IC Markets Europe Fundamental Forecast | 11 September 2025

IC Markets Europe Fundamental Forecast | 11 September 2025

What happened in the Asia session?

The Asia session on September 10, 2025, was dominated by three key themes: China’s unexpected deflation deepening, Japan’s escalating political crisis, and solidifying expectations for aggressive Federal Reserve easing. The most significantly impacted instruments were Japanese equities (down 1.6% due to political uncertainty), Chinese markets (down 0.8% due to concerns about deflation), and Asian currencies, which broadly weakened against the US dollar. The convergence of weak Chinese inflation data, Japanese political instability, and US monetary easing expectations created a complex trading environment that favored safe-haven assets while weighing on regional risk assets, particularly in Northeast Asia.

What does it mean for the Europe & US sessions?
Today represents a critical inflection point for global markets, with the U.S. CPI release serving as the primary catalyst for volatility across asset classes. The combination of inflation data ahead of the Fed meeting and ECB policy guidance creates a perfect storm for significant market movements. Traders should prepare for heightened volatility, particularly in currency pairs, with the dollar’s direction largely dependent on whether inflation data supports or contradicts current dovish Fed expectations.

The Dollar Index (DXY)

Key news events today

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

CPI m/m (12:30 pm GMT)

CPI y/y (12:30 pm GMT)

Unemployment Claims (12:30 pm GMT)

What can we expect from DXY today?

September 11, 2025, represents a critical juncture for the US Dollar, with multiple bearish factors converging: Fed rate cut expectations, weak employment data, policy uncertainty, and massive fiscal deficits. The currency faces its worst annual performance since 2003, with the 10-11% year-to-date decline marking the steepest drop since 1973. While today’s CPI data could provide some support if inflation prints hot, the overall trajectory points toward continued dollar weakness as the Fed prioritizes employment concerns over inflation risks. The dollar’s decline to fair value levels suggests the currency is no longer overvalued, but structural challenges, including debt concerns and policy uncertainty, continue to weigh on investor confidence.

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 CPI m/m (12:30 pm GMT)

CPI m/m (12:30 pm GMT)

CPI y/y (12:30 pm GMT)

Unemployment Claims (12:30 pm GMT)

What can we expect from Gold today?

Gold’s performance on Thursday, September 11, 2025, represents the continuation of a historic bull run driven by multiple converging factors. The combination of dovish Federal Reserve expectations, persistent geopolitical tensions, robust central bank buying, and technical momentum has created an environment highly conducive to precious metals appreciation. While some technical indicators suggest potential short-term consolidation, the fundamental backdrop remains supportive for further gains, with many analysts expecting gold to challenge the $3,700-4,000 range in the coming months.

Next 24 Hours Bias   
Medium Bullish

The Euro (EUR)

Key news events today

Main Refinancing Rate (12:15 pm GMT)

Monetary Policy Statement (12:15 pm GMT)

ECB Press Conference (12:45 pm GMT)

What can we expect from EUR today?

The euro faces a complex landscape as September 11, 2025, unfolds. The ECB’s expected pause on interest rates reflects confidence in the current policy stance, with inflation near target and economic resilience despite external pressures. However, political instability in France and ongoing geopolitical tensions present downside risks. The recent EU-US trade deal provides some certainty, but at the cost of higher tariffs on European exports. The euro’s exchange rate remains relatively stable above $1.17, supported by expectations of continued ECB policy stability and eurozone economic fundamentals, though market attention will focus on Christine Lagarde’s press conference for guidance on future monetary policy direction.

Central Bank Notes:

• The Governing Council kept the three key ECB interest rates unchanged at its September 11, 2025, meeting. The main refinancing rate remains at 2.15%, the marginal lending facility at 2.40%, and the deposit facility at 2.00%. These levels have been maintained after the cuts earlier in 2025, reflecting the Council’s confidence that the current stance is consistent with the price stability mandate.
• The decision to hold rates steady was supported by evidence that inflation is running close to the ECB’s medium-term target of 2%. Domestic price pressures are easing as wage growth continues to moderate, and financing conditions remain accommodative. Policymakers reaffirmed a data-dependent, meeting-by-meeting approach to further policy moves, with no pre-commitment to a predetermined path amid ongoing global and domestic risks.
• Eurosystem staff projections foresee headline inflation averaging 2.0% for 2025, 1.8% for 2026, and 2.0% in 2027. The 2025 and 2026 forecasts reflect a downward revision, primarily on lower energy costs and exchange rate effects, even as food inflation remains persistent. Core inflation (excluding energy and food) is expected at 2.0% for both 2026 and 2027, with only minor changes since prior rounds.
• Real GDP growth in the euro area is projected at 1.1% for 2025, 1.1% for 2026, and 1.4% for 2027. A robust first quarter—partly due to firms accelerating exports ahead of anticipated tariff hikes—cushioned a weaker outlook for the remainder of 2025. While business investment continues to face uncertainty from ongoing global trade disputes, especially with the US, government investment and infrastructure spending are expected to provide some support to the outlook..
• Household spending is backed by rising real incomes and continued strength in the labor market. Despite some fading tailwind from previous rate cuts, financing conditions remain broadly favorable and are expected to underpin the resilience of private consumption and investment against outside shocks. Moderating wage growth and profit margin adjustments are helping to absorb residual cost pressures.
• Household spending is backed by rising real incomes and continued strength in the labor market. Despite some fading tailwind from previous rate cuts, financing conditions remain broadly favorable and are expected to underpin the resilience of private consumption and investment against outside shocks. Moderating wage growth and profit margin adjustments are helping to absorb residual cost pressures.
• All future interest rate decisions will continue to be guided by the integrated assessment of economic and financial data, the inflation outlook, and underlying inflation dynamics, and the effectiveness of monetary policy transmission—without any pre-commitment to a specific future rate path.
• The ECB’s Asset Purchase Programme (APP) and Pandemic Emergency Purchase Programme (PEPP) portfolios are declining predictably, as reinvestment of maturities has ceased. Balance-sheet normalization continues in line with the ECB’s previously communicated schedule.
• The next meeting is on 29 to 30 October 2025

Next 24 Hours Bias

Weak Bullish

The Swiss Franc (CHF)

Key news events today

No major news event

What can we expect from CHF today?

The Swiss Franc remains one of the strongest performers in global FX markets on September 11, 2025, supported by safe-haven flows amid US trade tensions and Switzerland’s stable economic fundamentals. While inflation has stabilized at low levels and growth has slowed, the SNB appears increasingly comfortable with current franc strength, making aggressive easing less likely in the near term. The upcoming September 25 SNB meeting will be critical for determining whether policymakers maintain their cautious stance or signal greater concern about economic headwinds from continued trade disputes.

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 British Pound enters Thursday, September 11, 2025, in a relatively stable position, supported by monetary policy divergence as the Bank of England maintains a more hawkish stance compared to other major central banks. While technical levels suggest potential for further gains toward 1.3600 and beyond, the Pound faces headwinds from elevated inflation, fiscal uncertainty, and global economic concerns. Key resistance at 1.3600 will likely determine whether the recent recovery can extend toward the July highs near 1.3789, or if the pair retreats toward the 1.3500 support zone.

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 Bullis

The Canadian Dollar (CAD)

Key news events today

No major news event

What can we expect from CAD today?

The Canadian Dollar faces a confluence of negative factors on September 11, 2025, including deteriorating employment conditions, expectations for aggressive monetary easing, declining commodity prices, and persistent trade uncertainty. With unemployment at four-year highs and inflation below target, the Bank of Canada appears poised to resume its easing cycle on September 17. The currency’s position as the second-worst performer among major currencies in 2025 reflects these fundamental challenges, with further weakness likely if economic conditions continue to deteriorate and rate cuts materialize as expected.

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

No major news event

What can we expect from Oil today?

Oil markets on September 11, 2025, are caught between conflicting forces of geopolitical risk premiums and bearish supply-demand fundamentals. While Middle East tensions and Trump’s sanctions push have provided near-term support, driving oil prices higher for three consecutive sessions, the underlying market structure points to significant downward pressure ahead. The oil market appears to be in a transitional phase where short-term geopolitical risks are masking deeper structural challenges, including oversupply conditions and energy transition pressures that are likely to dominate pricing in the coming quarters.

Next 24 Hours Bias

Weak Bearish