DBG Markets: Market Report for Oct 09, 2025

Markets Weigh Feds Cautious Easing Path; Dollar Holds, Gold Takes a Breather？

FOMC Minutes & Fed Outlook

The latest FOMC minutes reveal a Federal Reserve still balancing between supporting growth and guarding against inflation. While most officials back further rate cuts this year, several warned that excessive easing could reignite price pressures.

The September cut was largely driven by labor market concerns, with policymakers citing employment softness as a key factor. However, some members cautioned that inflation risks remain elevated if policy loosens too quickly. Notably, Stephen Miran dissented, favoring a 50-basis-point cut instead of 25.

Most officials still expect two more cuts this year, though some prefer a slower approach extending into 2025. The ongoing U.S. government shutdown has added uncertainty, limiting data visibility and complicating the Feds decisions.

Fed Meeting – October Probabilities, Source: CME Group

According to CME FedWatch, the probability of a November cut remains high at 92.5%, but down from 99.1% a week ago, while December cut probabilities also decreased — suggesting expectations have cooled slightly.

In short, the Feds easing bias remains intact, but markets are turning more cautious. Until data releases resume and the economic picture clears, traders may hesitate to price deeper rate cuts.

GBP and EUR Find Support Against the Dollar

As discussed earlier, the U.S. Dollar Index is testing the 98.5 resistance after a three-day rally. While near-term bias stays bullish amid softer rate-cut expectations, major pairs like EUR/USD and GBP/USD are stabilizing, suggesting the dollar may face short-term headwinds.

EURUSD, H4 Chart

The euro remains under pressure as dollar strength and political risks in Europe weigh on sentiment. The pair has slipped toward 1.1600, a key support level that has held so far.

For EUR/USD to break decisively below this level, stronger catalysts may be required. Near-term, a rebound from 1.1600 appears possible, though upside momentum may remain limited, keeping the pair confined within a consolidation range.

GBPUSD, H4 Chart

The pound is also struggling amid renewed dollar demand, though it continues to hold around 1.3400. With no fresh catalysts driving volatility, the pairs downside appears contained for now.

Broadly, the dollars rebound still looks more corrective than trend-defining, meaning both EUR/USD and GBP/USD could stage short-term recoveries if the dollar pullback extends or if the Fed maintains a cautious tone in upcoming remarks.

Key Catalyst to Watch: Market focus now shifts to Fed Chair Jerome Powell‘s upcoming remarks, which could provide critical guidance on the policy path ahead. Investors will be watching how he addresses both the delayed economic data and the Fed’s data-dependent stance, as his tone could shape near-term expectations for future rate cuts and overall market sentiment.

Gold: Pullback Risk, But Bullish Bias Holds

Over the metal market, golds rally has been impressive, but after such a strong run and fresh record highs, a short-term pullback or consolidation now seems likely, but yet to confirmed.

XAUUSD, M30 Chart

Recent price action shows that after breaking to a new high yesterday, gold has begun to retrace slightly, hinting at a possible short-term reversal on lower timeframes.

Currently, the pullback below the $4,030 level, if sustained and accompanied by repeated failed rebound attempts, may suggest that momentum is cooling. This could lead to a brief consolidation phase before the next decisive move unfolds.

Until then, gold remains supported, especially with the $4,000 key level still in play. If gold holds above this support and the U.S. dollar softens, another leg higher remains possible — though traders should stay alert for signs of exhaustion as the rally matures.

Bottom Line

The FOMC minutes reaffirm a cautious yet dovish Fed, signaling that while rate cuts remain on the table, the pace and scale will hinge on incoming data — much of which is now delayed by the U.S. government shutdown. This uncertainty keeps the market in a holding pattern, with traders awaiting Powells guidance for clarity.

Meanwhile, the dollars rebound shows signs of slowing, allowing major peers like the euro and pound to stabilize near key supports. Gold, after an extraordinary rally, appears due for a cooling phase or consolidation, though its broader uptrend remains intact as safe-haven demand and easing expectations continue to underpin sentiment.