DBG Markets: Market Report for Sep 10, 2025

U.S. Inflation Data in Focus; Dollar Awaits Breakout

Investors are turning their attention to this week‘s U.S. inflation data, with the Producer Price Index (PPI) due today and the Consumer Price Index (CPI) tomorrow. Last month’s unexpected upside surprise in PPI has left traders cautious, as another strong print could trigger a repricing of Federal Reserve rate-cut expectations.

Caution Behind Optimism

U.S. equities remain near record highs, supported by dovish Fed expectations. However, sentiment is increasingly fragile.

Revised data from the Bureau of Labor Statistics showed the U.S. added 911,000 fewer jobs over the past year than previously estimated, underscoring concerns about the underlying strength of the economy.

While rate-cut bets have buoyed equities, history shows markets often “sell the news” once cuts are delivered. Optimism could quickly fade if this week‘s inflation data forces the Fed to recalibrate its rate path at next week’s September meeting. Meanwhile, the U.S. dollar is holding steady as traders wait for a catalyst.

Inflation Data Decide on Easing Pace？

Over the Fed policy front, markets are largely pricing in a 25-basis-point cut at the September Fed meeting, with a 50-basis-point cut seen as possible but less likely. The upcoming inflation reports represent the final checkpoint before that decision.

Fed September Rate Probabilities | Source: CME Group

Consensus forecasts point to moderating inflation, which would reinforce expectations for a deeper easing cycle into year-end. However, an upside surprise could shift sentiment quickly, forcing markets to reprice toward a slower and more cautious pace of cuts.

Dollar Outlook: Inflation Set to Catalyse the Breakout？

The U.S. dollar remains locked in a near month-long consolidation, with traders awaiting a catalyst to spark the next move. This weeks inflation data may provide that trigger.

US Dollar Index, 4-hour chart

The index has been moving between 97.5 and 98.5 for almost a month. Despite the yesterdays breakout attempt failed, price action still suggest that bearish sentiment remains as traders continue to expect Fed easing path.

The next move will likely depend on today‘s PPI and tomorrow’s CPI. If the data is softer than expected, markets may price in larger or faster cuts, especially after last week disappointing job reports, which would put more pressure on the dollar.

The key levels to watch are 97.5 and 98.5. A break below 97.5 would confirm further downside, while a break above 98.5 could signal short-term strength. Until then, the dollar remains in consolidation, waiting for inflation data to set direction.

USDJPY: Range-Bound, Waiting for Policy Clarity

Meanwhile, an interesting setup also found in USDJPY. The pair has been consolidating for more than a month, reflecting the ongoing recalibration of both Fed and Bank of Japan policy outlooks ahead of their September meetings.

· Fed outlook: Markets expect rate cuts in September, with focus on how deep the easing will be.

· BoJ outlook: Markets expect a rate hike, but investors are waiting for stronger signals

from the September meeting.

USD/JPY, Daily Chart

Technically, the pair continues to face resistance around the 149–150 zone, suggesting pressure remains on the upside. With the longer-term risk points to a potential bearish continuation if momentum shifts.

Key levels to watch are 148.00 on the downside. A break below this level, or confirmation of a bearish pattern in short-term moves, could open the door to deeper losses.

For now, the focus stays on this weeks U.S. inflation data, which could set the tone for USDJPY ahead of the September Fed and BoJ decisions.

Dollar Momentum Set to Resume on September

After a prolonged period of consolidation in the U.S. Dollar Index and major dollar pairs, September is shaping up to bring renewed momentum. With key market events lined up—and following last weeks weak non-farm payrolls—the dollar appears positioned for further moves.

Uncertainty still surrounds the upcoming Fed meeting, but the jobs data has already tilted sentiment toward a more bearish dollar outlook. The question now is whether this weeks inflation data will reinforce that shift.