As the final days of September 2025 tick away, global currency markets are gripped by a swirl of uncertainty, political brinkmanship, and delicate diplomacy. From Washington to Bern and London to Frankfurt, the fate of the world’s major currencies hangs in the balance, with investors, policymakers, and ordinary citizens watching closely as economic and political dramas unfold.
In the United States, the dollar has come under pressure as the specter of a government shutdown looms large. According to Convera Market Insights, with the fiscal year ending on Tuesday and no funding bill yet approved, the risk of a partial government closure by Wednesday is very real. President Donald Trump is expected to meet with congressional leaders in a last-ditch effort to avert disruption, but the uncertainty is already rattling markets. The dollar’s recent weakness is a direct reflection of this anxiety, as investors weigh the potential fallout from a shutdown against the backdrop of a pivotal week for economic data.
This week’s calendar is packed with critical indicators: September’s employment figures—including nonfarm payrolls, job openings, and private sector hiring—are set for release, alongside the ISM manufacturing PMI. As Convera notes, these data points will play a crucial role in shaping expectations for the Federal Reserve’s next moves. Just last week, stronger-than-anticipated economic data had tempered hopes for aggressive interest rate cuts, giving the dollar a brief reprieve from selling pressure. Now, traders have recalibrated, pricing in roughly 40 basis points of easing by year’s end—a notable shift that has added volatility to USD positioning.
August’s PCE inflation data, released recently, showed modest gains in both income and spending. Inflation ticked up slightly, but not enough to suggest that tariffs—like the hefty 39% levy imposed by President Trump on Swiss imports in August—are fueling a major surge in prices. Upward revisions to second-quarter consumption further paint a picture of an economy that, while not roaring, continues to hum along. This resilience complicates the case for deeper rate cuts, leaving the Federal Reserve in a tricky spot: inflation is hovering near 3%, still above the central bank’s 2% target, yet the labor market is showing signs of softening. The Fed’s recent rate cut—the first of 2025—was driven by these labor concerns, but officials remain vigilant. Any unexpected spike in inflation could force a policy reversal, potentially lifting rates and strengthening the dollar once more.
Meanwhile, across the Atlantic, the British pound finds itself caught in a tug-of-war between fiscal fragility and shifting global capital flows. The upcoming UK Budget announcement looms as a crucial test for sterling. As Convera reports, if the government fails to persuade markets of its fiscal credibility, the pound could face renewed pressure—especially against the dollar, where gains have been hard-won. The pound’s slide in August, following disappointing public finance data, was a stark reminder of just how sensitive sterling is to fiscal signals.
On a trade-weighted basis, sterling’s movement over the past year has been modest. But beneath the surface, divergent trends have emerged. The euro has gained ground as Eurozone inflation normalizes and investor confidence returns, drawing capital away from the UK and weighing on GBP/EUR. Since early 2025, however, the pound has managed to strengthen against the dollar, reflecting relative resilience in UK assets and shifting expectations around U.S. monetary policy. Still, as Convera cautions, the durability of these gains is far from assured. The Budget could either reinforce sterling’s footing or expose fresh vulnerabilities. For now, the pound walks a fine line between optimism and fragility, with political clarity and policy discipline more important than ever.
Turning to the euro, the story is one of fading momentum. According to Antonio Ruggiero of Convera, the EUR/USD pair closed the week just above 1.17 at 1.1703, down 0.4%, as a string of upward revisions to U.S. macro data—including August’s stronger-than-expected personal spending—hint that the U.S. economy may be regaining steam. The euro started the week on a more positive note, buoyed by renewed concerns over a potential U.S. government shutdown. But if the funding impasse is resolved and U.S. economic momentum continues, the euro could break below $1.1650 and even $1.16, with technical support sparse until $1.14—a level last seen in late July. For the euro’s recent rally to persist, more evidence of a sustained U.S. slowdown is needed. Otherwise, as Ruggiero puts it, "the euro’s fuel evaporates, setting the stage for a deeper decline."
While domestic factors are at play—such as EU confidence indicators and CPI releases from key eurozone members—these are not expected to have significant traction in FX markets this week. The real driver remains the U.S. data narrative, which has rarely commanded such sharp reactions from currency pairs in recent years.
Amid these swirling cross-currents, a rare note of diplomatic clarity emerged from Switzerland and the United States. On September 29, 2025, the Swiss National Bank (SNB), the Swiss Federal Department of Finance (FDF), and the U.S. Department of Treasury issued a joint statement reaffirming that neither country manipulates currencies for competitive purposes. As reported by SWI swissinfo.ch, the statement emphasized both nations’ adherence to International Monetary Fund (IMF) and G20 principles on currency practices. "In particular, neither country uses exchange rates or the international monetary system for the purpose of preventing effective balance of payments adjustment or securing unfair competitive advantages," the statement read.
The joint declaration also clarified that while the SNB does intervene in foreign exchange markets, these actions are aimed at ensuring price stability—a core part of its legal mandate—not at gaining unfair advantages. This is a pointed response to past U.S. criticism, especially after the Trump administration labeled Switzerland a "currency manipulator" and slapped a 39% tariff on Swiss goods in August 2025. The SNB, led by Martin Schlegel, has consistently rejected such accusations, maintaining that its interventions are about preventing excessive strengthening of the Swiss franc, which could harm the domestic economy.
Importantly, the statement is not legally binding, but it does confirm existing practice and ongoing dialogue. Since 2022, the SNB and the Swiss FDF have been in regular discussions with the U.S. Treasury on macroeconomic and financial policy issues, underscoring a commitment to transparency and cooperation. For both countries, reaffirming these principles is about more than just optics; it’s a signal to markets that, despite occasional friction, the rules of the currency game are being respected.
As the week unfolds, the stakes remain high for all the major currencies. The U.S. dollar’s fate hinges on political negotiations and a raft of economic data; the pound awaits a crucial Budget test; and the euro faces the prospect of further decline if U.S. momentum holds. In the midst of it all, the Swiss-U.S. statement offers a rare moment of certainty—at least for now—in a world where currency markets are anything but predictable.
With so much riding on the next few days, all eyes remain glued to the headlines, as policymakers and investors alike brace for whatever surprises the markets have in store.
