US CPI and PPI headline a packed inflation calendar
Markets price three-plus Fed hikes despite recent disinflation
Short-term correlations suggest risk appetite is driving USD/JPY
Narrowing trading range leaves USD/JPY awaiting a catalyst
US inflation data dominates the week ahead for USD/JPY, with Wednesday's CPI and Thursday's PPI reports likely to influence Treasury yields and broader risk appetite.
With markets pricing more than three Fed rate hikes by the middle of next year, the onus remains on inflation to stay relatively elevated and sticky to justify those expectations.
However, the recent deterioration in USD/JPY's traditionally strong relationship with US Treasury yields suggests the reaction in riskier assets may be just as important as movements in yields themselves, complicating the outlook for the pair.
US inflation takes centre stage
Source: TradingView
Outside Wednesday's CPI report, Thursday shapes up as another big session for US economic data, with PPI and retail sales released alongside each other. Following strong increases across retail sales measures in August, another solid outcome would reinforce the view that consumer demand remains firm enough to support further Fed tightening.
Friday's import prices will also be worth monitoring for signs of inflation pressures, particularly given elevated energy costs.
There's plenty of Fed speak throughout the week, although remarks after the inflation reports are likely to carry more weight. Governor Christopher Waller will discuss artificial intelligence at the Bloomberg New Economy Forum in New Delhi on Tuesday, while Fed Chair Kevin Warsh will participate in a fireside chat with IMF Managing Director Kristalina Georgieva in Bangkok on Thursday.
While Warsh may face questions about the policy outlook following CPI, he's shown little inclination to provide explicit forward guidance, and that's unlikely to change when discussing the global economy at a forum outside the United States.
In Japan, the calendar is as quiet as a church mouse. Remarks from BOJ board member Junko Koeda provide an opportunity to influence market pricing, which, like the Fed, favours a December move over October. Unless she delivers something truly unexpected, her appearance may come and go with little fanfare.
Core CPI cools, PPI remains hot
Heading into the September CPI report, the brutal truth is that inflation has remained above the Fed's 2% target for more than five years.
While there have been encouraging signs of near-term disinflation, with core CPI running at an annualised pace of just 1.97% over the past three months, the six-month annualised rate of 2.57% and year-on-year rate of 2.45% show that price pressures remain elevated.
Source: LSEG
For September, headline CPI is expected to rise 0.6%, with core inflation forecast to increase by just 0.2%, down from 0.3% in August.
Core PPI inflation has been running considerably hotter than core CPI, with the three-month annualised rate at 3.36%, the six-month rate at 3.73% and the annual rate at 4.62%.
However, historical analysis dating back to 2010 suggests that while producer inflation has traditionally provided some indication of where consumer inflation may be heading, that relationship has weakened considerably since 2023. More recent predictive testing also suggests PPI has generally made short-term CPI forecasts less accurate, rather than improving them.
While PCE remains the Fed's preferred inflation measure, historically it's been CPI that's generated the larger market reaction in Treasury yields and USD/JPY. That makes Wednesday's report the main event risk, with Thursday's PPI likely to play a secondary role, even though components feed directly into the core PCE deflator.
Three hikes priced, plenty at stake
As covered extensively beforehand, there's been an abrupt shift in the Fed interest rate outlook over the past six months, with markets moving from pricing several cuts to more than 80 basis points of tightening by the end of next year.
While there's little expectation of a follow up hike in October following September's increase, markets favour a further 25 basis point move before year-end, followed by at least two, perhaps three, more by the end of 2027.
Source: TradingView
Given how little tightening is priced for October, it would likely take a core CPI reading well north of 0.3% to get markets seriously considering a hike. Otherwise, recent Fed commentary suggests October is being positioned as a placeholder, with December the more likely live meeting when fresh forecasts and dot plot will be issued.
Alternatively, an undershoot in core CPI could pull the rug from underneath hawkish pricing, especially given the softness in payrolls a fortnight ago, potentially dragging Treasury yields lower, particularly at the front end and belly of the curve.
Risk appetite may matter more than yields
While the inflation reports will be influential for Fed pricing, particularly at the front end of the Treasury curve, the more important factor for USD/JPY this week may be how riskier assets digest those releases.
That's because the traditionally strong, positive relationship between USD/JPY, US Treasury yields and US–Japan yield spreads has been inconsistent recently. Over the past five sessions, USD/JPY has shown a correlation of -0.93 with VIX futures and +0.79 with S&P 500 futures, compared with just +0.47 for US two-year Treasury yields and +0.48 for equivalent yield spreads.
Source: LSEG
Over the past fortnight, correlations with US two-year yields and equivalent yield spreads have turned negative at -0.43 and -0.39, respectively, possibly reflecting the influence of quarter-end capital flows.
However, the strong relationships with VIX and S&P 500 futures are largely absent over longer windows, putting a big asterisk next to the recent readings. Five sessions is nowhere near long enough to declare a regime change, especially given the historical influence of interest rate differentials and carry trades.
While risk appetite has played a greater role recently, I suspect rate differentials will reassert themselves as a more influential driver of USD/JPY, particularly if this week's inflation reports trigger a meaningful shift in the Fed rate outlook.
USD/JPY playing pong between moving averages
Source: TradingView
For all the discussion about USD/JPY's changing relationships with yields and risk appetite, the pair has barely moved in October, trading in a range of roughly 150 pips. It feels like the market is waiting for a catalyst.
The broader range between 156.40 and 159.00 has been narrowing, with dips towards 157.50 bought last week, while offers continue to cap moves above 158.45.
As the daily chart inset shows, the latter sits just below the 200-day moving average at 158.54, while the 50-day moving average at 157.70 helps explain the dip buying. For now, USD/JPY is effectively playing pong between these moving averages.
Momentum indicators are providing no strong tell when it comes to directional bias. RSI (14) is marginally above the neutral 50 level but flatlining, while MACD has just crossed above its signal line in positive territory, although there's little velocity behind the move. Both are effectively meandering.
On the upside, 158.45 and the 200-day moving average at 158.54 are the initial levels to watch, followed by 159.00 and 159.50, where horizontal resistance converges with the 100-day moving average. The latter has acted as both support and resistance previously, strengthening its significance.
On the downside, 157.50 is the first level to watch following last week's dip buying, followed by 157.00 and 156.40, which has acted as both support and resistance recently. Below that, a more substantial support zone runs from 155.50 down to 155.00.
The threat of intervention remains a consideration on any sustained push higher. At the same time, the US economy continues to look a better bet than most, deterring prolonged dollar weakness.
For now, it's a stalemate. Perhaps this week's inflation reports will finally shake things up.
The trading week has come to an end and a lack of direction around the yen remains evident in the short term. This can be seen in the performance of USD/JPY over the last three trading sessions, where the pair has recorded moves of barely 0.3%, highlighting a market that continues to develop within a broadly neutral environment.
Before anyone starts celebrating, though, there’s unfinished business overhead.
The upper boundary of the current consolidation sits at 101.67, while the key resistance zone at 102.36-102.49 remains the bigger test.
That resistance area will help determine whether buyers have enough strength to break out of the sideways pattern – or whether we’re simply watching another attempt to push toward the top of the range.
Nevertheless, the bigger technical picture hasn’t changed.
The June and July highs at 101.49-101.57 remain the critical support zone that continues to shape our broader outlook.
As long as this area holds, the bullish case retains an important technical foundation. However, the nearby resistance levels still need to be cleared before we can talk about a convincing continuation higher.
Daily Takeaway
Bullish confirmation: a daily close above 102.05 would create the conditions for a bullish engulfing pattern. Resistance to watch: the consolidation’s upper boundary at 102.27, followed by 102.36-102.49. Nearest support: Wednesday’s bullish gap at 101.60-101.70. Key structural support: the June and July highs at 101.49-101.57. Bottom line: buyers have shown resilience, but the dollar still needs to clear overhead resistance. Until then, we’re watching the range rather than declaring a breakout.
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See all Gold forecasts Well, ladies and gentlemen, we have a breakout.
At least for now.
Gold bulls have pushed through both the upper boundary of the black declining channel and the red short-term downtrend line. That’s a meaningful intraday development – but there are two things we need to keep in mind before getting carried away.
First: this is still an intraday move.
We don’t have a confirmed daily close yet, so we’re keeping our enthusiasm under control until buyers prove they can hold their gains through the finish line.
Second: that red downtrend line deserves another look.
Together with the lower red line, it forms a potential declining wedge – a pattern that can sometimes precede a bullish reversal. If buyers confirm today’s breakout, the technical picture could become considerably more encouraging.
And here’s the level that matters most right now: 4202.
A daily close at least above that level – the upper boundary of the black declining channel, which is currently acting as potential support following the intraday breakout – would strengthen the case for a continuation higher.
What If the Breakout Holds? If gold finishes the session above 4202, the beginning of next week could bring another bullish attempt.
The next important obstacle would be the bearish gap at 4315-4321, created on September 28. A move toward that zone would be an encouraging development for buyers, although the gap itself could still attract selling pressure.
One more thing worth highlighting: all the indicators we’re monitoring have generated buy signals. Combined with a confirmed breakout above the declining resistance lines, that would make the bullish case more compelling.
And from a broader technical perspective, if the breakout is confirmed, we estimate the minimum upside potential of the developing bullish move at approximately 4500, based on the height of the declining wedge.
That’s a potential technical objective, not a guarantee – and the intermediate resistance zones still matter.
Zooming Out
The broader bullish scenario remains conditional on the breakout holding.
The key support area is unchanged: 4098–4135, with the psychological 4100 barrier remaining particularly important.
A confirmed breakout would improve the near-term outlook but losing that support would undermine the bullish case.
Daily Takeaway
Bullish trigger: a daily close above 4202, confirming the breakout from the black declining channel. First upside target: the September 28 bearish gap at 4315-4321. Potential next objective: around 4500, based on the height of the declining wedge, provided the bullish breakout is confirmed and follow-through develops. Key support: 4098-4135, especially 4100. What to avoid: treating an intraday breakout as a confirmed daily signal. Bottom line: gold bulls have made an impressive move, and the indicators are supporting their effort. Now they need to deliver the daily close that turns a promising setup into a confirmed technical development.
Gold and the dollar are making headlines today, but there’s more happening beneath the surface. Silver has already invalidated a recent breakdown, while platinum, palladium, and copper are testing technical levels that could shape their next moves.
Final Thought – The Close Matters More Than the Excitement Friday has given the bulls plenty of reasons to feel encouraged. Gold is challenging its declining resistance lines, silver has already invalidated a small breakdown, platinum is fighting to reclaim its rising channel, and copper is attempting another breakout – all while the dollar is showing strength of its own. That’s an interesting development, but interesting doesn’t automatically mean confirmed. Our job isn’t to predict how today’s candles will finish. It’s to know exactly which closing levels will matter when they do. Let the market make its move. We’ll deal with the evidence.
USD strength continued through last week and at this point, the currency remains overbought on the daily chart and there's no sign yet that bulls are ready to relent. But – there was a slowing at highs which led to a pattern of lower-highs, and this is something of note as we go into next week.
Gold 091026 Daily Chart Gold gains ground despite stronger dollar and rising Treasury yields. U.S. dollar moved higher against a broad basket of currencies as traders focused on the problems in the European debt markets.
Treasury yields moved higher as bond traders remained worried that rising inflation will force the Fed to raise rates. FedWatch Tool indicates that the probability of a rate hike at the next meeting in October is 19.4%, but traders expect that Fed will continue the rate hike cycle in December.
The yield of 2-year Treasuries climbed above the 4.79% level, while the yield of 10-year Treasuries settled near 5.25%. Rising Treasury yields are bearish for gold that pays no interest. However, yield dynamics are not the only catalyst for gold markets. Central banks continue to buy gold to diversify their reserves amid uncertainty, which is bullish for gold.
It remains to be seen whether central banks will intensify their gold purchases amid global bond sell-off. Worries about financial sustainability of developed countries may serve as a major bullish catalyst for gold and other precious metals.
Currently, gold is trying to settle above the resistance level at $4160 – $4180. If gold manages to settle above the $4180 level, it will move towards the next resistance, which is located in the $4300 – $4320 range. RSI is in the moderate territory, and there is plenty of room to gain additional upside momentum in the near term.
Silver Rebounds Above $60.00
Silver 091026 Daily Chart Silver rallied as gold/silver rati pulled back towards the 69.00 level. Gold/silver failed to settle above the psychologically important 70.00 level, which was a bullish development for silver.
The nearest resistance level for silver is located in the $61.00 – $62.00 range. If silver climbs above the $62.00 level, it will head towards the 50 MA at $64.27. A move above the 50 MA will open the way to the test of the resistance at $65.00 – $66.00.
On the support side, a move below the $60.00 level will push silver towards the support, which is located in the $56.00 – $57.00 range.
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Platinum 091026 Daily Chart Platinum gained upside momentum amid broad rally in precious metals markets. Palladium markets gained +1.8%, which was bullish for platinum. Dynamics of oil markets did not have an impact on platinum today as oil prices were up by +0.4%.
Platinum failed to settle below the support level at $1600 – $1620 and climbed towards the $1680 level. If platinum settles above the $1680 level, it will head towards the nearest resistance at $1700 – $1720. A move above $1720 will push platinum towards the 50 MA at $1760. In case platinum climbs above the 50 MA, it will head towards the next resistance at $1780 – $1800.
On the support side, platinum needs to settle below the $1600 level to gain downside momentum in the near term. In this case, platinum will head towards the $1520 level.
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The American currency stays strong ahead of the weekend.
U.S. Dollar Moves Higher As Traders Focus On Consumer Sentiment Data
DXY 091026 4h Chart U.S. Dollar Index gains ground as traders focus on Michigan Consumer Sentiment report. The report indicated that Michigan Consumer Sentiment declined from 48.1 in September to 46.3 in October, compared to analyst forecast of 47.6.
Year-ahead inflation expectations increased from 4.6% in September to 4.7% in September. Long-run inflation expectations grew from 3.4% to 3.5%.
U.S. Dollar Index continues its attempts to settle above the resistance level at 102.35 – 102.50. If U.S. Dollar Index manages to settle above the 102.50 level, it will head towards the next resistance, which is located in the 103.15 – 103.30 range.
EUR/USD Retreats As European Debt Markets Remain Under Pressure
EUR/USD 091026 4h Chart EUR/USD pulls back as traders react to the continuation of the sell-off in European debt markets. Traders are worried that the situation may get out of control.
Currently, EUR/USD is trying to settle below the support level at 1.1175 – 1.1190. If EUR/USD manages to settle below the 1.1175 level, it will head towards the next support at 1.1075 – 1.1090.
GBP/USD Is Flat Ahead Of The Weekend
GBP/USD 091026 4h Chart GBP/USD is mostly flat as traders are not ready for big moves ahead of the weekend. Rising Treasury yields did not provide support to GBP/USD in today’s trading session. The yield of 2-year Treasuries settled above the 4.80% level, while the yield of 10-year Treasuries climbed above 5.25%.
If GBP/USD moves below the 1.3200 level, it will head towards the nearest support, which is located in the 1.3150 – 1.3165 range. A successful test of the support at 1.3150 – 1.3165 will open the way to the test of the next at 1.3030 – 1.3045.
USD/CAD Tests New Highs As Canada’s Job Data Disappoints
USD/CAD 091026 4h Chart USD/CAD gains ground as traders react to Canada’s Unemployment Rate report. The report indicated that Unemployment Rate increased from 6.4% in August to 6.5% in September, in line with analyst estimates.
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See all EUR/USD forecasts The Employment Change report showed that the economy lost -68,300 jobs in September, compared to analyst forecast of +7,000.
USD/CAD climbed above the resistance at 1.4235 – 1.4250 and made an attempt to settle above the 1.4300 level. If USD/CAD manages to settle above 1.4300, it will head towards the next resistance at 1.4350 – 1.4365.
USD/JPY Attempts To Settle Above 158.50
USD/JPY 091026 4h Chart USD/JPY is trying to settle above the 158.50 level as traders focus on rising Treasury yields and react to Household Spending report from Japan. The report showed that Household Spending increased by +0.1% month-over-month in August, compared to analyst forecast of +0.5%. On a year-over-year basis, Household Spending declined by -3.1%, compared to analyst consensus of -3.6%.
USD/JPY has already made several attempts to climb above the 158.50 level, but these attempts yielded no results. If USD/JPY moves above 158.50, it will gain additional upside momentum and head towards the next resistance, which is located in the 160.00 – 160.50 range. RSI is in the moderate territory, so there is plenty of room to gain momentum in case the right catalysts emerge.
On the support side, USD/JPY needs to settle below the 50 MA at 157.89 to gain downside momentum in the near term. In this case, USD/JPY will move towards the 157.00 level. In case USD/JPY declines below 157.00, it will head towards the support at 155.00 – 155.50.
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Vladimir is an independent trader, with over 18 years of experience in the financial markets. His expertise spans a wide range of instruments like stocks, futures, forex, indices, and commodities, forecasting both long-term and short-term market movements.
AUD/USD is attempting to stabilize after a sharp month-long decline carried the pair into a major support zone last week. The rebound has now brought Aussie back to an important technical threshold, where buyers are trying to break the descending structure that has governed price action since the September high.
Non-yielding Assets Like Gold Hate Higher Rates A lot of traders are going to be watching the energy market. The crude oil market, of course, is a major influence on what is going on with rates, with supply being a major concern. That has been the story since the war started. Now, the question is whether or not those rates can continue to roll over. If they do, that could give us a little bit of relief here in the gold market. This is the hope, at least.
From a technical analysis point of view, each rally is getting lower, producing lower highs. We have not broken down to a fresh new low, though, so if we turn around here, it could be a change in attitude.
I think this is a market that remains very noisy going forward, mainly due to the fact that not only will interest rates be an issue, but geopolitical issues driving those rates are one of the biggest problems. It is just too unpredictable. Regardless, I do think there are some buyers in this general vicinity.
Silver continues to fight interest rates as they continue to be sticky. Ultimately, this is a bond market story.
Silver Technical Analysis
Weekly chart of Silver Futures (SI1!) on TradingView with price at 60.720 testing the 55.000–60.000 demand zone. The silver market has seen quite a bit of sideways action during the course of the week, as the $60 level continues to be a bit of a support level. The support level is more or less the top of a demand zone that extends all the way down to the $55 level, an area that we can see on the weekly chart that caused the latest bounce.
The problem, though, technically speaking, is that each rally is a little lower as far as the peak is concerned. We will have to wait and see how that plays out. As things stand at the moment, it is all about interest rates.
Interest Rates Did Drift a Little Lower This Week Interest rates did drift a little lower this week. They were at 5.35% on the 10-year yield in America. As I record the video, we are at 5.231%, providing a little bit of relief. We need to see some type of continuation of this to give silver a real shot to go to the upside.
If we continue to grind lower from here, underneath the $55 level would be a very negative turn of events. That being said, I think we are in an area that will be very choppy and very noisy.
With interest rates rallying due to energy, that is our biggest problem. Non-yielding assets do not do well with high rates most of the time. Unfortunately, rates are being driven by energy supply concerns, something that flares up every once in a while due to comments in the marketplace and on the wires.
With the situation in the Middle East still going on, that provides a little bit of a headwind. Right now, though, we are sitting on pretty significant demand.
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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.
Gold bounces slightly to kick off the Friday session. This is a pattern that we have seen more than once: traders see falling rates, and gold bounces. The question is can we get lower rates for any significant amount of time?
Gold Technical Analysis
Daily chart of Gold Futures (GC1!) on TradingView with price at 4,210.9 edging above the 4,000–4,200 support zone. The gold market has rallied a little bit in the early part of the trading session here on Friday as interest rates in America are starting to drift a little bit lower. That is a welcome relief for those looking to push gold higher, with interest rates being the major problem gold has faced as of late.
I do find it interesting that we’re basically at the top of a demand range between $4,000 and $4,200. If we can maintain this attitude, we might have a chance for gold to rally, but the rate situation will be worth watching.
10-year Yield in the United States Is at 5.246% While elevated, it is definitely better than what we had been seeing. We’ve dropped about 8 or 9 basis points over the last couple of days, so that’s starting to create a little bit of a hopeful attitude in the gold market.
That being said, we are heading into the weekend, and we could get more of those Middle Eastern headlines out there that make the bond market start to price in energy inflation. It might be a little bit difficult to buy gold and hang on through the weekend, so we’ll see what comes of this on Friday.
It wouldn’t surprise me at all to see a little bit of sideways action, but we are starting to see a little bit of a push, at least an attempt, if nothing else, to try to rally. This is a market that remains tight, but eventually, we should get clarity.
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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.
Daily Spot Gold (XAU/USD) Spot Gold is sharply higher early Friday as traders continue to build on the rally from the low reached on Wednesday at $4066.54.
The main trend is down according to the daily swing chart; however, the minor trend is up. This could drive up near-term volatility. The main trend changes to up on a trade through $4399.67. A move through $4066.54 will signal a resumption of the downtrend.
The minor trend turned up earlier today when $4184.38 was taken out. If this move generates enough upside momentum, it could lead to a test of a key retracement-level resistance cluster at $4230.51 to $4233.10. If the buying is strong enough to take out this area, the 61.8% level at $4272.41 will come into play. This is a potential trigger point for an acceleration into the 50% level at $4319.60, followed by the 50-day moving average at $4334.94.
What to Watch There is no major U.S. economic report Friday to take over the trade. Gold is going to follow the headlines out of the Middle East, crude oil, the dollar and Treasury yields.
The deal talk is winning this morning. Crude is lower and gold buyers have the edge going into the New York open.
Buyers took out the minor top at $4184.38 early Friday and the next stop is the retracement cluster at $4230.51 to $4233.10. That cluster is where the bounce runs into its first real selling.
My bias is still to the downside, but my outlook was weakened by the change in the minor trend. There is room to the upside to extend the rally, but the move could be labored due to overhead resistance. Each level could lead to refreshed selling pressure. Until we see a sustained move over the 50-day moving average at $4334.94, sellers are still going to be in control.
Sellers still have the bigger trend until $4399.67 is taken out. Wednesday’s low at $4066.54 is the floor under the whole bounce.
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The silver market continues to be driven by the bond markets, specifically rates, and whether they are rising or falling. As they are simply drifting at the moment, this has given the market some relief.
Silver Technical Analysis
Daily chart of Silver Futures (SI1!) on TradingView with price at 60.730 bouncing off the 60.000 support level.
The silver market has rallied slightly during the early part of the day as interest rates in America have drifted a little bit sideways to lower. We are starting to see them tick up a little bit as we head toward New York, though, so keep an eye on that.
It is worth noting that the $60 level has offered a little bit of support. It is a large, round, psychologically important figure and the top of an area that has been important a couple of times as support, so we will see whether or not this holds. A little bit of short covering could be going on as well because silver is such a volatile market. It is difficult to go into the weekend with a massive amount of position size on, so there could be a little bit of that.
Declining Rates Could Provide Relief
The $62.50 level recently has been a bit of a barrier, so that might be worth paying attention to as well. I do see the potential for demand all the way down to the $55 level, all things being equal.
Keep in mind, though, that headlines surrounding energy being threatened can drive up interest rates as energy inflation becomes a concern. Then we have to worry about the fact that silver is a non-yielding asset. It becomes easier to own bonds, etc. However, if those yields start to fall quickly, silver could take advantage of that if historical correlations return to this market.
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Yesterday, I wrote: “Silver follows stocks more closely than gold does, and the reason is industry.”
On Thursday, the link worked to the downside: the Nasdaq fell 1.25 percent, and silver fell while gold rose. Today, it works to the upside: stock futures and copper are higher, and silver is rising faster than gold. I also wrote that silver “amplifies gold’s moves in both directions,” and today it’s repeating Thursday’s move in the other direction.
In my view, silver’s outperformance today says more about stocks and copper than about the precious metals. It’s the industrial half of silver reacting to a better morning for risk assets.
Gold: A Bounce With Clear Drivers On Thursday, oil rose 3.3 percent, but the 10-year Treasury yield eased to about 5.23 percent after a well-received 30-year bond auction, and gold rose $16.30. That’s a modest gain for a day with lower yields and a war headline in the morning.
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See all Gold forecasts The USD Index is little changed this morning, pausing near its highest levels since April 2025. St. Louis Fed President Musalem said another hike is needed to return inflation to 2 percent, and markets price a 17 percent chance of a hike on October 28 and an 83 percent chance by December.
The Treasury sold $22 billion of 30-year bonds on Thursday at 5.618 percent, the highest yield at a 30-year auction since August 2000, with a bid-to-cover ratio of 2.54, above the 2.41 average of the previous six auctions. After Wednesday’s 10-year auction at 5.300 percent, that’s two days in a row of investors lining up for yields that gold doesn’t pay, and the lower yields that followed are part of today’s bounce.
Technically, since the consolidation is taking place above the previous 2026 highs, the breakout is fully verified, and the breather’s implications are bullish. The USD Index is simply getting ready for another powerful wave up.
If we are to view the current consolidation as a flag pattern, then the move that follows it is likely to be similar to the one that preceded it. The preceding rally took the USDX from about 99 to about 102, so a repeat of that could take the USDX to about 105 – that would be quite an event for the precious metals market – a very bearish one.
Where This Leaves Us Trump ruled out strikes on Iran before the midterms, oil pulled back, the dollar paused, and gold and silver bounced, with silver outpacing gold as stocks and copper rose. The S&P 500 closed below its August high on Thursday, which invalidated Tuesday’s breakout, and gold remains below the highs of its verification rebound.
Today’s bounce is yesterday’s decline in reverse, driven by the same links. The trend didn’t reverse with it.
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Markets went from risk off to risk on yesterday afternoon and we have since kicked on with some follow-up buying of stocks, gold and silver, while the dollar has also shown signs of weakness. Risk appetite turned positive after bond yields and oil prices both retreated yesterday.
USD/INR trades near 96.75 on Friday, October 9, as the Indian rupee attempts to recover from record-low territory following a pullback in US Treasury yields. The Reserve Bank of India (RBI) is reportedly supporting the rupee, while its latest interest rate increase and expectations of higher Indian inflation keep monetary policy in focus. The USD/INR forecast remains bullish above 96.50, with resistance around 96.80 and the psychological 97.00 level as investors await India's September CPI inflation report. The USD/INR exchange rate climbed back toward 96.75 on Friday, October 9, as the Indian rupee struggled to hold gains made earlier in the session. The pair had retreated toward 96.55 after US Treasury yields eased and the Reserve Bank of India reportedly intervened to support the currency. However, the subsequent rebound suggests that dollar demand remains resilient, keeping the 97.00 level within reach.
USD/INR was trading at 96.7475 at 09:15 UTC, above its 20-period simple moving average of 96.7394 on the hourly timeframe. The recovery in the dollar-to-rupee pair comes despite a decline in the US 10-year Treasury yield toward 5.22%, following its recent surge to approximately 5.36%, a level not seen in more than two decades.
For investors monitoring the USD to INR rate today, the central question is whether the rupee can sustain a recovery as US yields retreat or whether persistent dollar demand will push the exchange rate toward fresh record highs.
Why Is USD/INR Rising Despite Falling US Treasury Yields? The latest USD/INR price movement highlights the difficulty facing emerging-market currencies when global interest rates remain elevated. The Indian rupee initially strengthened on Friday as US Treasury yields declined, reducing some of the pressure that had supported the dollar throughout the week.
The benchmark US 10-year yield eased toward 5.22% after failing to extend its rally beyond 5.36%. Lower Treasury yields can reduce the relative appeal of dollar-denominated investments, providing support for currencies such as the INR.
However, the improvement proved limited. USD/INR subsequently recovered toward 96.75, suggesting that investors remain cautious about the broader interest-rate outlook and the possibility of renewed dollar strength. The decline in US yields followed a pullback in crude oil prices after President Donald Trump expressed optimism about diplomatic discussions with Iran.
Oil prices are particularly important for the Indian rupee outlook because India depends heavily on imported crude. Higher oil prices can increase demand for US dollars among Indian importers, putting additional pressure on the domestic currency. While easing oil prices and Treasury yields have provided temporary relief, neither development has been sufficient to reverse the broader upward trend in USD/INR.
RBI Intervention and Interest Rate Hike Support the Indian Rupee The Reserve Bank of India has become an important source of support for the rupee as USD/INR approaches the 97.00 level. According to Reuters reporting referenced by FXStreet, the RBI was suspected of selling US dollars during Friday’s opening session to limit further depreciation in the Indian currency.
Dollar sales by the central bank can increase foreign currency supply in the domestic market, helping reduce immediate pressure on the rupee. However, intervention does not necessarily establish a lasting reversal, particularly when global investors continue favouring the US dollar.
The RBI also raised its benchmark policy rate by 25 basis points this week, shifting its monetary policy stance from neutral to calibrated tightening. The decision reflects growing concern about inflation and signals a more cautious approach to future monetary policy.
Higher domestic interest rates can make rupee-denominated investments more attractive, potentially supporting the currency. Nevertheless, the rupee remains vulnerable to developments in US monetary policy, global bond markets and crude oil prices.
US Bond Yields and Federal Reserve Outlook Remain Key USD/INR Drivers Although US Treasury yields have retreated from recent highs, analysts remain cautious about calling an end to the broader upward trend. Danske Bank analysts have highlighted the possibility of continued pressure on long-term US borrowing costs, partly because of substantial Treasury issuance and increased debt financing by large technology companies investing in artificial intelligence infrastructure.
The bank has warned that yields on 10-year and 30-year US Treasuries could potentially approach 6% if investors demand higher compensation for holding longer-term debt. Such a development would create additional challenges for emerging-market currencies.
Expectations of further Federal Reserve interest rate increases also remain relevant. Higher US policy rates can support the dollar by maintaining attractive returns on dollar-denominated assets.
For USD/INR traders, a renewed increase in US Treasury yields could weaken the rupee and bring the 97.00 resistance level back into focus. Conversely, a sustained decline in yields, accompanied by lower oil prices, could give the Indian currency more room to recover.
India CPI Inflation Data Could Determine the Next USD/INR Move India’s upcoming September Consumer Price Index (CPI) report, scheduled for Monday, October 12, is another important event for the USD/INR outlook. Societe Generale expects headline inflation to rise to 5.6% year-on-year, compared with approximately 4.8% in August.
The bank anticipates that food inflation could accelerate toward 7.5%, while core inflation may approach 4.5%. A stronger-than-expected inflation reading could reinforce expectations that the RBI will maintain its tighter monetary policy stance or consider additional interest rate increases.
However, persistent inflation also presents economic challenges. Higher consumer prices can weaken household purchasing power, increase business costs and complicate India’s growth outlook. For the Indian rupee, the market reaction will depend on whether investors interpret higher inflation primarily as a reason for additional RBI tightening or as a sign of increasing economic pressure.
USD/INR Technical Analysis: Can the Dollar Break Above 97? The USD/INR technical outlook remains broadly bullish, although the hourly chart suggests that upward momentum has weakened following the latest pullback. As of now, October 9, USD/INR is trading around 96.7475, slightly above its 20-period simple moving average at 96.7394.
The pair has maintained a series of higher trading levels since late September, advancing from below 96.00 toward the 96.80 region. Friday’s sharp decline toward 96.50 was followed by a recovery, indicating that buyers returned before the pair could establish a sustained move lower.
However, the Moving Average Convergence Divergence (MACD) indicator remains below its signal line, with a negative histogram reading. This suggests that short-term bullish momentum has moderated despite the recovery.
Why is the Indian rupee weakening against the US dollar?
The Indian rupee has faced pressure from elevated US Treasury yields, strong dollar demand, crude oil prices and uncertainty surrounding global monetary policy. RBI intervention and easing US yields have provided some support, but the broader pressure remains.
When is India’s next CPI inflation report?
India’s September CPI inflation report is scheduled for Monday, October 12, 2026. Societe Generale expects headline inflation to rise to 5.6% year-on-year, compared with approximately 4.8% in August.
How does the RBI interest rate hike affect USD/INR?
Higher RBI interest rates can support the Indian rupee by improving returns on rupee-denominated assets. However, USD/INR also responds to US interest rates, inflation expectations, oil prices and international capital flows.
AUD/JPY retested the 110.50 level after securing four daily gains, driven by renewed appetite for risk-sensitive assets and technical buying. Cautious Bank of Japan communications reduced near-term rate hike expectations, while sticky Australian inflation keeps RBA rate hike risks plausible. Key risks that could reverse gains include stronger Japanese data, hawkish BoJ signals, weaker commodities or a broad risk-off move favouring the yen. The AUD/JPY currency pair has fluctuated this week. The Australian dollar gained against the Japanese yen in four of the last six trading sessions, and after two straight declines, AUD/JPY approached the 110.50 level during the Asian trading session.
Is this recent upward movement a sustained recovery, or just a temporary pause before a potential decline?
Why Buyers Are Returning Signals from the Bank of Japan (BoJ) are bringing buyers back. Even though the BoJ hiked interest rates in September, markets found its guidance less aggressive than expected.
Comments from Governor Ueda on Tuesday and statements from board member Ayano Sato, who advocated for a gradual approach to monetary policy tightening, suggest that borrowing the yen may remain inexpensive for now.
Markets now price in a much lower chance of an October rate hike from the BoJ, now around 12% compared to last week’s 40%. This shift has lowered immediate demand for the yen, potentially prompting carry traders to rebuild long positions in the Australian dollar.
Australia’s higher interest rate differential also provides ongoing fundamental support for the Australian dollar. The Reserve Bank of Australia (RBA) has kept a tighter monetary policy than the BoJ, which gives the Australian dollar a yield advantage.
Is the Upside Momentum Sustainable? This upside momentum, however, needs more confirmation to prove sustainable. While buyers did push the pair back above the 110.00 psychological level, it’s still below its 100-day Simple Moving Average (SMA) near 112.45.
Short-term technical indicators, like the Relative Strength Index (RSI) on lower timeframes, look overbought. For this uptrend to continue, we’d need a clear daily close above 111.00.
Fundamentally, the interest rate differential and the BoJ’s cautious stance offer some support. But these gains will need ongoing confirmation to stick.
If Japanese monetary policy stays gradual and Australian economic data holds up, the pair might extend its recent climb. Yet, the broader technical picture suggests sellers could keep pushing down on rallies until it breaks past key moving averages.
Potential Disruptors Ahead Several factors could disrupt the current rebound. Any hint of a more hawkish shift from the BoJ or stronger Japanese economic data could reignite rate hike expectations and strengthen the yen.
Reports suggest President Trump discussed concerns about yen weakness with Prime Minister Takaichi, sparking talk of a possible joint US-Japan intervention. This kind of intervention would directly oppose yen weakness, and it could happen with little warning.
On the Australian side, given Australia’s heavy reliance on raw material exports to China, any unexpected weakening in Chinese manufacturing or industrial output would hurt the Australian dollar.
A general move towards risk aversion in global markets also often sends investors to the yen as a safe-haven, potentially pushing AUD/JPY lower. So, we’ll need to watch upcoming central bank meetings and key economic data releases closely.
What’s driving the recent buying interest in AUD/JPY?
Softer comments from the Bank of Japan have reduced the odds of an October rate hike to about 12%, weighing on the yen. Meanwhile, Australia’s higher yields continue to support the Australian dollar.
What could disrupt the current recovery?
The key factors that could disrupt recovery include stronger Japanese economic data, more hawkish signals from the BoJ, weakness in commodity prices, or a broad move to risk aversion that strengthens the yen as a safe haven.
What’s the main technical resistance limiting AUD/JPY’s immediate gains?
The 100-day Simple Moving Average near 112.45 is a significant overhead resistance. It’s currently capping any bigger upward moves.
GBP/USD rose to 1.3237 on Friday. Following a rapid decline, the pound has entered a consolidation phase, although the main external drivers remain a strong US dollar and a renewed rise in bond yields amid inflation risks.
The focus remains on Bank of England policy. Markets put the probability of a rate hike at the November meeting at over 80% and are effectively pricing in two 25-basis-point hikes by February. High energy prices and concerns that inflationary pressures in the UK could prove more persistent are reinforcing these expectations. MPC member Megan Greene also warned that the Bank of England should not rely solely on high bond yields as a means of curbing inflation.
During his speech in Istanbul, Andrew Bailey focused less on the next rate decision and more on financial stability and fiscal policy. He stressed the need for a credible and predictable fiscal strategy amid soaring borrowing costs. UK government bond yields are near multi-year highs, increasing pressure on the budget and making the pound more sensitive to any signs of deteriorating fiscal discipline.
As a result, the fundamental backdrop for sterling remains mixed. Expectations of further Bank of England tightening support the currency, but a strong US dollar, elevated global yields and rising UK fiscal risks are limiting GBP/USD’s upside. In the short term, the balance will depend on whether expectations of a BoE rate hike can outweigh pressure from the US dollar.
Technical Analysis
On the H4 chart, GBP/USD remains in the downtrend that developed after the upward correction ended. The pair attempted to recover towards resistance at 1.3250 but failed to establish a foothold above it. The current structure suggests that the corrective move may be nearing completion, with the main downward move poised to resume.
In today’s trading session, the pair is expected to decline towards the nearest support at 1.3185. A confirmed break below this level would set up a third Elliott wave, followed by a move towards 1.3118 and 1.3108. The MACD indicator provides further confirmation of the bearish scenario and remains in negative territory. Despite the local recovery in the histogram, the indicator’s position does not yet signal a full reversal of the medium-term trend.
On the H1 chart, GBP/USD appears to be in the final stage of its upward correction around 1.3250. This resistance coincides with the descending trend line, increasing the likelihood of renewed selling. The Stochastic oscillator has turned down from elevated levels, signalling weakening buying momentum.
The main scenario remains a decline towards 1.3180, followed by a further move towards 1.3104. Intermediate levels are 1.3201 and 1.3118. At the same time, a return above 1.3250 would weaken the current bearish scenario and open the way for a retest of resistance at 1.3303.
Conclusion GBP/USD has steadied after a sharp decline, although the outlook remains mixed as the pound contends with a strong US dollar, elevated bond yields and rising UK fiscal risks. Markets continue to price in further Bank of England tightening, with the probability of a November rate hike above 80% and two 25-basis-point hikes effectively priced in by February, supported by persistent inflation concerns. However, Andrew Bailey’s focus on fiscal sustainability and financial stability, rather than the next rate decision, highlights the broader challenges facing the UK economy. Technically, the pair remains bearish below 1.3250, with a decline towards 1.3185 and potentially 1.3104 if support breaks. A recovery above 1.3250 would ease pressure but would not alter the broader downtrend, with 1.3303 as the next key resistance level.
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Gold: Softer Yields Offer Relief as Institutional Buying Deepens Gold’s basic backdrop improved Friday with a weaker U.S. dollar and lower Treasury yields. Non-yielding bullion had recently faced headwinds from a strong dollar and rising yields. Softer labor-market data mean there is a 17% probability of a Fed rate hike in October and an 83% probability of a hike in December, keeping the end-of-year outlook restrictive. Other Fed officials, like Governor Waller, said, “additional” rate hikes will likely be needed to get inflation to the 2% target, and that they had the flexibility to determine the timing.
Strong investment demand is helping to offset the restrictive rate environment. Global gold ETFs added another 67 metric tons in September, bringing holdings to a record 4,256 tons. Strong third quarter inflows also set a record at $31 billion, according to the World Gold Council.
Silver: Investment Demand Confronts Weakening Solar Consumption Just like gold, silver benefits from the Fed shift. But while gold has transitioned to a more store of value role, silver has not, and its fundamental story remains more industrial. The Silver Institute expects 2026 to be the sixth consecutive year of a market deficit, with the estimated deficit for the year at 46.3 million ounces. The cumulative stock draw since 2021 is around 762 million ounces.
Industrial fabrication is estimated at 639.6 million ounces for 2026, impacted by silver thrifting and the substitution of silver in the manufacture of solar panels. However, AI infrastructure and automotive electronics, and the strengthening of the power grid remain positive demand drivers.
Coin and bar demand is expected to increase by 18% in 2026, while U.S. retail investment is expected to increase by 88% after several years of low demand.
Both metals are expected to have positive demand from investment, but silver has a more structural supply constraint than gold.
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Gold Technical Analysis: XAU/USD Breaks Above $4,184 as $4,226 Becomes the Next Upside Test
Gold – Chart Gold is trading at $4,193.60 on the 2-hour chart, and what draws my attention is the convincing break above the descending trendline and the resistance level at $4,183.83. Additionally, price is trading above the short-term moving averages, which is an improvement in the structure after several weeks of lower highs.
The first resistance that I am focusing on is at $4,225.81. Once above that, the next resistances come in at $4,271.57 and $4,311.17. On the other hand, if the breakout fails, the support comes in at $4,183.83, then $4,141.86 and $4,103.24.
RSI has moved into the upper range, which indicates bullish momentum, but has stretched a bit too far, which indicates that a pullback could be on the cards. Overall, I’m bullish as long as gold stays above $4,183.83 and the descending trendline. A clear break above $4,225.81 would target the next resistance at $4,271.57. A break below $4,141.86 would negate the breakout.
Silver Technical Analysis: XAG/USD Reclaims $59.96 as $61.72 Becomes the Next Major Test
Silver – Chart Silver is near $60.42 on the 2 hour chart, having bounced sharply from the $58.94 area. Price has reclaimed $59.96, and is now testing the downward sloping trendline. It’s a bullish sign that price has recovered to this area, but as long as silver is trading below the moving-average cluster, the structure remains bearish.
The first area of resistance is at $61.72. A close above this level would open up $63.06, followed by the $65.09 area. If the recovery loses steam, $59.96 would be the first area of support, with $58.94, and $57.64 following suit.
The Relative Strength Index (RSI) has recovered to the upper portion of its range, which means momentum is improving. I am currently neutral to slightly bullish, and would become more bullish with a 2-hour close above $61.72, with a break of $63.06 next. A move back below $58.94 would bring the trendline back into play and give the sellers control once again.
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The Pound-Euro rate could stay supported if French fiscal concerns persist, although rising UK gilt yields may limit Sterling’s upside. The Pound to Euro (GBP/EUR) exchange rate maintained a positive trajectory on Thursday, trading just below the 15-month high struck earlier in the week.
At the time of writing, the GBP/EUR exchange rate was trading at around €1.1806. A modest rise from the start of Thursday’s session.
Latest — Exchange Rates:
Pound to Euro (GBP/EUR): 1.180062 (+0.03%)
Pound to Dollar (GBP/USD): 1.322954 (+0.12%)
Euro to Dollar (EUR/USD): 1.121089 (+0.09%)
DAILY RECAP:
The Euro (EUR) continued to face resistance on Thursday as renewed concerns over European energy prices and France’s deteriorating fiscal position weighed on sentiment towards the single currency.
Brent crude climbed back above $104 a barrel amid fresh supply concerns, adding to inflationary pressures across the Eurozone and contributing to another rise in regional bond yields.
France remained at the centre of the market’s concerns as investors continue to question the sustainability of France’s €3.5tn debt burden and the government’s ability to rein in its sizeable budget deficit, particularly as its government is seen as unlikely to push its spending cuts through parliament.
The Pound (GBP) traded with modest support on Thursday following a speech by Bank of England (BoE) Governor Andrew Bailey.
While the bulk of his speech focused on his calls for financial markets to better prepare for future fiscal shocks, he also touched on the need for monetary policy to focus on controlling target.
Bailey warned that inflation risks are set to rise the longer that energy prices remain elevated and that the BoE is 'fully committed' to returning inflation to target.
Near-Term GBP/EUR Forecast: Rising UK Bond Yields to Sap Sterling? Turning to the end of the week, amid the ongoing turmoil in France investors are also likely to keep at least one eye on the UK bond market amid a continued rise in borrowing costs.
If Gilt yields continue to appreciate it's likely to raise fresh concern about the fiscal headroom available to Chancellor John Healey in his upcoming budget, and potentially apply pressure to the Pound Euro exchange rate.
Meanwhile, EUR investors will look to speeches by European Central Bank (ECB) policymakers for fresh impetus on Friday, with the Euro potentially catching bids if a hawkish consensus strengthens ECB rate hike expectations.
Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.
The Pound-Dollar rate could rebound if US consumer confidence weakens, although persistent risk aversion may keep the safe-haven Dollar supported. The Pound US Dollar (GBP/USD) exchange rate slipped to a six-day low on Thursday before bouncing back as volatile bond markets impacted the pairing.
At the time of writing, GBP/USD was trading at $1.3226, up marginally on the day.
Latest — Exchange Rates:
Pound to Dollar (GBP/USD): 1.3229 (+0.12%)
Euro to Dollar (EUR/USD): 1.121178 (+0.10%)
Dollar to Yen (USD/JPY): 157.87288 (-0.14%)
DAILY RECAP:
The Pound (GBP) struggled to establish a clear direction on Thursday, with a quiet UK economic calendar leaving Sterling vulnerable to broader market movements.
The Pound moved erratically as UK gilt yields climbed to multi-year highs before easing back from their peaks. The initial jump in borrowing costs unsettled GBP, as higher government financing costs added to the challenges facing the Treasury ahead of the Autumn Budget.
However, the subsequent retreat in gilt yields helped calm some of those concerns, allowing the Pound to recover its earlier losses.
Meanwhile, the US Dollar (USD) was also mixed on Thursday as a shifting market mood left USD without a clear directional bias.
The currency initially firmed amid a deterioration in market sentiment. Risk appetite took a hit as oil prices climbed again following recent attacks on oil tankers in the Strait of Hormuz. At the same time, energy companies in the US shut down some offshore oil and gas platforms in the Gulf of Mexico as an approaching hurricane raised operational risks.
Expectations for higher interest rates around the world added to the pressure on sentiment, while reports that some major tech companies are seeking to raise billions of Dollars through debt also unsettled markets.
However, the market mood improved slightly as the session went on, prompting USD to relinquish its gains.
Near-Term GBP/USD Forecast: US Consumer Confidence in Focus Looking forward, the key data release on Friday will be the latest US consumer sentiment index from the University of Michigan.
Markets expect US household morale to have deteriorated to 47.6 in October, which would be its third consecutive decline and its weakest reading since May. If the data prints as forecast, the ‘Greenback’ may face headwinds.
Meanwhile, market risk appetite will likely continue to play a part in the safe-haven US Dollar’s direction. If investors remain risk averse, the ‘Greenback’ could attract support.
Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.
