USD/INR Falls Below 95.20 as Markets Weigh India's Inflation Rise
MUFG sees oil costs weighing on the Indian Rupee against the US Dollar despite RBI tightening, even as the currency recovers from its recent lows.
The Indian Rupee extended its recovery on Tuesday, taking the USD/INR exchange rate down to 95.1959 at the time of writing, as new data showed September inflation accelerating to 5.54%.
The US Dollar was 0.59% lower against the Indian Rupee on the day.
MUFG's latest forecasts nevertheless project USD/INR at 96.00 in the fourth quarter of 2026 and 97.50 in the third quarter of 2027.
Those projections predate Monday's inflation release.
Image: USD to INR exchange rate intraday chart.
Inflation has arrived close to MUFG's preview assumption
India's official September CPI release, published on Monday, put annual inflation at 5.54%, with food inflation at 7.74%.
The result broadly matches the consensus reading around 5.5% cited in MUFG's preview.
Michael Wan had already questioned how much additional interest-rate support was available to the Rupee:
"A stronger CPI print would reinforce expectations for further RBI tightening, although one-year onshore OIS above 6.20% suggests markets already price a comparatively aggressive path. India's 2-year government bond yield spread over the US widened by 32bps this week, which may offer some near-term carry support, but elevated oil prices and a firmer USD should keep INR under pressure."
These swaps reflect expected short-term interest rates.
The RBI's 7 October decision raised the repo rate by a quarter-point to 5.50% and shifted its stance to calibrated tightening.
That stance permits a further increase or a pause, with the next decision dependent on the evolving growth and inflation outlook.
MUFG's central-bank team wrote before the inflation release:
"With the RBI sounding hawkish and concerned about inflation pressures, we expect a further 25bp hike in February 2027, taking the repo rate to 5.75%. Markets are now pricing about 2 more hikes over the next 12 months."
That forecast allows the RBI to pause in December.
Oil imports can outweigh the yield support
MUFG's account of the period following the RBI meeting helps explain its longer-term caution, even though the currency has since recovered:
"INR remained under pressure above the 96 level despite the RBI hike as persistent USD strength, elevated US Treasury yields and oil prices above $100/bbl continued to weaken the external backdrop for a major energy importer. USD/INR moved higher after the decision, while local rates had already priced a comparatively aggressive tightening path. The rupee likely to remain sensitive to oil prices, US yields and importer demand even as the RBI's expanded intervention capacity limits disorderly depreciation."
The forthcoming trade figures will also reflect seasonal demand, MUFG's preview says: "The trade deficit is also expected to widen as higher oil prices and festive demand for gold lift imports, keeping INR sensitive to commodity prices and the broader USD."
Higher Indian rates can improve the return on Rupee assets without eliminating that commercial demand for foreign currency.
The scope for the RBI to limit abrupt losses without reversing depreciation also underpinned its earlier assessment of India's larger foreign-exchange buffers, which continued to allow for depreciation despite stronger reserves.
MUFG identifies the external risks:
"US yields, oil prices and risk sentiment should therefore remain the principal global drivers for Asia FX, with any renewed rise in yields or energy costs likely to weigh broadly on the region's net oil importers."
Foreign bond demand offers a partial counterweight: MUFG recorded $608mn of inflows into India in its latest weekly review after outflows the week before.
The report's equity data still showed net foreign selling in India, however, so the improvement in bonds did not represent a general return of overseas investors.
USD/INR exchange rate FAQ
What is MUFG's USD/INR forecast?
The bank's 9 October report projects 96.00 in Q4 2026 and 97.50 in Q3 2027.
Has September's Indian inflation figure been released?
Yes. The 12 October release put annual CPI inflation at 5.54%, broadly matching the 5.5% consensus cited in MUFG's preview.
Why does MUFG expect Rupee weakness despite RBI support?
It expects oil-import costs, US yields and Dollar demand to offset some benefit from Indian rate rises and intervention.
The USD/JPY eased lower today with the greenback also declining against several other currencies. However, at the time of writing, oil prices were bouncing back and yields were off their lows again. The US dollar hadn’t moved much yet, but these forces could help it to regain its poise ahead of the release of US CPI on Wednesday. We maintain a modestly bullish USD/JPY forecast, as the pair continues to consolidate near its 200-day average.
Before discussing the macro factors further, let’s first discus the chart of the USD/JPY…
Technical USD/JPY forecast and key levels to watch
The USD/JPY has been holding just below its 200-day average for several sessions now without any traction on the downside. With the bulls refusing to give up, we could potentially see a sizeable rally in the coming days, if the sellers now lose control here.
Source: TradingView.com
Undoubtedly, there will be lots of stops resting above recent highs of around 158.75 to 159.00 area. If we see a run on those stops, then a quick follow-up rally to 160.00 would become highly likely to me.
Support meanwhile comes I around the 158.00 area on an intraday basis. Below that, 157.00 seems to be a congested zone judging by recent wicks of the daily price candles. Thereafter, 156.00 is the next downside level to watch.
All told, the risks remain tilted to the upside for the USD/JPY, despite the slight weakening today.
US CPI in focus
As mentioned, US inflation will be the main event on the macro calendar and it may well trigger some short term volatility across the major FX pairs on Wednesday.
Markets are expecting core CPI to rise 0.2% month-on-month, taking the annual rate to 2.5%.
Headline inflation meanwhile is expected to accelerate to 3.6%.
Given that expectations are already fairly well defined, we may need a meaningful surprise to trigger a stronger dollar move. This, If the numbers come in broadly as expected, the initial reaction could be fairly limited.
USD/JPY forecast: dollar remains supported on short-term dips
Ahead of the CPI release, the dollar was still supported by relatively hawkish expectations for Fed policy, while positioning data continues to show preference for long dollar bets against most major currencies, particularly the euro.
While the long dollar trade looks somewhat crowded, that alone isn’t necessarily a reason to expect a reversal. Could we now see a fresh dollar rally, and another push towards 160.00 on USD/JPY?
The USD/INR is currently 1.51% lower after the RBI's intervention, but can the RBI's measures overcome the external pressure from oil prices? Current setup A series of Reserve Bank of India interventions has caused a sharp selloff in the USD/INR, sending the pair toward the 95.2700 mark after an intraday high of 95.7600. The intervention, which was monitored across several sources, began on Monday and occurred at sequential price levels. As such, the USD/INR is down 1.51% since the intervention began.
Market sentiment has shifted toward rupee strengthening, even as the medium-term outlook for USD/INR remains clouded amid elevated oil prices, a geopolitical risk premium, foreign portfolio investor outflows, and India’s external financing picture.
Current narrative:
RBI intervention + ↓ speculative dollar demand → ↓USD/INR lower
USD/INR: Current Macro Drivers 1. RBI Intervention Ramp The RBI has ramped up its intervention mechanism, broadening its scope to reduce speculative positioning against the rupee and reduce dollar demand. The RBI has also introduced steps to redirect oil-driven dollar demand away from spot markets, while imposing extra requirements on naked derivatives trading and certain foreign-exchange hedging transactions.
India’s apex bank continues to sell dollars to support the local currency. These measures helped secure a sharp rupee recovery after it weakened to 96.78 in late Friday trading. However, the measures are not expected to have a long-lasting impact on the pair, as they do not reduce dollar demand, foreign portfolio fund exits (which dump the rupee for the USD as funds seek external destinations), or the geopolitical risk premium.
2. RBI Rate Hike The RBI raised its policy repo rate on 7 October. The 25 bps hike to 5.50% was the first since February 2023, driven mainly by higher energy and food costs from higher oil prices. The hike provides temporary support for the rupee by widening the yield differential with low-yielding currencies. It also raises the cost of speculative bearish positioning in the rupee. However, the Fed’s hawkish path is quickly eroding the yield benefits of this hike, especially as global bond yields keep rising. Traders will now watch whether the RBI offers additional hawkish guidance or whether growth and inflation data will shape its trajectory.
The next focus is therefore on whether the RBI maintains a tightening bias or signals that further increases will depend on inflation and growth.
3. Oil prices and capital flows As a major crude-oil importer, India’s economy and currency are highly vulnerable to higher oil prices. The resulting increase in the country’s import bill, and the need for additional USD funds to cover rising import costs, put structural pressure on the rupee.
A weaker rupee forces foreign portfolio investors to exit Indian markets and seek new destinations to protect the value of their holdings. This process requires selling financial assets in rupees and converting them to US Dollars (thus raising dollar demand and increasing rupee supply). The latest RBI measures aim to reduce this spot-market demand, but they are hard to sustain against higher energy prices or foreign capital flight.
USD/INR Forecast Scenarios Bull case for USD/INR: A recovery from current levels that clears the prior psychological price zone at 96.00–96.30 suggests that the RBI’s intervention has lost steam. If the relevant price candle closes above 96.50, this could reopen the pathway toward 97.00.
Base case: USD/INR consolidates between 95.00 and 96.30 as the counterbalance between the RBI’s interventionist measures and continuing rupee pressure/dollar support from the geopolitical risk premium and elevated US bond yields plays out.
Bear case for USD/INR: A sustained break below 95.00 indicates that rupee strength has not run out of steam. This support breakdown could expose 94.90 and then 94.20. Softer oil prices and lower bond yields would support this outlook.
Technical Outlook The 95.24 support holds firm for now. However, a breakdown of this pivot exposes downside targets at 94.28 initially (Jun2 2026 and 3 September lows), and potentially 94.04 (61.8% Fibonacci retracement of the 9 April – 20 May 2026 upswing).
Fig 1: USD/INR daily chart showing key price levels (snapshot: 13 October 2026) On the flip side, a bounce from the current support targets the 96.00 psychological barrier (25 September and 12 October 2026 highs). If the bounce clears this barrier, the next target is the 96.96 resistance and prior high of 20 May 2026, which remains the all-time high.
British pound support at the bottom of its yearly range has held for a fourth straight week as easing Treasury yields give sterling some relief. Michael Boutros, StoneX Media Senior Market Analyst, walks through GBP/USD on the weekly, daily and four-hour charts.
October 10 2026, before the open of the trading week, we advised EWF members that the EURUSD pair was in a bearish wave count and that a move lower was coming.
On October 11 2026 I entered the SELL trade when EURUSD tapped the 4 Hour supply zone (Pink). Visible bearish signals, before the sell entry, was the bearish regular divergence pattern (Sign of trend reversal) which reversed lower from the 4 Hour supply zone (Grey) and the hidden divergence pattern (Sign of trend continuation). Together with the bearish wave count I entered the sell entry with confidence.
EUR/USD 15 minute chart October 11 2026 (Entry)
EUR/USD 15 minute chart October 12 2026 (Target HIT)
EURUSD moves lower and on October 12 2026 price hits the 2R target at 1.1161 from 1.1215 and I closed the sell trade for +54 pips (+2% gain risking 1% on every trade).
When sterling weakens, gold in pounds tends to rise even if the dollar price stands still.Gold is priced in US dollars on the world market, but a saver in Manchester or Glasgow does not spend dollars. What matters to a UK household is the gold price in pounds, and that price moves with two things at once: the dollar price of gold and the GBP/USD exchange rate. When sterling weakens, gold in pounds tends to rise even if the dollar price stands still.
That mechanism is why a growing number of UK savers buy gold bullion as a small reserve alongside their cash savings. Not as a bet on the metal alone, but as a way to hold part of their wealth in an asset that does not depend on the fortunes of the pound.
How the currency effect worksTake a simple example. If gold trades at a fixed dollar price and the pound falls from $1.30 to $1.20, an ounce of gold suddenly costs roughly eight per cent more in sterling. Nothing happened to the metal; the pound simply bought fewer dollars. For a UK saver, that move shows up as a gain on their gold holding at the very moment the purchasing power of their pounds on imported goods, holidays and energy is under pressure.
The effect is strongest when both drivers point the same way. Periods of global stress often lift the dollar price of gold, while domestic political or fiscal worries weigh on sterling. When the two coincide, the gain in pounds is larger than either move on its own. That combination is exactly what a currency hedge is meant to capture.
Two episodes that made the pointThe referendum result of June 2016 is the clearest example. Sterling fell from around $1.50 to roughly $1.32 in a single day, and gold in pounds jumped far more sharply than gold in dollars. Savers holding bullion saw a large part of the currency loss on their cash balances offset.
The mini-budget of September 2022 told a similar story. Sterling slid to a record low near $1.03. In dollar terms gold had a flat to slightly negative year, yet the sterling price ended 2022 noticeably higher, largely because of the weaker pound.
A hedge, not a guaranteeThe currency effect works in both directions. When sterling recovers, gold in pounds can lag the dollar price. And if the dollar strengthens while real interest rates rise, gold can fall in both currencies at once, as it did between 2011 and 2015, when the dollar price dropped by more than 40 per cent. Gold also pays no interest, so every year you hold it you give up the rate on a savings account.
For those reasons most advisers treat gold as a modest allocation, often in the range of five to ten per cent of a portfolio, rather than a replacement for cash or equities.
Practical ways UK savers hold bullionOwning gold for currency protection comes down to a few practical choices:
• Bars in a professional vault: allocated bullion stored in a secure, independently audited vault and insured against theft, damage and loss avoids the risks of keeping metal at home.
• Legal ownership: check that the bullion is registered in your name, so you hold the metal itself rather than a claim on a provider.
• Good Delivery standard: bars that meet the LBMA standard are at least 99.5 per cent pure and can be traded worldwide. Some providers go further and only buy from refiners that work to 99.99 per cent.
• VAT: investment gold is exempt from VAT in the UK, so the full amount goes into the metal.
• Costs: compare the spread, the transaction fee and the annual storage charge before you start.
You do not need a large sum to begin. Some providers let you buy from £50 and become part owner of a large LBMA certified bar, which makes it possible to build a position gradually instead of choosing one entry point.
Timing and the monthly approachTrying to time both the gold price and the exchange rate is a double gamble. A monthly purchase of a fixed amount smooths out both movements: when sterling is weak you buy less gold for your pounds, when it is strong you buy more. Over several years the average cost evens out, and the holding does what it is meant to do, which is to protect part of your savings against a falling pound.
Before committing, it is worth following the gold price in pounds for a few weeks next to GBP/USD. Seeing how the two interact makes it easier to decide how much of your savings you want to hold outside sterling, and to stick to that decision when the headlines get loud.
Gold traders continue to pay close attention to yields in the United States and other major economies, as we are still worried about the idea of energy inflation globally. Higher yields continue to stifle gold markets.
Australian Dollar Outlook: Hawkish RBA Minutes Keep Further Rate Rises in Play
The Australian Dollar faces competing signals as hawkish RBA minutes support rate-rise expectations while global bond volatility limits its appeal.
The Reserve Bank of Australia has kept further interest-rate increases firmly in consideration, with Tuesday's minutes showing concern that inflation pressures are broader and more persistent than previously assumed.
For the Australian Dollar, the question is whether that concern can reverse investors' recent retreat from expectations of several more hikes.
The record of September's policy meeting, released on 13 October, confirms that the decision to raise rates to 4.60% was unanimous.
Latest-Exchange Rates:
Pound to Australian Dollar (GBP/AUD): 1.899021 (0.00%)
Pound to Dollar (GBP/USD): 1.32421 (+0.24%)
Australian Dollar to Dollar (AUD/USD): 0.697312 (+0.24%)
Members also considered the risk that tightening overseas could weaken the Australian Dollar and loosen domestic financial conditions if the RBA stood still.
That gives the currency a direct role in the inflation debate, since depreciation can increase the Australian cost of imported goods.
Crédit Agricole's senior FX strategist David Forrester wrote before the release: "While the policy statement was hawkish following the RBA's September rate hike, Governor Michele Bullock sounded less hawkish in her press conference. We note that Bullock tends to present her own view at the press conference and so expect the Minutes to likely be hawkish."
The minutes support the substance of that warning, although they do not commit the board to a November increase.
Markets had been retreating from an early hike
Westpac economist Ryan Wells wrote on 9 October: "Swaps markets have continued to pull-back on a follow-up RBA rate hike in November, with only 4bps priced in, while a December rate hike is still seen at roughly around 50/50 odds."
Those were market expectations at the time of the report, rather than a fresh reading after Tuesday's minutes.
Crédit Agricole linked the retreat in Australian rate expectations to weaker household sentiment.
Forrester wrote: "A steep drop in Australian consumer confidence led to the Australian rates market reducing the chances of follow-up rate hikes by the RBA."
Its assessment of market pricing still showed one further increase fully anticipated by mid-2027: "While the market is still fully pricing in another 25bp rate hike by the middle of 2027, it has pulled back from pricing in a good chance of more than one rate hike."
Higher borrowing costs can therefore help the currency through yields while simultaneously increasing concern about spending and growth.
Higher yields can still work against the Aussie
The global bond sell-off complicates the usual relationship between higher rates and a stronger currency.
Forrester described the Australian Dollar's position before the minutes: "AUD/USD therefore continues to struggle to get a foothold back about 0.70, despite weaker-than-expected US non-farm payrolls data. Investors also remain rattled by the global bond sell-off reducing demand for the AUD as a carry trade."
Greater exchange-rate volatility can outweigh the extra interest earned by holding Australian assets.
Exchange Rates UK coverage of the Aussie's vulnerability to bond-market turbulence identified the same obstacle to recovery against Pound Sterling.
Crédit Agricole's broader outlook remains more favourable than its account of the latest selling pressure: "The AUD is clinging to its rate advantage as sticky inflation forces the RBA to continue raising rates even while other central banks join the tightening cycle, making the currency a favoured carry trade. Adding to the AUD's appeal are elevated commodity prices and low levels of public debt, the latter leaving it immune to concerns about fiscal sustainability."
UBS accepts that resilient US data favours the Dollar, but its measures of investor positioning indicate that buyers have stretched that advantage further: "Positioning and options data signal the market has moved even further in favor of the USD."
That leaves scope for a change in relative expectations if US releases disappoint, without requiring the RBA to promise a succession of increases.
Forrester sees the external calendar as particularly influential: "China trade as well as US retail sales and inflation data will be the big international drivers of the Antipodean currencies in the coming week. With UST yields being such a strong driver of investor sentiment, the US data is likely to take centre stage."
Australia's own September jobs report is due on 15 October.
The scope for a lasting AUD recovery will depend partly on whether that report supports the RBA's concern about limited capacity, or shows that higher rates are creating more room for inflation to ease.
Australian Dollar and RBA FAQ
Did the RBA raise rates on 13 October?
No, Tuesday's release was the account of September's decision to raise the cash rate to 4.60%.
Do the minutes guarantee another increase?
No, further tightening remains conditional on the data and inflation outlook.
Why might the Australian Dollar struggle despite higher rates?
US yield increases and volatile global markets can offset the appeal of higher Australian returns.
Silver traders continue to watch yields in the United States and beyond, and although they are drifting lower early on Tuesday, energy inflation and shocks remain a concern. Silver will be noisy until we get energy under control.
Silver Technical Analysis
Silver futures daily chart showing prices near $60.67, a highlighted demand zone between $55 and $60, and moving averages at $63.62 and $65.11. Source: TradingView. The silver market has been somewhat noisy during the early part of the trading session on Tuesday as we are sitting on top of a major demand area between the $55 level and $60. That is an area that I think the market is trying to defend at the moment.
It’s worth noting the yields have dropped a little bit during the trading session here on Tuesday. That provides a little bit of pressure relief on silver. Ultimately, we still have a situation where a lot of people are very concerned about the idea of energy inflation. That has not gone away, and I do not think that is going away anytime soon.
Is Silver Trying to Build a Bounce Here? We are calming down a little bit, and that can give us an idea of silver perhaps trying to bounce. Maybe it is setting up a short-term move, but ultimately this is a market that I think is just kind of bumbling around.
Perhaps longer-term traders are accumulating. I know from the physical side, we are probably seeing some of that. Leveraged positions in the futures market or in a CFD position might be a different story. It is a little bit more dangerous.
Ultimately, though, this market, I believe, is one that is closer to the bottom of the overall range than the top. Therefore, little bouncing will probably be expected. Silver is a choppy market at the time, and it makes sense, as most of what is moving things will be headlines that are random and due to comments around the world.
If you’d like to know more about how to trade gold and silver, please visit our educational area.
Chris is a proprietary trader with more than 20 years of experience across various markets, including currencies, indices and commodities. As a senior analyst at FXEmpire since the website’s early days, he offers readers advanced market perspectives to navigate today’s financial landscape with confidence.
The Euro is still hovering around the downtrend resistance line as more pressure still affects the market. As long as prices hold below the resistance of 1.1240-80 the drop pressure could continue towards the target and support of 1.1065, which in turn could lead to a correction.
GBPUSD fell toward 1.3180 as market support remains at 1.3140-60. As long as the market holds above the support zone of 1.3140-60, a rebound towards the 1.3350-1.3400 zone is likely.
USDJPY added more value above 157.85 as the drop pressure still overshadows the market as traders expect an intervention from the Bank of Japan. Intraday prices show resistances at 159.00 and 160.00, whilst a drop wave could hit the market toward 156.40 and 153.90.
Gold managed again to rebound toward the 4200 resistance zone. As we see over the chart, this resistance zone could push again for another drop towards the 4095 support.
EUR/GBP reverses earlier gains on Tuesday as fiscal and political concerns in France limit the Euro’s (EUR) upside, while the technical picture also suggests sellers remain dominant. At the time of writing, the cross trades around 0.8445, near its lowest level since June 2025, after reaching an intraday high of 0.8457.
Euro Price Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the US Dollar.
USDEURGBPJPYCADAUDNZDCHFUSD-0.28%-0.29%-0.32%-0.30%-0.27%-0.46%-0.32%EUR0.28%-0.02%-0.05%-0.01%-0.01%-0.18%-0.03%GBP0.29%0.02%-0.04%-0.03%0.01%-0.18%-0.01%JPY0.32%0.05%0.04%0.02%0.04%-0.16%0.01%CAD0.30%0.00%0.03%-0.02%0.03%-0.17%-0.01%AUD0.27%0.00%-0.01%-0.04%-0.03%-0.20%-0.04%NZD0.46%0.18%0.18%0.16%0.17%0.20%0.17%CHF0.32%0.03%0.01%-0.01%0.00%0.04%-0.17%
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).
Pound support builds as EUR/GBP seen anchored in tight range despite UK budget riskAnalysts at ING have turned more constructive on the Pound, noting that they have "lowered our EUR/GBP forecast and now expect the pair to trade in a 0.84-0.85 range for at least several more months." They argue that "idiosyncratic risks surrounding the euro are unlikely to fade anytime soon," while the BoE "has sent a clear enough signal that it is prepared to hike," creating a supportive backdrop for GBP.
At the same time, ING flags the forthcoming "UK budget on 28 October" as "a potential risk for sterling, as markets are pricing in little fiscal concern." Even so, the bank points out that "Chancellor John Healey and Prime Minister Andy Burnham have appeared mindful of market sensitivities," and stresses that "while the budget will be closely scrutinised, we do not currently expect it to trigger significant bond volatility or leave a lasting negative mark on GBP."
Traders look ahead to the UK’s August Gross Domestic Product (GDP) report on Thursday, followed by the final Eurozone inflation reading for September on Friday. These releases, alongside comments from European Central Bank (ECB) and Bank of England (BoE) officials throughout the week, could trigger some price swings over the coming days.
Technical analysis
EUR/GBP has reversed sharply after testing 0.8600 in late September, slipping below the 50-day and 100-day Simple Moving Averages (SMAs). The 200-day SMA sits further overhead, reinforcing the bearish structure.
Momentum remains weak, with the Relative Strength Index (RSI) near 22 signalling deeply oversold conditions, while the Moving Average Convergence Divergence (MACD) remains in negative territory. The Average Directional Index (ADX) around 33 points to a strong prevailing downtrend, although oversold conditions leave room for a short-term recovery.
On the topside, initial resistance appears just above the market at the 0.8450 horizontal level, followed by a stronger barrier at 0.8500. Beyond these, the 50-day SMA at 0.8554 and the 100-day SMA at 0.8572 form a dense technical zone ahead of the 0.8600 horizontal line, with the 200-day SMA at 0.8626 marking a more strategic hurdle. On the downside, a further decline could bring the 0.8400 psychological mark into focus as the next support level.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Euro FAQs
The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day.
EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy.
The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa.
The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control.
Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency.
A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall.
Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period.
If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
Amid a lack of any major news, the FX markets have been largely in consolidation mode in the first half of Tuesday's session. The US dollar eased along with bond yields and oil prices, allowing downbeat currencies like the euro to rebound modestly.
US Inflation Forecast: CPI Puts December Fed Hike Calls to the Test Wednesday's US inflation report could reinforce a December Fed increase, while banks question whether markets have priced too much tightening. US inflation figures on Wednesday will test whether the Federal Reserve can wait until December to raise interest rates again, and whether another increase would be enough to finish the job.
Goldman Sachs expects one further quarter-point rise in December, taking the federal funds range to 4.00-4.25%.
The September consumer price report is due on 14 October at 13:30 BST.
The consensus recorded in Crédit Agricole's 9 October calendar was for annual headline inflation to rise to 3.6%, from 3.4%.
An acceleration alone would therefore not constitute an upside surprise.
Goldman expects December to be the final increase After Governor Christopher Waller's 8 October speech, Goldman's economics team wrote: "We continue to expect one additional 25bp rate hike in December, which would raise the funds rate to 4-4.25%. Waller's message is in line with comments last week from President Williams and Vice Chair Jefferson that pointed toward skipping a hike in October."
The speech also reduced the risk, in Goldman's assessment, of the Fed stopping at its September increase: "We have lowered our probability that the FOMC could pass on a December hike because Waller's speech represents a hawkish shift relative to his emphasis in previous comments on the three-month annualized rate of core PCE inflation, which is now just 2.0%."
That 2.0% figure refers to a three-month annualised measure of core PCE inflation, a different index and period from Wednesday's annual headline CPI reading.
Goldman identified risks extending beyond energy: "Waller said that the lack of a resolution to the Middle East conflict, signs that the artificial intelligence buildout is raising consumer prices for technology goods, and the risk of new tariffs had undermined his faith that inflation is progressing toward the 2% target."
Goldman's lower peak-rate forecast rests on disinflation outlasting those pressures.
Its economists wrote: "We continue to think that by March-the next meeting after December where a hike might be under consideration on an every-other-meeting schedule-the inflation data will have improved enough to convince most of the FOMC that additional hikes are unnecessary."
A broad rise in prices beyond food and energy would challenge that expectation more directly than a headline increase concentrated in petrol.
It could make waiting until December harder to defend, even if part of the headline rise was expected.
Higher Treasury yields do not all reflect the next Fed decision Crédit Agricole's rates team distinguished the forces affecting long-dated bonds from the outlook for the next meeting in its 8 October review.
It wrote: "Rates continued climbing to fresh highs in the past week, driven by supply and rising long-term rates in Europe. Treasury 10Y and 30Y yields are at their highest level since the early 2000s. Meanwhile, recent Fed speakers expressed little urgency to raise rates at the October meeting, helping anchor front-end rates."
Long-term borrowing costs can rise as investors demand more compensation to absorb debt, even when the expected timing of the next official increase barely changes.
Crédit Agricole added: "In rates direction, we take a cautious stance following the relentless rise in long-term rates, a trend that can continue in the short run. If the CPI data comes in as expected, front-end rates should have limited upside."
An inflation surprise would matter most where it changed the expected policy path, especially the prospect of an October increase or additional moves during 2027.
The Dollar and gold face different tests The currency market also enters the release with substantial optimism about the US already reflected in positioning.
UBS's recent weekly report said: "Overall, we conclude that a combination of factors has driven EURUSD lower, but that the magnitude of the move exceeds what fundamental drivers would justify. In addition, positioning and options market indicators suggest that the USD has become overbought, while the EUR appears oversold."
This does not make a Dollar fall inevitable after an in-line report, but it raises the burden on fresh data to justify adding to existing bullish positions.
Our latest EUR/USD outlook also examined how French fiscal concerns have supported the Dollar independently of US inflation.
For gold, a shift towards higher US rates can increase the appeal of interest-bearing alternatives, particularly if inflation-adjusted yields rise.
UBS retained a distinction between that near-term pressure and the sources of longer-term demand: "While a hawkish Federal Reserve may pose a near-term headwind for gold, we remain constructive on the metal's longer-term outlook, supported by robust central bank demand, growing debt concerns, and expectations of a weaker US dollar."
The bank's view, explored in our coverage of gold's recovery forecasts, allows for further price weakness before its projected recovery.
Wednesday's most consequential outcome would be evidence that underlying inflation is becoming harder to reverse, forcing investors to reconsider the assumption that December can be the last increase.
When is the US CPI report?
September CPI is due on Wednesday 14 October at 13:30 BST.
What is Goldman Sachs' Fed forecast?
One further 25-basis-point increase in December, taking the target range to 4.00-4.25%.
Would higher annual inflation guarantee a stronger Dollar?
No. The result must be judged against expectations and its effect on the anticipated Fed path.
Gold (XAU/USD) and Silver (XAG/USD) just posted their first winning week in a while, and the three latest FXStreet analyses agree on one thing: the correction didn't scare off the buyers who matter. All three lean bullish, but no two make the same case — one frames it through a 45-year chart pattern, one points to record fund inflows, and one explains why China is buying more gold than it admits.
Gold daily chartMoney Metals Exchange: A 45-year base just brokeThe boldest chart read argues the entire 1980-2024 period was one giant consolidation. "All the price action from 1980 through early 2024 can be viewed as a gigantic Stage 1 cup-and-handle base. Gold broke out of that pattern in 2024, beginning an unprecedented Stage 2 bull market," the analysis says. From that view, the correction from the late-January peak is small relative to the advance, and Silver - now pulled back near the top of its own similar pattern - is "at or near the point where it should begin another major advance." The near-term backdrop supports it too: the 10-year Treasury yield is "heavily overbought" near the top of its channel, and the US Dollar is "sputtering" at its own resistance, while the GDX-to-Gold ratio just broke out of a giant relative base as miners print "stellar results" with all-in sustaining costs well below spot. - Read the full report
Mike Maharrey: China is buying for a reason that has nothing to do with ratesThe structural answer sits with central banks. China's Gold buying reflects "a broader global de-dollarization trend," Maharrey writes, citing CNBC's summary: "That buying spree reflects Beijing's push to cut its dependence on the dollar." The People's Bank of China (PBoC) has reported higher Gold reserves for 23 straight months - about 23 tonnes added in September, 80 tonnes year-to-date - and, per researcher Jan Nieuwenhuijs, may secretly hold more than 5,000 tonnes in Beijing, over twice the admitted figure, while its US Treasury holdings have collapsed to the lowest level since 2008. The driver is counterparty risk: "Western governments froze Russia's central bank assets after its 2022 invasion of Ukraine, underscoring how foreign-held reserves can be restricted at times of geopolitical friction, while gold in a country's own vaults remains insulated." And because central banks are "far less price sensitive than retail investors," ING's Ewa Manthey calls Chinese buying "an important source of structural support for gold prices." - Read the full report
Money Metals Exchange: Record flows under the dipThe flows data backs the structural camp. "The more revealing development is what happened while prices were falling: investors poured billions into gold-backed funds, and China stepped up its purchases of physical gold," the analysis notes. World Gold Council figures show global Gold ETFs attracted about $10 billion in September even as prices declined, third-quarter inflows hit a record $31 billion, and holdings rose to an all-time high of 4,256 tonnes. "Investors were adding exposure during a correction, suggesting that many still see reasons to own gold beyond the next Fed meeting," it says. The caution flag is the Fed: minutes from September's meeting showed most policymakers expected another rate increase before year-end, and the 10-year yield still sat near 5.24% - making Wednesday's consumer inflation report the main test for the recovery. - Read the full report
The takeawayThis is a consensus, not a split: all three views are bullish, but through stacked mechanisms - a 45-year technical breakout, record ETF and central bank accumulation, and de-dollarization demand. Watch Wednesday's US consumer inflation report for the near-term test: a softer print would ease Fed tightening expectations and let the recovery extend, while a hotter one revives the pressure that drove the selloff.
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
Gold (XAU/USD) holds modest gains during European trading hours on Tuesday as a pullback in the US Dollar (USD) and US Treasury yields supports the precious metal. At the time of writing, XAU/USD trades around $4,183, up 0.28% on the day.
The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, trades around 102.29 after reaching 102.61 on Monday, its highest since April 2025.
Meanwhile, Treasury yields are declining across the curve as short covering and demand for government bonds pick up after a sell-off in AI-related stocks. The benchmark 10-year yield slips below 5.20%, retreating from last week’s peak of 5.36%, its highest since 2002.
However, Gold lacks strong upward momentum and remains capped below the $4,200 mark as the broader fundamental backdrop keeps buyers cautious. Further declines in the US Dollar and Treasury yields could remain limited as energy-driven inflation risks linked to Middle East tensions reinforce expectations that the Federal Reserve (Fed) may need to keep interest rates higher for longer.
Cleveland Fed President Beth Hammack said on Monday that she prefers smaller interest-rate adjustments but wants the Fed to act “relatively quickly.” Hammack added that trend inflation is in the “mid-to-high 2% range” and expects it will take time to return to the central bank’s 2% target despite appropriate monetary policy.
Energy prices remain volatile at elevated levels, with no sign of a breakthrough in diplomatic efforts to reach a US-Iran agreement on reopening the Strait of Hormuz. Escalating fighting between Saudi Arabia and Yemen’s Houthis adds to concerns over regional security and energy supplies.
Geopolitical tensions and inflation risks would normally support Gold. However, elevated borrowing costs encourage investors to favour interest-bearing assets. Traders now look ahead to the US Consumer Price Index (CPI) report, due on Wednesday, for fresh clues on the interest-rate path.
Analysts at MUFG/BTMU highlight that “the recent run of softer US data (PCE deflator report for August and NFP report for September) alongside cautious comments over the need for another back-to-back hike from the Fed’s leadership have dampened expectations for another rate hike as soon as this month.” They note that “market expectations for the Fed to stay on hold this month will be tested by the release on Wednesday of the latest US CPI report for September,” which is seen as the key near-term catalyst for rate pricing.
MUFG/BTMU add that “unless there is a significant upside surprise for underlying inflation, we expect the Fed to leave rates on hold this month,” while stressing that “it is likely to be only a temporary pause as the Fed currently plans to hike rates again before the end of this year in December.”
On the daily chart, XAU/USD maintains a pattern of lower highs and lower lows since peaking near $4,700 in late August and subsequently slipping back below its key Simple Moving Averages (SMAs). The broader structure remains bearish, although selling pressure shows signs of easing.
The Relative Strength Index (RSI) near 45 hints at subdued downside pressure, whereas the Moving Average Convergence Divergence (MACD) is turning slightly positive, though the overhead moving averages remain barriers to a stronger recovery.
On the topside, initial resistance lies at the 100-day SMA near $4,252, followed by the 50-day SMA around $4,339. A stronger barrier stands at $4,450, ahead of the 200-day SMA near $4,527.
On the downside, initial support emerges at $4,100. A break below this level could expose the $4,000-$3,950 zone, while holding above this floor would allow Gold to consolidate within the current bearish framework.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
Silver price (XAG/USD) trades in a tight range at around $60.30 during the European trading session on Tuesday. The white metal consolidates as investors shift their focus to the United States (US) Consumer Price Index (CPI) data for September, which will be released on Wednesday.
The inflation data is expected to have a significant impact of Federal Reserve (Fed’s) interest rate expectations.
Strategists at OCBC note that markets “currently expect the Fed to remain on hold in October before delivering a fully priced 25bp rate hike in December.” They argue that the “key question is whether upcoming CPI data can alter that sequencing by bringing forward expectations for further tightening.”
OCBC added that while consensus forecasts point to “firmer headline inflation due to higher energy costs, core inflation is expected to remain relatively contained.”
In their view, “if core inflation moderates as expected, markets could further trim expectations for additional Fed tightening.” OCBC adds that “it would likely take a core CPI print of 0.4% m/m or higher to materially shift market pricing and strengthen the case for earlier Fed action.”
According to FXs Economic Calendar, the US headline inflation rose to 3.7% Year-on-Year (YoY) from 3.4% in August. The core CPI – which excludes volatile food and energy items – is seen arriving at 2.5% YoY, higher than the previous reading of 2.4%.
During the European trade, the 10-year US Treasury Yields are down almost 1% to near 5.19%. Technically, lower US bond yields improve the appeal of non-yielding assets, such as Silver.
Silver Technical Analysis
In the daily chart, XAG/USD has been in a limited range of $58.50-$62.09 for over weeks, keeping a bearish near-term tone as price holds beneath the 20-period Exponential Moving Average (EMA) at $61.85. The metal has retreated from recent highs and now trades under this short-term trend gauge, suggesting upside attempts remain capped, while the Relative Strength Index (RSI) at 41.94 stays below the neutral 50 line, hinting at persistent but not extreme selling pressure.
On the topside, initial resistance aligns with the 20-period EMA at $61.85, and a sustained break above this barrier would be needed to ease immediate downside risks and allow a recovery toward higher levels. On the downside, momentum support is implied by the RSI hovering near 42, as a deeper slide in price would likely push the oscillator closer to oversold territory and could pave the way for a corrective bounce if bears overextend the move.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Silver FAQs Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
The Dollar-CAD has been in a five week strong uptrend.
Price has returned to a rising weekly trendline and near the 61.8% Fib retracement of the decline since 2025.
Weekly Stochastic RSI is also overbought, reading roughly 8 and favouring a reversal.
After such a sharp move, buyers now have to prove they can push through resistance rather than simply reach it.
DXY is also near a potential resistance, and similarly with an overbought signal.
The dollar index is moving up from an ascending channel and towards overhead resistance around the 102 to 103 area.
If USD/CAD and DXY both print a rejection at their key levels, it would hint at a weakening dollar in the coming weeks.
Why the Canadian Loonie is weakThe latest Canadian labour numbers do not give the Bank of Canada much room to sound hawkish.
Statistics Canada said employment fell by 68,000 in September after a 42,000 decline in August. The unemployment rate rose to 6.5%, and the participation rate slipped to 64.8%, its lowest level since December 1997 outside the pandemic period.
That is not the profile of an economy inviting tighter policy. Even if inflation risks remain alive because of energy and trade frictions, a softer jobs market makes it harder for policymakers to lean against the economy with higher rates. At a minimum, it argues for caution.
The Bank of Canada already held its policy rate at 2.25% on 2 September. Its next decision is not due until 28 October. So unless Canadian data suddenly rebound, the market has little reason to price an aggressive move higher from Ottawa in the near term.
Why has USD/CAD climbed so quickly?Another explanation comes from the bond market. The spread between US and Canadian 10-year yields has been rising sharply, reaching around 1.316 percentage points on the weekly chart.
A rising spread means the market is rewarding the US with a much higher long-term return than Canada.
That can happen because traders expect firmer US growth, stickier US inflation, bigger Treasury supply, or simply a Bank of Canada that cannot keep pace with the higher-for-longer mood in the US.
I do not think we need to overcomplicate it. The simplest read is this: US rates are rising because the market still sees a tougher inflation and growth mix there, while Canadian data are soft enough to limit how far Canadian yields can follow.
That is also why the recent USD/CAD rally deserves respect until the spread stops widening. If the yield gap keeps expanding, the pair can stay bid even when it looks technically stretched.
So even if we retrace here – which should weaken the dollar and strengthen CAD, therefore USDCAD moves lower – the overall trajectory for USDCAD is still posited to the upside.
Watch how the spreads react when they return into that orange band, which is the 20W-EMA with 1 standard deviation.
What would change the view?The main near-term risk to the thesis is a softer-than-expected US CPI print this Wednesday.
If inflation cools and Treasury yields back off, part of the dollar’s current support could fade quickly.
On the Canadian side, a surprise rebound in domestic data or a much more hawkish tone from the Bank of Canada later this month would also weaken the argument.
For now though, the balance still favours the upside. USD/CAD is not only breaking higher because the dollar is strong. It is climbing because Canada looks less able to live with the kind of long-end repricing now visible in the United States.
Silver prices (XAG/USD) rose on Tuesday, according to FXStreet data. Silver trades at $60.53 per troy ounce, up 0.35% from the $60.31 it cost on Monday.
Silver prices have decreased by 14.85% since the beginning of the year.
The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, stood at 69.17 on Tuesday, broadly unchanged from 69.17 on Monday.
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
Overview: Based on Arc Cycle Analysis applied to the 30m chart, Euro/Japanese Yen is interacting with the 0.786 Arc within the current Arc Cycle. Price remains centered around this Arc, indicating that directional confirmation has not yet been established.
Metric
Reading
Market Bias
Neutral
Preferred Scenario
Awaiting Directional Confirmation
Primary Target Zone
176.40
Scenario Confirmation
Sustained close above 177.10
Current Arc Level
Decision Arc (0.786)
Cycle Status
Compression
Arc Integrity
Testing
Market outlookPrice remains centered around the 0.786 Arc, indicating that the market has not yet established a definitive directional bias within the current Arc Cycle. The preferred approach is to await confirmation before anticipating the next significant move.
A sustained 30m breakdown below the 0.786 Arc would confirm the bearish scenario toward the primary price target at 176.40 (1 / 100% Target Arc).
Conversely, a sustained 30m close above 177.10 would invalidate the immediate downside setup and reopen the path back toward upper Arc resistance levels.
The USD/ZAR forex pair rose near 16.75 on October 1. It then dropped over 0.8 percent last week, making it the second straight weekly loss and going below 16.50 today.
Even with the DXY holding above 102, the rand has stayed strong, thanks to the SARB’s September rate hike to 7.25% and recent lower oil prices.
The pair will likely see more near-term declines if oil prices ease. However, US inflation figures, energy markets, and geopolitics will shape its direction.
The USD/ZAR exchange rate hit a nine-week high around 16.75 on October 1, 2026, before falling back. It’s already dropped over 0.8% this past week and is on track for a second straight weekly loss, currently trading below 16.50.
Currency traders might want to pay attention to this recent slide, particularly when looking at the broader market. The US Dollar Index (DXY) has stayed strong, trading above 102, due to persistent US inflation and expectations that interest rates will remain high. So what is happening?
What Is Pressuring the Pair?
Oil prices are a big factor here. On October 9, Reuters reported oil prices fell after Middle East supply worries lessened. That came after President Trump said the US wouldn’t attack Iran before the upcoming elections.
South Africa imports a lot of energy, so cheaper oil cuts its import costs. That could free up capital for other spending.
Plus, ongoing global geopolitical uncertainty and the hunt for safe-haven assets have kept gold and silver prices high. Since South Africa exports a lot of minerals, these conditions boost its terms of trade and bring in more foreign currency.
The rand also offers attractive yields for carry trades against the US dollar. In September, the South African Reserve Bank (SARB) raised its policy rate by 25 basis points to 7.25%.
SARB made that decision because of inflation risks from high fuel prices and broader energy market disruptions. This keeps the rand’s interest rate advantage substantial.
Why the Rand Is Defiant Amid Elevated DXY Index Reading
The DXY Index still trades above 102, recently hovering near 102.4. Strong bond yields and the Federal Reserve’s commitment to tight monetary policy support this. Typically, a DXY level like this would put considerable pressure on emerging market currencies, the rand included.
Yet the USD/ZAR has dropped, showing the rand’s relative strength. Two key things explain this. The SARB’s September repo rate hike to 7.25% and local bond yields around 8.8% give foreign investors a premium.
In addition, August inflation came in at 4.4%, under the projected 4.5%, reducing the chance of further interest rate raises.
What Will Decide USD/ZAR Direction?
The outlook suggests a modest, continued decline in USD/ZAR short-term, assuming global risk appetite stays stable. A sustained break below the 16.45-16.40 range could signal further rand appreciation. On the flip side, a move back above 16.70 would indicate the dollar’s strength is returning.
Upcoming US inflation data will heavily influence market expectations for Federal Reserve policy. US CPI figures are due Wednesday. Headline inflation is anticipated to rise to 3.7%, up from 3.4%. Core inflation is expected at 2.5%.
Traders currently put an 81% probability on the Fed holding rates steady in October. Stronger-than-expected inflation, however, could revive bets on a December rate hike and strengthen the dollar, possibly pushing USD/ZAR back towards 16.75. Weaker inflation data, on the other hand, would likely have the opposite effect.
South Africa’s domestic data and communications from the SARB will also play a role. If evidence shows the inflationary impact of higher fuel costs is contained, that would support the rand. But signs of broader price pressures could limit its upward momentum.
Why did USD/ZAR fall after its October 1 peak?
The pair met technical resistance near 16.75 and then retreated. Softer oil prices helped the rand recover, even as the dollar remained strong.
How does the SARB rate support the rand?
The SARB’s September rate hike to 7.25% keeps the interest rate attractive. It also signals the bank’s commitment to curbing inflation, particularly with rising energy costs.
Why does oil matter for the rand?
When global crude oil prices climb, South Africa’s petroleum import costs increase. This strains the country’s current account balance and drives up inflation.
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USD/CAD depreciates after two days of gains, trading around 1.4260 during European hours on Tuesday. The technical analysis of the daily chart indicates that the price is remaining within the ascending channel pattern, suggesting a persistent bullish bias.
The USD/CAD pair is extending its advance while holding above both the nine- and 50-period Exponential Moving Averages (EMAs), which reinforces a bullish near-term bias. The 14-day Relative Strength Index (RSI) at 68.07 hovers just below the overbought threshold, hinting that upside momentum remains strong but increasingly stretched as price presses against recent highs.
The USD/CAD pair may rebound toward the 18-month high of 1.4298, recorded on October 9. A successful break above this level would support the pair to test the top trendline of the ascending channel around 1.4390, followed by the psychological level of 1.4300.
On the downside, the primary support lies at the nine-day EMA of 1.4236. A break below the short-term price average would weaken the bullish bias and put downward pressure on the USD/CAD pair to navigate the region around the bottom trendline of the ascending channel around 1.4110, followed by the 50-day EMA of 1.4062.
USD/CAD: Daily ChartHammack leans hawkish as Fed rhetoric underscores need for tighter policyFed’s Hammack delivers a notably more hawkish message, with an FXS Speechtracker score of 8.4/10 compared to the established baseline of 7.5/10, emphasizing that interest rates need to be higher and that more tightness is needed in the economy. The focus on widespread inflation pressures, strong demand beyond energy, and the risk of an inflationary mindset becoming ingrained, alongside a preference for frequent, smaller policy tweaks, signals a restrictive bias even as financial conditions are described as neutral and trend inflation is seen stuck in the mid-to-high 2% range for some time. Hammack’s insistence that inflation expectations should not be assumed anchored, and that Fed officials must clarify the reaction function, reinforces a message of readiness to act relatively quickly to keep policy tight until the 2% target is credibly in sight.
The FXS Fed Sentiment Index rose by 0.59 points to 138.92, keeping Fed rhetoric firmly in hawkish territory well above the neutral 100 threshold and aligning with the elevated FXS Speechtracker score. This combination of a stronger hawkish tone and a high index level suggests sustained support for a tighter policy path, which is typically Dollar-positive and a headwind for risk-sensitive currencies.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
The AUD/JPY cross comes under some renewed selling pressure on Tuesday and retreats further from the 110.65 resistance zone, retesting the previous day. Spot prices slide to a fresh daily low during the early European session, with bears now awaiting a break below the 110.00 mark before positioning for further losses.
Traders remain on high alert amid speculation that Japanese authorities will step in to prop up the domestic currency. Adding to this, firming expectations for further policy tightening by the Bank of Japan (BoJ) provide a modest lift to the Japanese Yen (JPY), which, in turn, is seen as a key factor exerting pressure on the AUD/JPY cross. Meanwhile, the Australian Dollar (AUD) benefits from a modest US Dollar (USD) pullback from an 18-month peak and might help limit the downside for the currency pair.
From a technical perspective, spot prices keep a bearish intraday bias following the overnight rejection around the 100-period Simple Moving Average (SMA) on the 4-hour chart. Moreover, Moving Average Convergence Divergence (MACD) remains below zero with a negative reading of -0.03, and the Relative Strength Index (RSI) at 48.48 stays neutral, hinting that downside pressure is present but not yet overstretched. This, in turn, validates the near-term negative outlook for the AUD/JPY cross.
That said, some follow-through selling and acceptance back below the 23.6% Fibo. level and the 110.00 psychological mark is needed to back the case for deeper losses to the structural floor at 108.73. On the topside, initial resistance is seen at the 100-period SMA at 110.58, followed by the 38.2% Fibo. level at 111.12 and the 200-period SMA at 111.42, before the 50.0% retracement at 111.85 and the 61.8% level at 112.59 come into play. Higher up, the 78.6% retracement at 113.64 and the cycle high at 114.98 mark a broader cap.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
AUD/JPY 4-hour chart
Japanese Yen Price Today The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the strongest against the US Dollar.
USDEURGBPJPYCADAUDNZDCHFUSD-0.30%-0.19%-0.27%-0.12%-0.10%-0.27%-0.21%EUR0.30%0.10%0.02%0.18%0.17%0.03%0.09%GBP0.19%-0.10%-0.10%0.04%0.07%-0.09%-0.01%JPY0.27%-0.02%0.10%0.15%0.16%-0.01%0.07%CAD0.12%-0.18%-0.04%-0.15%0.01%-0.16%-0.08%AUD0.10%-0.17%-0.07%-0.16%-0.01%-0.16%-0.10%NZD0.27%-0.03%0.09%0.00%0.16%0.16%0.08%CHF0.21%-0.09%0.00%-0.07%0.08%0.10%-0.08% The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).
USDJPY driving higher The dollar kept up the pressure as the Fed set a slightly dovish tone for the remainder of the year. The latest move higher hit some resistance after testing the mid-158.00 area.
GBP/USD rises amid a weaker USD, but gains could be limited
GBP/USD is rising towards 1.3230 at the time of writing, supported in part by a weaker U.S. dollar and developments in the UK.
The IMF upgraded its UK growth outlook, saying GDP is set to grow by 1.3% in 2026, an upgrade of 0.5 percentage points from its forecast in April. This comes despite the energy shock unleashed by the Iran war, with the IMF pointing to AI as a driver of stronger growth. It sees the UK emerging as one of the winners in the tech boom.
However, the IMF also warned of further price rises and job losses, and cautioned against state handouts ahead of the budget later this month. Any measures announced by Chancellor John Healey need to be well funded to maintain credibility.
Stronger-than-expected like-for-like retail sales data from the British Retail Consortium and hawkish comments from Bank of England policymaker Megan Greene have also supported sterling. Greene warned that second-round inflationary effects could emerge if the central bank fails to raise rates soon.
Meanwhile, the U.S. dollar is seeing modest profit-taking, pulling back from an 18-month peak reached on Monday.
Still, the downside for the dollar appears limited, given growing expectations that the Federal Reserve will hike interest rates again before the end of the year.
Geopolitical risks also remain in play, with the U.S.-Iran standoff and ongoing fighting involving Iran-backed militias and Saudi Arabia potentially keeping safe-haven flows directed towards the U.S. dollar.
This week, attention will be on U.S. CPI data on Wednesday and PPI data on Thursday for further clues on the Fed’s outlook.
GBP/USD Forecast – Technical Analysis
GBP/USD ran into resistance at 1.3650 before moving lower and finding support around 1.3200. The pair is trading below its 50 and 200 EMAs, consolidating above 1.3200 but below 1.3280.
Sellers will need to break below the 1.3200 support zone to establish a lower low and bring 1.3100 into focus, followed by 1.3000, the psychological level.
Buyers will need to move above 1.3275 to bring 1.3340 into focus. A break above here would turn attention to the 50 EMA at 1.3365, followed by the 200 EMA around 1.3400, where buyers could gain further traction.
Gold rises as Oil, Treasury yields slip, central bank buying remains strong
Gold is heading higher on Tuesday as oil prices slip, helping Treasury yields ease. However, attention remains on tomorrow’s U.S. inflation data for fresh signals on the Federal Reserve’s interest rate outlook.
Oil prices are falling for the first time in almost a week. Elevated oil prices, driven by the conflict in the Middle East, have raised inflation concerns, pushing Treasury yields higher and strengthening the case for restrictive monetary policy.
Higher yields and a stronger U.S. dollar weigh on demand for non-yielding, dollar-denominated gold.
The benchmark 10-year Treasury yield has slipped to 5.19% today as technology stocks in Asia sell off and investors return to safe-haven assets.
Tomorrow’s CPI data will be important for the short-term outlook, followed by Thursday’s PPI report. Hotter-than-expected inflation, particularly in core CPI, could increase expectations for an October rate hike. Markets are currently pricing in just a 19% chance of a Fed hike this month, but still see around an 85% probability of an increase before the end of the year.
Cleveland Fed President Beth Hammack has said the Fed should move quickly towards a more restrictive monetary policy stance to control inflation.
Global gold ETF holdings reached 4,256 tonnes in September, following inflows of $10 billion that month and third-quarter inflows of $31 billion.
However, central bank buying remains supportive. China recorded a 23rd consecutive month of gold purchases in September, adding 23 metric tonnes, its largest monthly purchase in three years. Other emerging-market central banks have also been buying gold to reduce their reliance on U.S. government bonds and the dollar.
Central banks purchased a total of 39 tonnes in August, taking total purchases this year to 170 tonnes. Persistent buying keeps Gold prices supported.
XAU/USD Forecast – Technical Analysis
After falling from $4,700, gold found support around $4,100. The price has moved above the falling trendline as it heads towards $4,200. However, it remains below the 20 and 50 EMAs, suggesting the outlook remains bearish.
Buyers would need to break above $4,200 and the 20 EMA, followed by $4,310 and the 200 EMA, for the outlook to improve. Above here, $4,500 comes into focus.
If gold fails to reclaim $4,200, a retest of $4,100 is possible. A break below this level would establish a lower low, turning attention towards $3,940, the 2026 low.
The Indian rupee extended its recovery against the US dollar on Tuesday, October 13, as the Reserve Bank of India (RBI) introduced another round of foreign exchange restrictions, intensifying efforts to contain dollar demand and stabilise the currency.
USD/INR fell to approximately 95.20, down 0.58% during the session, after briefly approaching the 95.00 level. The rupee strengthened to its highest level since early September, building on Monday’s 1% advance, its largest single-day gain in more than six months.
The recovery represents a striking reversal from last week’s record lows near 97.00, when rising crude oil prices, foreign investment outflows and increased demand for dollar hedging placed considerable pressure on the Indian currency.
However, the RBI’s increasingly aggressive intervention has also unsettled parts of the foreign exchange market, raising questions about how long the rupee’s recovery can continue without improvements in India’s underlying economic conditions.
RBI Intervention Pushes USD/INR Lower for a Second Day The RBI expanded its foreign exchange restrictions on Monday, extending a recently introduced cash reserve requirement to a broader range of hedging transactions undertaken by banks. The revised measures now cover transactions involving banks’ own assets and liabilities, rather than focusing exclusively on certain customer-related foreign exchange exposures.
The central bank has also tightened rules governing non-deliverable forward contracts, restricting how eligible financial institutions can offer rupee derivatives to overseas clients. These changes follow Saturday’s announcement of a special dollar window for three state-owned oil marketing companies: Indian Oil Corporation, Bharat Petroleum and Hindustan Petroleum.
By allowing the companies to meet their dollar requirements directly through the RBI, the facility reduces their immediate reliance on the regular spot foreign exchange market. The combined measures are intended to discourage excessive dollar buying and limit speculative activity that could accelerate rupee depreciation.
Tuesday’s gains were also supported by dollar sales from state-run banks, which traders suspect were conducted on behalf of the RBI.The intervention has helped reverse expectations that USD/INR would quickly break above 97.00.
India CPI Inflation Rises to 5.54%, Adding Pressure on the RBI The rupee’s recovery comes as India’s latest inflation figures point to renewed price pressures. September headline inflation accelerated to 5.54% year-on-year, up from approximately 4.83% in August, according to government data released on Monday. Food inflation climbed to 7.74%, reflecting higher prices for essential household goods.
The increase brings inflation closer to the RBI’s upper tolerance limit of 6%, strengthening expectations that policymakers may need to maintain a restrictive monetary policy stance. Higher interest rates could provide additional support for the rupee by making rupee-denominated assets more attractive. However, further tightening would also increase borrowing costs for Indian businesses and households.
Meanwhile, lower crude oil prices have offered some relief to the currency. Brent crude futures declined approximately 1.1% toward $105.47 per barrel on Tuesday, reducing immediate concerns about India’s energy import costs. Foreign capital outflows remain a challenge. Overseas institutional investors sold approximately ₹1,708 crore worth of Indian equities on Monday, highlighting the external pressures that continue to weigh on the currency.
USD/INR Forecast: Can the Indian Rupee Extend Its Recovery? The near-term USD/INR forecast favours further rupee strength while the pair remains below 95.75. A sustained break beneath 95.00 could open the way toward 94.80, a level also identified by CR Forex managing director Amit Pabari as a potential near-term target.
However, the durability of the rally remains uncertain. The RBI’s measures have disrupted dollar demand and changed short-term market expectations, but foreign investment outflows and India’s substantial oil import requirements have not disappeared.
Wednesday’s US CPI inflation report will be another important test. Stronger-than-expected US inflation could revive Federal Reserve rate-hike expectations and support the dollar, potentially slowing the rupee’s advance.
For now, the RBI has succeeded in shifting the immediate momentum away from the dollar. The next challenge is maintaining that stability without creating prolonged disruption in India’s foreign exchange market.
Why is the Indian rupee rising today?
The Indian rupee is strengthening because the RBI has tightened currency hedging regulations, introduced a special dollar facility for oil importers and reportedly intervened through state-run banks.
What is the USD/INR forecast for October 2026?
The short-term outlook remains bearish below 95.75, with support at 95.00 and 94.80. A recovery above 96.05 would weaken the immediate bearish outlook.
What is the RBI doing to support the Indian rupee?
The RBI has introduced a special dollar window for state-owned oil companies, restricted certain foreign exchange derivatives and expanded reserve requirements for banks undertaking currency hedging transactions.
Silver (XAG/USD) attracts some dip-buyers in the vicinity of mid-$59.00s on Tuesday and sticks to its modest intraday gains through the early European session. The white metal, however, lacks bullish conviction and currently trades around the $60.50 area, up just over 0.30% for the day.
The US Dollar (USD) retreats from its highest level since April 2025 as bulls opt to take some profits off the table, offering some support to XAG/USD. However, the US Federal Reserve's (Fed) hawkish outlook and geopolitical uncertainties could limit deeper USD losses. Traders might also opt to wait for the release of the latest US consumer inflation figures and Fed Chair Kevin Warsh's speech on Friday for more cues about the policy path, which will drive the USD and provide a fresh impetus to the white metal.
From a technical perspective, the XAG/USD retains a bearish near-term bias beneath the 23.6% Fibonacci retracement level and the 100-period Simple Moving Average (SMA) on the 4-hour chart. Moreover, momentum indicators suggest only modest, consolidative price action rather than a decisive bullish recovery. In fact, the Moving Average Convergence Divergence (MACD) indicator hovers slightly in positive territory with a flat read. Moreover, the Relative Strength Index (RSI) at 51.39 sits near neutral.
Meanwhile, the 23.6% Fibo. level at $61.54 could act as an initial hurdle ahead of the 100-period SMA at $61.98, which forms a nearby cap. The XAG/USD would need to clear this barrier to ease downside pressure and climb further to the 38.2% retracement at $63.38 en route to the 50.0% level at $64.87, ahead of deeper Fibonacci resistance at $66.36, $68.48 and the cycle high zone near $71.17. On the flip side, the primary structural support is the Fibonacci anchor around $58.57, where buyers could attempt to reassert a floor if the current bearish tone extends.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
XAG/USD 4-hour chart
Silver FAQs Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
This preview of weekly data examines USOIL and XAUUSD, with economic data expected later this week as the primary market drivers of the near-term outlook.
Highlights of the week: RBA meeting minutes, US inflation, British GDP, US PPITuesdayRBA meeting minutes at 12:30 AM GMT. These are published 2 weeks after the interest rate decision. They give full detail of the discussions and the different views, and record the votes of the members of the committee. This could spark some volatility in the Australian dollar and the instruments traded against it.
WednesdayChinese inflation rate at 01:30 AM GMT. The market is expecting this figure to tick upwards by 0.2%, reaching 1% for September.
US Inflation rate at 12:30 PM GMT, where the consensus is for an increase of around 0.3%, reaching 3.7% for September. If this is broadly accurate, then it might not influence a change in the stance of the Federal Reserve at their next meeting, where the probability for now is that they will keep the rates stable. On the other hand, if there is any significant surprise change in the actual figure, then it will affect the dollar in the short term.
TuesdayBritish GDP growth at 06:00 AM GMT. The market consensus is that the figure will decrease from 0.4% to -0.1% month over month. This might not have a major effect on the quid since it is for the month of August; however, it would provide some hints on the overall economic performance of the British economy.
US Producers Price Index (PPI) at 12:30 PM GMT. Market participants are expecting the figure to come out at 0.5% over 0.4% of the previous reading. If this is confirmed, then it could potentially hint at higher inflation figures in the coming months since higher producers' costs usually roll down to consumers, pushing inflation figures to the upside.
Fed chair Kevin Warsh speech on Thursday at the IMF’s annual meeting in Bangkok. It's a particularly interesting point in time because this is ahead of its two-day meeting ending on October 28 and could help markets have "less uncertainty" about the outcome of the meeting.
USOil, daily
Oil prices fell as traders weighed rising Middle East tensions against resilient crude flows. Despite attacks on Saudi Arabia and another tanker in the Strait of Hormuz, exports from the Persian Gulf have recovered to around 17.5 million barrels a day, or 98% of pre-war levels, limiting the impact on supply. Markets are also assessing a potential Russia-Ukraine energy ceasefire and Russia’s decision to resume some diesel exports, although the additional volumes are relatively small. Meanwhile, the IEA is calling for faster releases of diesel reserves as global fuel markets remain tight.
From a technical perspective, crude oil is showing sideways-to-bullish momentum, trading around $90 after finding support near the 50% Fibonacci level at $88. Price is holding above the rising 50-day moving average, while the 100-day moving average remains well below at around $83.5, supporting the broader bullish structure. The key resistance is at $91, followed by the 23.6% Fibonacci level around $95. A sustained break above $91 could open the way toward $95, while a move below $88 would weaken the setup and expose the 61.8% level at $85.
Gold-Dollar, daily
Gold traded below $4,200 as investors weighed lower oil prices against persistent inflation risks and awaited key US economic data for clues on the Fed’s rate path. Falling Treasury yields and continued buying by gold ETFs and China’s central bank provided some support. However, gold remains under pressure from elevated bond yields and expectations of further monetary tightening. The metal has fallen about 20% since the US-Iran war began, while ongoing energy disruptions in the Middle East continue to create inflationary pressure. Fed Chair Kevin Warsh’s upcoming comments and US inflation data could provide further direction for gold.
From a technical point of view, gold rebounded from the support of $4,130 and is currently on route to test the resistance of $4,250, which is the next major resistance area consisting of the 61.8% daily Fibonacci retracement level and also the 100-day simple moving average. The Stochastic oscillator is in neutral levels hinting that there is potential for the price to move in either direction in the short term. The moving averages are validating the overall bullish trend despite the bearish trend which is in place since late August. The Bollinger Bands are also quite expanded, showing that there is sufficient volatility in the market to support any sharp moves; however, we might need a new catalyst in the market to see any sharp moves anytime soon.
Pound-Canadian Dollar could remain volatile as competing BoE signals and oil price swings pull the pair in opposite directions. The Pound Canadian Dollar (GBP/CAD) exchange rate lacked a clear direction on Monday as Bank of England (BoE) interest rate hike bets and rising oil prices impacted the pairing.
The Pound-Dollar rate could stay volatile as mixed BoE signals and Federal Reserve commentary compete with shifting global risk sentiment. The Pound US Dollar (GBP/USD) exchange rate struggled to find a clear direction on Monday amid Bank of England (BoE) interest rate hike bets and worries ahead of the UK's Autumn Budget.
At the time of writing, GBP/USD was trading at $1.3230, having wavered through the day.
Latest-Exchange Rates:
Pound to Dollar (GBP/USD): 1.323082 (-0.02%)
Euro to Dollar (EUR/USD): 1.117718 (-0.22%)
Dollar to Yen (USD/JPY): 158.60856 (+0.18%)
DAILY RECAP:
The Pound (GBP) found some support on Monday as mounting inflationary pressures in the UK fuelled expectations of a Bank of England interest rate hike next month.
A report from accountancy and advisory firm BDO found that businesses were experiencing their sharpest inflationary pressures since June 2023, driven by higher energy and raw material prices.
However, Sterling's upside remained limited after the Institute for Fiscal Studies (IFS) warned that rising inflation had contributed to a £35bn funding gap ahead of the Autumn Budget.
Meanwhile, the US Dollar (USD) initially softened at the start of Monday's session amid a risk-on market mood, before the 'Greenback' was able to find some support.
Risk sentiment faded amid reports that Russia had struck Ukrainian energy infrastructure on Sunday evening, despite US President Donald Trump claiming on Sunday morning that both sides had agreed to an 'energy ceasefire'.
Near-Term GBP/USD Forecast: Central Bank Speakers in Focus Looking ahead, Bank of England policymakers Megan Greene and Swati Dhingra are both due to speak on Tuesday. As Greene tends to favour a more hawkish approach to monetary policy while Dhingra is more dovish, contrasting signals could leave the Pound on uncertain footing.
Likewise, some Federal Reserve policymakers are due to deliver speeches. If their remarks boost bets on a December rate hike from the Fed, the US Dollar could attract support.
Elsewhere, market risk dynamics will likely continue to drive the safe-haven 'Greenback'. Any shifts in sentiment could see the Pound US Dollar exchange rate waver.
Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.
Key Points:Markets price an 80.6% probability of the Fed holding rates steady in October, while softer Treasury yields and Wednesday's U.S. CPI report keep the dollar's outlook in focus.DXY remains bullish above 102.10 and its rising trendline, with a breakout through 102.61 potentially targeting 102.97 and 103.36.EUR/USD remains bearish below 1.1218, with a break beneath 1.1161 exposing 1.1128 and 1.1092 as German inflation and weak French growth weigh on the euro.GBP/USD consolidates within a tightening triangle above 1.3222, with a breakout above 1.3284 targeting 1.3323, while a drop below 1.3180 could accelerate selling pressure.Dollar Index: CPI Looms as Fed Pause Expectations Hold The dollar’s major backdrop softened slightly on Tuesday as the pressure on the dollar from lower Treasury yields and falling oil prices reduced some of the upside from dollar inflation concerns. The 10-year Treasury yield fell approximately five basis points to 5.19%. The markets are assigning an 80.6% probability that the Federal Reserve leaves rates unchanged at its October 27-28 meeting.
The consumer price index is the next major report to watch out for in the U.S. Moreover, the Federal Reserve Bank of Cleveland President Beth Hammack said that underlying inflation is around 2.5%-3.0% and that the labor market does not need to be damaged unnecessarily to cool inflation; however, she argues that demand still needs to be weakened.
EUR: German Inflation Adds Pressure as French Growth Stalls Germany’s inflation increased to 3.3% in September from 2.9% in August, adding more pressure on the ECB to keep policy restrictive.
France remains the bigger concern. The Bank of France estimates the economy grew by only 0.1% in the third quarter, as growth in services offset weakness in manufacturing, construction, and agriculture.
GBP: BoE Tightening Bets Meet Fiscal Restraint Expectations for tighter Bank of England policy are supporting sterling, and a November rate increase is priced at around 90% probability. Bank of England policymaker Megan Greene also argues the 3.75% Bank Rate may not be restrictive enough.
The IMF expects UK growth to average 1.3% in 2026 and 1.2% in 2027. The forecasts for inflation are for it to average 3.3% in 2026. The combination of restrictive monetary and fiscal policies is putting pressure on the UK economy ahead of the October 28 budget.
U.S. Dollar Index Technical Analysis: DXY Holds Rising Trendline as 102.61 Remains the Breakout Trigger
Dollar Index Price Chart – Source: Tradingview The U.S. Dollar Index has edged up to 102.40 on the 4-hour chart, and what is notable is that price continues to respect the rising trendline and is comfortably above the short-term moving average. Price structure is still positive, as higher lows are still in the process of being developed; however, there have been some repeated hesitations under 102.61, which suggests that price has not cleared a clean breakout.
The first resistance is at 102.61, above which price would aim for 102.97 and 103.36. Support comes in at 102.10, then 101.75 and then 101.43.
EUR/USD Price Forecast
Every new EUR/USD analysis as it publishes, today's technical signal and key levels, live price — on one page.
See all EUR/USD forecasts Momentum is neutral as the Relative Strength Index is near the 50-neutral level. As long as price continues to trade above 102.10 and the rising trendline, I would remain bullish. A break below 101.75 would negate this structure. A break above 102.61 would open the upside to 102.97 and 103.36.
GBP/USD Price Chart – Source: Tradingview The GBP/USD pair is currently trading at 1.3229. On the 2-hour chart, what is noticeable to me is the narrowing trade between the falling trendline and the rising support line. The pair is currently trading above the 1.3222 support level and is approaching the rising support line. With the longer-term moving average still above, this leaves Sterling in a compressed trade where the next move out could be the breakout.
Looking at the resistance side of the trade, I’ll start at 1.3284. If the pair is able to break and close above 1.3284, then the next area of interest would be at 1.3323 and then 1.3368. On the other side of the trade, 1.3222 is the first support level, with 1.3180, 1.3147 and 1.3113 becoming more relevant to the downside.
Momentum for the pair is neutral with the RSI holding just above the mid line. Until the pair is able to move above 1.3284 or below 1.3180, the trade will remain neutral. A break above 1.3284 would give the pair a slightly higher target while a breakdown below 1.3180 would bring lower targets into play.
EUR/USD Technical Analysis: Euro Tests Trendline Resistance as 1.1218 Becomes the Key Recovery Level
EUR/USD Price Chart – Source: Tradingview EUR/USD is trading at 1.1181 on the 2-hour chart after bouncing off 1.1161 support. Currently, the price is near the 1.12-area and pressing against a descending trendline, with both moving averages above it, suggesting the bearish trend is likely to continue.
The first resistance I am looking at is at 1.1218, above which we would see 1.1275 and 1.1315. As for support, we have 1.1180-1.1161, and below that we have 1.1128 and 1.1092.
RSI is neutral and in the middle, suggesting that the pair may consolidate rather than trend strongly in either direction. Until it breaks above 1.1218, I’ll maintain a bearish bias. A break below 1.1161 would increase the likelihood of a move toward 1.1128.
Arslan is a finance MBA and also holds an MPhil degree in behavioral finance. An expert in financial analysis and investor psychology, Arslan uses his academic background to bring valuable insights about market sentiment and whether instruments are likely to be overbought or oversold.
