The US Dollar Index (DXY) ended the week lower after failing to hold above the 100.00 level and later trying to steady around 99.00 ahead of a US market closure for the Labor Day holiday on Monday. The next data run begins on 8 September with the NFIB Business Optimism Index, alongside Consumer Inflation Expectations and ADP Employment Change Weekly; 9 September brings MBA Mortgage Applications and the API weekly US crude inventories report. On 10 September, releases include Initial Jobless Claims, Producer Prices, Existing Home Sales and the EIA weekly crude oil stockpiles, before the Inflation Rate, the flash U-Mich Consumer Sentiment and the Monthly Budget Statement close the week’s schedule.
In FX, EUR/USD rose but stayed below 1.1700, with euro area Employment Change due on 7 September alongside a revised Q2 GDP Growth Rate, Germany’s Trade Balance on 8 September, and Germany’s final Inflation Rate plus an ECB rate decision and press conference on 10 September. GBP/USD hovered in the mid-1.3500s, with the Lloyds House Index on 7 September, BRC Retail Sales Monitor on 8 September, RICS House Price Balance on 10 September, and UK GDP, Trade Balance, production data, Construction Output and the NIESR Monthly GDP Tracker on 11 September. USD/JPY slid to seven-month lows near 155.00 as Japan releases Coincident and Leading indices and FX reserves on 7 September, then wages, Current Account, lending and final Q2 GDP on 8 September, with Producer Prices and surveys on 11 September. AUD/USD moved above 0.7200, after weekly gains in eight of the last ten weeks and a rise of more than 3 cents since late June; Australia prints Westpac Consumer Confidence, Building Permits, Private House Approvals and NAB Business Confidence on 8 September, then Consumer Inflation Expectations on 10 September, while central bank appearances include RBA speakers on 8 September and ECB speakers on 9 and 12 September; the ECB decision is set for 10 September with rates at 2.25% and 2.50% expected.
US Dollar Index Volatility and Major Data Releases
We must prepare for intense volatility as the US Dollar Index (DXY) hovers around the critical 99.00 level after failing to hold 100.00. With US markets closed for Labor Day on September 7, we should focus on the upcoming data docket starting September 8, which features NFIB Business Optimism and the crucial consumer inflation rate. Given that the US annual inflation rate is projected to settle around 2.3% in late 2026, we suggest using option straddles to capture sudden breakouts.
Currency Market Outlook: EUR/USD, GBP/USD, USD/JPY, and AUD/USD Recommendations
We recommend a cautious approach to EUR/USD as it struggles to reclaim the 1.1700 benchmark ahead of the European Central Bank’s rate decision on September 10. The market anticipates the ECB will lower its key rate to 2.25% from 2.50% to address sluggish growth while Eurozone inflation hovers near its 2% target. Derivative traders should consider buying short-term put options on the Euro if the central bank adopts an unexpectedly dovish tone.
For the British Pound, currently consolidating in the mid-1.3500s, a massive UK data dump on September 11 will be the primary market catalyst. With GDP, manufacturing production, and trade balance data all releasing on the same day, we expect sharp currency swings. We advise setting up tight stop-losses on spot positions or using range-bound butterfly spreads to profit from the choppy price action.
The Japanese Yen is our top pick for outperformance as USD/JPY plummets toward seven-month lows near 155.00 on speculation of further Bank of Japan tightening. Japan’s final Q2 GDP growth rate on September 8 and upcoming wage data will show if the domestic economy can handle higher interest rates. We favor buying USD/JPY put options to capitalize on a potential slide toward the 152.00 level.
Finally, we see continued strength in the Australian Dollar after AUD/USD successfully broke above the 0.7200 barrier, marking gains in eight of the last ten weeks. Speeches from the RBA’s Hunter and Hauser on September 8 will dictate whether this bullish trend has legs. We suggest buying call options on minor pullbacks, targeting a move toward 0.7350 as global risk sentiment stabilizes.
