Forex & Currency Watch — 2026-09-06

Market Snapshot

Top Movers

• USD/JPY (Winner): Up +0.26% on the day to 156.25. Despite the daily gain, the pair has fallen significantly (-2.39%) over the past week as the Yen experienced its best week since July due to shifting rate expectations and intervention fears.
• USD/CHF (Winner): Up +0.32% on the day to 0.8100. The Swiss Franc weakened against the dollar following the strong US employment data, which reduced immediate expectations for aggressive Fed cuts, boosting the Greenback against safe-haven peers.
• EUR/USD (Loser): Down -0.10% on the day to 1.1614. The Euro pulled back from intraday highs of 1.1633 after the US Nonfarm Payrolls report crushed expectations for a dovish Fed, causing the dollar to strengthen temporarily.

What Moved the Tape

• US Nonfarm Payrolls Surprise: A "blockbuster" US jobs report released on Friday, September 4, caused US Treasury yields to spike and initially strengthened the dollar across the board. The data suggested a resilient labor market, forcing traders to cut bets on imminent Fed rate cuts.
• Fed Governor Waller's Commentary: Following the jobs data, Fed Governor Christopher Waller made comments that tempered the hawkish interpretation of the NFP print. His remarks helped cap the dollar's upside against the Euro and Pound, allowing EUR/USD to recover from intraday lows near 1.1585.
• Yen Volatility: The Japanese Yen had been surging in the days prior due to speculation of Bank of Japan (BoJ) policy shifts or Ministry of Finance (MoF) intervention. This surge rippled through global markets, causing cross-currency volatility. On September 4, the yen eased slightly from these highs, contributing to the USD/JPY daily rise.

Central Bank Watch

• Federal Reserve (Fed): Traders are actively repricing the rate path following the strong NFP data. While initial reactions favored a "higher-for-longer" stance, comments from Fed officials like Waller have introduced nuance, suggesting the data is mixed enough to warrant caution. The focus has shifted to how persistent inflation will be versus labor market strength.
• European Central Bank (ECB): The market is bracing for the upcoming ECB decision, with analysts debating whether the ECB will hike or hold rates given the diverging economic signals from the Eurozone. The ECB's next move is a critical catalyst for EUR/USD direction in the short term.
• Bank of Japan (BoJ) / MoF: The "MoF-BoJ duo" is cited as a key factor in recent volatility. Unabated geopolitical tensions and domestic policy debates continue to influence the Yen, which recently saw its best weekly performance since July before stabilizing.

Emerging Markets & Asia FX

• Indian Rupee (INR): India’s foreign exchange reserves hit a record high of $740.80 billion, driven by strong inflows. This record level provides a robust buffer for the Rupee, supporting stability against the US Dollar despite global volatility.
• Chinese Yuan (CNY): Hong Kong’s Secretary for Financial Services and the Treasury, Lee, announced plans to expand offshore Yuan usage in the city's 5-Year Plan. This structural push for internationalization supports the Yuan's long-term demand profile, though short-term moves remain tied to DXY strength.
• Asian Currencies General: Asian currencies generally rose on Friday, September 4, as the Yen eased from its massive rally and investors took profits. The region benefited from a slight pullback in the dollar's initial surge following the NFP release.

Strategist Takes

• FXStreet Analysis: Analysts note that EUR/USD has formed a potential "higher low" above its 100-day Simple Moving Average (SMA). Despite the sharp two-way swings triggered by the US employment report, the pair's ability to recover from 1.1585 suggests underlying buying interest at technical support levels.
• VT Markets Commentary: Strategists highlight that the DXY slipping below 100 and steadying near 99 indicates a market that is "bracing" rather than trending. The consensus is that volatility will remain elevated until the ECB decision and the next US CPI print provide clearer directional cues.

What to Watch Next

• ECB Policy Decision: The European Central Bank's upcoming rate decision is the primary catalyst for the Eurozone. A surprise hike or hawkish guidance could push EUR/USD higher toward 1.1650.
• US CPI Data: Key US inflation data is expected soon. Given the recent "blockbuster" jobs report, CPI will determine if the Fed needs to remain hawkish. A hot print could send the DXY back above 100 and pressure EUR/USD and GBP/USD.
• Eurozone Inflation Data: As noted by FXStreet, focus is shifting to Eurozone inflation releases. These prints are critical for validating the ECB's next steps and will directly impact the EUR/USD pair.

Reader Action Items

• Watch EUR/USD 1.1585 Support: The pair found strong support at 1.1585 post-NFP. If this level breaks, further downside toward 1.1500 is likely. Conversely, holding above this level suggests a bullish continuation pattern.
• Monitor DXY 100 Level: The psychological 100 mark for the Dollar Index is key. A sustained break above 100 would signal renewed dollar strength, negatively impacting most major pairs except JPY and CHF.
• Prepare for Volatility Around ECB/CPI: With both the ECB decision and US CPI on the horizon, expect sharp intraday moves. Avoid over-leveraging into these events, as the market is currently in a "data-dependent" whipsaw phase.