situation closely and will adjust its monetary policy if necessary to ensure inflation remains within the range consistent with price stability over the medium term.
• The next meeting is on 25 September 2025.

Next 24 Hours Bias

Mediumk Bullish

The Pound (GBP)

Key news events today

No major news event

What can we expect from GBP today?

The pound sterling faces a complex environment on September 10, 2025, supported by sticky inflation that limits the Bank of England’s easing options and recent economic data that has exceeded expectations. However, significant headwinds persist from fiscal uncertainties ahead of the Autumn Budget and broader political concerns. Technical indicators suggest near-term resilience around 1.3540, but the currency’s trajectory will largely depend on upcoming UK inflation data, Federal Reserve policy decisions, and clarity on the government’s fiscal plans. The divergence between cautious BoE policy and expected Fed easing provides underlying support for GBP/USD, though volatility is likely to remain elevated as these competing factors play out.

Central Bank Notes:

• The Bank of England’s Monetary Policy Committee (MPC) voted on 7 August 2025 by a majority (exact split likely 5–3–1 or similar, based on expectations) to cut the Bank Rate by 25 basis points to 4.00%. Multiple members supported the move, citing fragile economic growth and signs of disinflation, while others preferred a larger reduction, and at least one member voted to hold the rate steady due to concerns about persistent inflation.
• The Committee unanimously decided to continue reducing the stock of UK government bond purchases held for monetary policy purposes by £100 billion over the next 12 months, targeting a balance of £558 billion by October 2025. As of 7 August, the gilt stock stands at £590 billion.
• Disinflation has been substantial since 2023 owing to policy tightening and the fading of external shocks. However, an unexpected uptick in headline CPI inflation—to 3.6% in June—reflects pass-through from regulated prices and earlier energy price rises, as well as signs of sticky core inflation.
• Headline CPI inflation is now 3.6%, above the Bank’s 2% target, reflecting regulated and energy price effects. The Committee expects inflation to remain around this level through Q3 before resuming its downward trend into 2026.
• UK GDP growth remains weak. Business and consumer surveys point to lackluster activity, and the labor market continues to loosen, with increasing evidence of slack. Wage growth has softened but remains above pre-pandemic norms.
• Pay growth and employment indicators have moderated further, and the Committee expects a significant slowing in pay settlements over the rest of 2025.
• Global uncertainty remains elevated, especially with rising energy prices and supply disruptions linked to conflict in the Middle East and renewed trade tensions. These factors prompt the MPC to remain vigilant in monitoring cost and wage shocks.
• The risks to inflation are considered two-sided. With the outlook for growth subdued and inflation persistence less clear, the Committee argues that a gradual and careful approach to further easing is warranted, with future policy decisions highly data-dependent.
• The Committee’s bias is still towards maintaining monetary policy at a restrictive stance until there is firmer evidence that inflation will return sustainably to the 2% target over the medium term. Further adjustments to policy will be decided on a meeting-by-meeting basis, with scrutiny of developments in demand, costs, and inflation expectations.
• The next meeting is on 18 September 2025.
  
  Next 24 Hours Bias
  
  Medium Bullish

The Canadian Dollar (CAD)

Key news events today

No major news event

What can we expect from CAD today?

The Canadian dollar faces significant headwinds on September 10, 2025, driven primarily by a sharp deterioration in labor market conditions and mounting expectations for aggressive Bank of Canada rate cuts. With unemployment at nine-year highs, tariff-sensitive industries shedding jobs, and money markets pricing in a 90%+ probability of rate cuts, the loonie is approaching its weakest levels since August. While oil prices provide some support, trade uncertainty and weak economic fundamentals are likely to keep the currency under pressure in the coming weeks, particularly ahead of the September 17 Bank of Canada decision.

Central Bank Notes:

• The Bank of Canada maintained its target for the overnight rate at 2.75%, with the Bank Rate at 3% and the deposit rate at 2.70% as of July 30, marking the third consecutive meeting with rates on hold.
• The Council cited ongoing U.S. tariff adjustments and unresolved trade negotiations as driving factors for elevated economic uncertainty. The persistence of tariffs well above early-2025 levels continues to present downside risks for growth and keeps inflation expectations elevated, supporting a cautious approach to monetary easing.
• The lack of a clear U.S. policy path, plus frequent threats of additional tariffs, led the Bank to highlight risks to Canadian exports and broader demand, amplifying uncertainty about future growth.
• Canada’s economic growth in the first quarter came in at 2.2%, slightly stronger than the original forecast, while the composition of GDP growth was largely as expected. Consumption slowed from its very strong fourth-quarter pace, but continued to grow despite a large drop in consumer confidence.
• Canadian GDP growth is expected to be near 0% in Q2 2025, closely aligned with the more optimistic scenario outlined earlier in the year. Weakness in manufacturing activity—driven by both U.S. trade disruptions and sector-specific challenges like wildfires—contributed to softer output. A partial recovery is anticipated in Q3 due to rebuilding efforts and stronger retail sales in June.
• Consumer spending slowed, especially as households front-loaded durable goods purchases ahead of tariffs. Housing activity remains subdued, with resales and construction still soft despite some government tax relief measures.
• Headline CPI inflation continued to ease, holding close to 1.7% in June, aided by declines in energy prices following the removal of the fuel charge. However, the Bank’s measures of core inflation and underlying price pressures moved up further due to higher import costs from tariffs and lingering supply disruptions.
• The Governing Council reiterated that it will carefully weigh ongoing upward inflation pressure from tariffs and cost shocks against the gradual downward pull from economic weakness. While additional rate cuts remain possible, timing and scale will depend on trade policy developments and inflation’s path.
• The next meeting is on 17 September 2025.

Next 24 Hours Bias

Medium Bearish

Oil

Key news events today

EIA crude oil inventories (2:30 pm GMT)

What can we expect from Oil today?

Wednesday’s oil price gains reflect a complex interplay of geopolitical tensions, supply decisions, and market fundamentals. While the Israeli strike on Qatar and Trump’s tariff threats provided short-term support, underlying market conditions remain challenging, with expectations of significant oversupply developing in the coming months. The modest nature of OPEC+’s production increases and growing inventory builds signal a market transition toward surplus conditions, despite current geopolitical risk premiums. Traders are closely monitoring both political developments and fundamental supply-demand dynamics as the market navigates between short-term volatility and longer-term oversupply concerns.

Next 24 Hours Bias

Weak Bearish