DBG Markets: Market Report for Sep 04, 2025

Global Bond Selloff Lifts Yields, Dollar Steadies Ahead of NFP

Global bond markets remained under pressure as Japan‘s 30-year government bond yield surged to a record 3.30% on September 3, while the Eurozone’s 20-year yield also touched fresh highs. Rising global yields have tightened financial conditions and reinforced investor caution across risk assets, with safe-haven flows offering some support to gold.

In contrast, U.S. Treasuries have been relatively stable. Dovish-leaning remarks from several Federal Reserve officials, alongside reassurance on policy independence, helped ease concerns over credibility. Markets continue to price in rate cuts later this year, tempering upward pressure on U.S. yields even as global bonds face heavy selling.

As a result, the dollar has retained a safe-haven bid against major currencies. The yen, however, remains under pressure, with its traditional safe-haven role challenged by higher domestic yields, fiscal uncertainty, and a widening U.S.–Japan rate gap.

FX Outlook: Dollar Consolidates, Yen Faces Pressure

The U.S. dollar index (DXY) is consolidating after recent declines, supported by safe-haven demand but capped by dovish Fed expectations. Traders remain cautious ahead of Fridays nonfarm payrolls (NFP), keeping both DXY and USDJPY confined to narrow ranges.

DXY: Tight Range Pending Breakout

USDX, H4

On the H4 chart, DXY has been consolidating between 97.5 – 98.5, with the prior downtrend stalling into sideways trade. A breakout beyond this zone could set the next directional move.

· Bearish scenario: A weaker-than-expected NFP would reinforce dovish Fed expectations and weigh on the dollar.

· Bullish scenario: A stronger NFP print could provide short-term relief, lifting DXY higher.

USDJPY: Cautious on False Breakout

Rising long-term Japanese bond yields have raised fiscal concerns domestically, weighing on the yen, which has weakened broadly against major currencies. Still, USDJPY remains the most influential pair for yen flows and has dominated recent price action.

USDJPY, H4

USDJPY has managed to hold above 148.0, but upside momentum remains capped below 149.0, with the 150.0 level continuing to stand as a key psychological barrier.

Technically, maintaining support above 148.0 keeps the door open for further gains, though momentum appears limited as traders stay cautious ahead of upcoming U.S. data.

A sustained break above the 149.0–150.0 zone would likely require a strong catalyst, such as a significant upside surprise in Fridays NFP report.

Until then, the risk of a false breakout remains elevated, leaving the pair vulnerable to pullbacks if sentiment shifts. Should the pair fail to hold 148.0, the move could instead resolve into an extended sideways range.