September Seasonality May Boost EUR/USD Gains

Historically, September has been a strong month for the EUR/USD currency pair. According to data going back over 50 years, this pair has seen an average return of +0.6% in September.

Last month, EUR/USD bucked its seasonal weakness and rose by 0.7%, but finished well off its intra-month highs. As the world's most widely-traded currency pair, it is likely to see significant volatility this month due to potential interest rate hikes from both the ECB and the US Fed.

Looking at other major currency pairs, September has historically been a bearish month for USD/JPY, with an average fall of -0.2% since 1971. However, intervention risk is rising as USD/JPY approaches 161.00, making it a time to ignore long-term seasonal tendencies.

In contrast, the Canadian dollar may benefit from any progress in negotiations around the USMCA and reductions of bilateral tariffs between the US and Canada. The Loonie has historically traded relatively neutrally in September, with an average return of +0.1% over 50 years.