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Oil Slides, Dollar Strengthens as Markets Weigh Demand Outlook | 12th September 2025

Oil Drops, Dollar Gains Global markets started Friday under renewed pressure as oil prices extended their slide, with WTI (CL) falling below $62.00 on concerns of weaker demand and oversupply. The U.S. Dollar regained ground, dragging higher against the NZD/USD (NZDUSD) and AUD/USD (AUDUSD), while the USD/CAD (USDCAD) consolidated near 1.3850 ahead of key U.S. consumer sentiment data. Meanwhile, diplomatic stability was reinforced after the U.S. and Japan reaffirmed their agreement not to manipulate foreign exchange rates, a move seen as supportive for broader market confidence. WTI crude oil Forecast Current Price and Context WTI crude oil slipped below $62.00, extending its bearish momentum as demand concerns and persistent oversupply weigh heavily on energy markets. Softer global growth signals, alongside rising U.S. stockpiles, have further pressured crude, with traders cautious ahead of fresh U.S. consumer sentiment data and OPEC+ commentary. Key Drivers Geopolitical Risks: Limited escalation in geopolitical tensions has left crude trading more in line with demand and supply fundamentals. US Economic Data: Weak economic indicators have reinforced recession fears, weighing on demand outlook. FOMC Outcome: Larger Fed rate cut bets may indirectly support crude by weakening the USD, but demand fears currently dominate. Trade Policy: U.S.-Japan reaffirmation on FX stability reduces volatility spillovers, but limited direct impact on crude. Monetary Policy: Global easing expectations may cushion downside risks, yet fundamentals remain bearish in the near term. Technical Outlook Trend: Bearish momentum persists below key levels. Resistance: $63.20 – Initial upside barrier. Support: $61.50 – Critical near-term floor; break could expose $60.00. Forecast: WTI likely to remain pressured unless demand sentiment improves, with risks skewed to further downside. Sentiment and Catalysts Market Sentiment: Cautious to bearish, as traders weigh supply overhang against softer demand prospects. Catalysts: U.S. Michigan Sentiment data, OPEC+ commentary, and upcoming weekly EIA inventories. USD/JPY Forecast Current Price and Context The US and Japan reaffirmed their agreement not to manipulate FX rates, providing reassurance to markets that currency stability remains a shared priority. While this limits the scope for direct intervention, the pair continues to be influenced by interest rate differentials and evolving Fed expectations. USD/JPY holds steady as traders await further clarity from U.S. economic data. Key Drivers Geopolitical Risks: Geopolitical calm keeps focus on policy divergence rather than risk aversion flows. US Economic Data: Michigan Consumer Sentiment and CPI implications remain pivotal for USD direction. FOMC Outcome: Larger Fed rate cut bets cap USD strength, but Japan’s ultra-loose stance limits JPY upside. Trade Policy: The reaffirmed U.S.–Japan pact reduces FX intervention risks, supporting credibility in exchange rate stability. Monetary Policy: BoJ’s dovish stance continues to pressure JPY, while Fed cut expectations keep USD in check. Technical Outlook Trend: Neutral to slightly bullish bias for USD/JPY. Resistance: 148.50 – Near-term ceiling. Support: 146.80 – Key downside cushion. Forecast: USD/JPY likely to remain range-bound near current levels, with breakout potential tied to U.S. sentiment data. Sentiment and Catalysts Market Sentiment: Cautious, with reduced fears of FX manipulation but uncertainty around Fed policy path. Catalysts: U.S. Michigan Sentiment Index, Fed rate cut expectations, BoJ communications. NZD/USD Forecast Current Price and Context NZD/USD is trading below 0.5900, pressured by renewed U.S. Dollar demand amid safe-haven flows and firm Treasury yields. The Kiwi faces headwinds from global growth concerns and subdued risk appetite, while softer domestic data weighs on sentiment. Traders remain cautious ahead of the U.S. Michigan Consumer Sentiment Index and inflation readings that could shift Fed cut expectations. Key Drivers Geopolitical Risks: Weak global demand and ongoing China slowdown concerns undermine NZD’s outlook. US Economic Data: Stronger-than-expected labor data and sentiment reinforce USD resilience. FOMC Outcome: Markets price in larger Fed cuts, but timing uncertainty supports USD in the near term. Trade Policy: Global trade fragility adds downside risks to export-driven NZD. Monetary Policy: RBNZ remains cautious with little room to ease; Fed moves will remain decisive for direction. Technical Outlook Trend: Bearish bias below 0.5900. Resistance: 0.5950 → 0.6000. Support: 0.5870 → 0.5820. Forecast: Expect downside pressure to persist unless U.S. data disappoints or risk appetite improves. A sustained break below 0.5870 could open further losses. Sentiment and Catalysts Market Sentiment: Bearish — investors favor USD strength over commodity currencies. Catalysts: U.S. Michigan Consumer Sentiment, CPI/PPI data, Fed commentary, Chinese growth updates. USD/CAD Forecast Current Price and Context USD/CAD is consolidating around 1.3850 as markets await the U.S. Michigan Consumer Sentiment Index. The pair remains supported by broad U.S. Dollar strength, while lower oil prices weigh on the Canadian Dollar. Traders are cautious, as the outcome of U.S. economic data could tilt Fed expectations and drive fresh volatility. Key Drivers Geopolitical Risks: Trade deal uncertainty and oil market oversupply keep CAD vulnerable. US Economic Data: Upcoming sentiment index and inflation data may guide Fed cut expectations. FOMC Outcome: Speculation of deeper Fed cuts tempers USD upside but hasn’t shifted momentum yet. Trade Policy: Cross-border trade flows remain under pressure, particularly energy-related exports. Monetary Policy: BoC stays cautious amid inflation slowdown, limiting CAD’s recovery potential. Technical Outlook Trend: Consolidation with bullish bias above 1.3800. Resistance: 1.3880 → 1.3920. Support: 1.3810 → 1.3760. Forecast: Bias remains mildly bullish; a break above 1.3880 could extend gains toward 1.3920, while downside risk emerges only below 1.3810. Sentiment and Catalysts Market Sentiment: Neutral to bullish — investors favor USD as a safer play versus CAD. Catalysts: U.S. Michigan Sentiment, oil price direction, Fed commentary, and Canadian inflation updates. AUD/USD Forecast Current Price and Context AUD/USD is trading near 0.6400, losing earlier gains as the U.S. Dollar recoups strength despite heightened expectations of a larger Fed rate cut. Stronger USD flows are overshadowing upbeat domestic inflation expectations, leaving the Aussie struggling to sustain momentum. Key Drivers Geopolitical Risks: China’s slowing growth and trade tensions continue to weigh on AUD. US Economic Data: CPI data and consumer sentiment reports remain decisive for Fed outlook. FOMC Outcome: Market still anticipates a sizable cut, but USD strength suggests safe-haven preference. Trade Policy: China’s commodity demand outlook dampens Australian export prospects. Monetary Policy: RBA maintains a cautious stance, reluctant to ease further without stronger inflation signals. Technical Outlook Trend: Weakening after rejection above 0.6450. Resistance: 0.6450 → 0.6490. Support: 0.6370 → 0.6320. Forecast: Mildly bearish; risks skew lower if USD momentum persists, though holding above 0.6370 would keep a neutral bias. Sentiment and Catalysts Market Sentiment: Bearish tilt — traders prefer USD amid global risk caution. Catalysts: U.S. CPI, Fed policy expectations, China’s demand outlook, and RBA commentary. Wrap-up Traders now shift focus to upcoming U.S. Michigan Consumer Sentiment Index figures for fresh cues on household outlook and inflation expectations, alongside developments in energy markets as oversupply fears weigh on oil. With Fed policy expectations still leaning toward larger rate cuts, market sentiment remains fragile, leaving currencies and commodities exposed to sharp swings. Ready to trade global markets with confidence? Join Moneta Markets today and unlock 1000+ instruments, ultra-fast execution, ECN spreads from 0.0 pips, and more! Start now with Moneta Markets!

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Publication date:

2025-09-12 06:45:05 (GMT)

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