USDJPY remains constructive and moved to the upper side of four-day congestion but continues to face headwinds from fading bullish momentum and freshly formed 55/200DMA death cross (strong resistance zone at 158.33/92 provided by falling 55DMA, 20 DMA and Fibo 76.4% of 160.39/152.93).
Another obstacle would be hawkish signals from BoJ, as rising inflation keeps the central bank highly alerted, while expectations for Fed Oct rate hike faded after downbeat Sep NFP data.
Daily studies show neutral to negative alignment, Ichimoku cloud turns down and started thickening that may also obstruct upside attempts (cloud base lays at 159.36) along with other indicators.
We still lack clearer direction signal, which could be developed on clear break above MA’s, cloud, as well as lower top at 159.03 (positive) or dip below 157.52 (broken Fibo 61.8%) and acceleration through supports at 156.64 (daily Kijun-sen / broken 50% retracement) that will be needed to confirm bearish signal.
Wednesday’s release of FOMC September policy meeting Minutes will be closely watched for fresh signals.
The information contained in this document was obtained from sources believed to be reliable, but its accuracy or completeness cannot be guaranteed. Any opinions expressed herein are in good faith, but are subject to change without notice. No liability accepted whatsoever for any direct or consequential loss arising from the use of this document.
Bullish engulfing candle warns of potential NZD/USD reversal
USD-rates relationship shows tentative signs of re-engagement
October Fed tightening pricing has fallen sharply
RBNZ swaps still imply an aggressive tightening cycle
A softer US payrolls report last Friday and less aggressive hawkish language from key Fed officials has seen expectations for an October rate hike from the FOMC pared back sharply.
However, entering early October, the US dollar showed little interest in the partial unwind of the historic surge in front-end yields seen through September, suggesting its previously strong relationship with rates had temporarily broken down.
But there are now tentative signs that relationship may be starting to re-engage, and with markets still pricing an aggressive RBNZ tightening cycle over the coming year, the combination has helped trigger a reversal pattern in NZD/USD that warns the bearish move from mid-August may have run its course.
NZD/USD turning point may be approaching
Source: TradingView
NZD/USD has undergone a pronounced bearish move since the highs set in mid-August, sliding from just shy of 0.6000 to below 0.5600 as downside pressure intensified.
After such a sizeable move that has taken the pair beneath its key medium and long term moving averages, the price action over the past few sessions suggests a turning point may be approaching.
The pair initially bounced from 0.5581, the swing low set in November last year, before Tuesday produced a clear bullish engulfing candle. Coming after such an extended bearish move, the pattern warns that directional risk may be starting to skew higher.
The latest daily candle has the price trading above the downtrend running from the August highs, further bolstering the case for near-term upside.
That view is backed by the oscillators. RSI (14) has established higher lows and is pushing out of oversold territory, while MACD is curling towards the signal line and appears close to a bullish crossover, albeit in negative territory, suggesting peak downside momentum may already have passed.
Overhead, 0.5639 has been respected on several occasions going back to late last year, making it the immediate focal point. A break above would bring 0.5696, a breakdown level from mid-September, into play, followed by 0.5750, which has acted as both support and resistance over recent months.
Below, 0.5581 remains the immediate point of interest. A break beneath would point to the potential for a deeper unwind towards the Liberation Day low of 0.5486 from April 2025 and the COVID low at 0.5470.
Dollar-rates breakdown may have been temporary
Suggesting the potential turning point may not be Kiwi-specific, similar reversal patterns have emerged across a range of G10 currencies against the US dollar so far this week.
As shown in the graphic below, DXY had maintained a strong positive relationship with front-end US yields for several months, particularly over the 20-session window.
That relationship collapsed abruptly around the quarter turn. The five-session correlation between daily changes in DXY and the US 2-year yield fell from +0.83 on September 28 to -0.93 by October 5, while the 20-session measure also dropped sharply towards zero.
Source: LSEG
The abruptness and timing of the breakdown of this long-standing relationship suggests it may have been driven by window dressing and capital flows around the turn of the month, rather than a fundamental change in the dollar's relationship with front-end rates.
It's not concrete at this point, but there are tentative signs the relationship may be starting to re-engage. The five-session correlation has recovered to -0.66, while the 20-session measure has edged back to +0.17.
Neither is strong enough to suggest the relationship has reconnected, but combined with the reversal patterns across the G10 FX complex, it raises the possibility the broader dollar may also be approaching a turning point.
Fed pricing turns less hawkish
After an historic surge in September, a partial reversal has also taken place in US 2-year yields, coinciding with a sharp pullback in hawkish pricing for the Fed's October meeting.
At one point in late September, more than 17 basis points of tightening was priced for that meeting. Less aggressive hawkish language from New York Fed President John Williams and Vice Chair Philip Jefferson, helped by the softer payrolls print last Friday, has seen that fall to just five basis points.
Cumulative tightening over the next year has also come off the boil, falling from more than 94 basis points of hikes priced through the Fed funds futures curve in late September to just above 80 basis points at the time of writing.
Source: TradingView
FOMC minutes could test the reversal
In an otherwise quiet data week, the key risk for the US dollar today is the release of the September FOMC minutes.
Put bluntly, the tone is likely to be hawkish. The meeting delivered a unanimous 25 basis point hike, the Fed’s first in three years, alongside stronger growth forecasts, lower projected unemployment and an upward revision to the core PCE inflation outlook compared with June.
The dot plot also showed most officials expected at least one further hike this year, with some signalling moves in both October and December. That goes some way to explaining why markets continue to fully price another 25 basis point increase by December, even as expectations for an October move have been pared back sharply.
Given how hawkish the meeting was, the bar for the minutes to surprise in that direction looks high. But if there’s even a sprinkling of doubt over that outlook, it could add to the pullback in front-end yields and exacerbate the reversal already underway in the US dollar.
Kiwi still has domestic tailwinds
While the potential turning point for the dollar looks largely US-specific, that’s not to say there aren’t prevailing tailwinds also helping underpin the Kiwi.
The latest NZIER Quarterly Survey of Business Opinion, released on Tuesday, showed a significant improvement in sentiment, with a net 40% of firms expecting the economic outlook to improve, up from 14% previously. Investment and hiring intentions also strengthened, while there were signs spare capacity may be starting to dissipate, especially in the labour market.
Of course, that does not mean the Kiwi economy is suddenly roaring back to life. Hard data remains inconsistent and soft, fitting with a recovery still in its infancy.
But with inflation the RBNZ’s sole mandate, and persistently elevated energy prices combining with a softer New Zealand dollar to fuel imported inflation, swaps markets continue to price an aggressive outlook from the bank. A rate hike in October is deemed marginally more likely than not at around 60%, while a move by the December meeting after the general election is fully priced, with roughly a one-in-three chance of two hikes by then.
By the August meeting next year, more than four full 25 basis point hikes are priced, which would leave the overnight cash rate at 3.75% or higher, levels the RBNZ currently considers restrictive.
The US dollar rally has finally lost some momentum after three strong weeks, allowing USD/CAD to retreat from its cycle high. Softer US data, reduced Fed hike bets and easing Treasury yields have weighed on the greenback, while a strong Canadian trade surplus and the prospect of firmer crude oil add to the case for a near-term USD/CAD pullback.
View related analysis:
Gold Price Outlook: Bears Target 4,000 Before a Potential Rebound
AUD/USD Q4 Outlook: RBA and Fed Hikes Set the Tone
Australian Dollar Outlook: AUD/USD Bears to Face Near-Term Reprieve?
British Pound Outlook: GBP Recovery Mixed as BOE Hike Bets Rise
USD/CAD Retreats as the US Dollar Rally Loses Momentum
A weak payrolls report and slightly softer headline ISM services print helped the US dollar index retreat further from Monday’s cycle high, as Fed hike bets were scaled back. The bond-market selloff also stabilised to pull Treasury yields a touch lower, though they remain firmly elevated. Trade data showed imports surged 4.3% to a record $420.8 billion, widening the deficit to $105.6 billion and building the case for weaker growth.
A firmer euro also contributed to US dollar weakness, with bets of an ECB hike in December rising to 80%. French bond yields also pulled back from their highs as bond-market stress eased.
The weaker US dollar helped USD/CAD pull back from arguably stretched highs, aided by an unexpectedly strong Canadian trade surplus. Commodity FX was higher in general, with NZD/USD the strongest FX major and AUD/USD rising for a third day, in line with my near-term bias. It seems markets are taking advantage of the minor reprieve from the US dollar rally, while risk appetite on Wall Street amid earnings optimism also helped.
US Dollar Index (DXY) Technical Analysis
We have just witnessed the strongest three-week rally for the US dollar index since November, but with resistance on hand, a pause in the trend – if not a pullback – is arguably due. The fact that payrolls undermined the rally strengthens the case for momentum to lose steam over the near term.
DXY Weekly Chart Points to a Pause
We’re not even halfway through the week, but DXY is on track for a bearish pinbar should it close around current levels or lower by Friday. Note that prices are back below the May high, while this week’s high has so far respected the upper trend-channel resistance and has not yet managed to test the 50% retracement level between the January 2025 high and January 2026 low. The weekly RSI (2) was also heavily overbought last week.
The daily chart shows a small bearish engulfing candle formed on Tuesday, following a wide-bodied shooting star on Monday. A bearish divergence also formed on the daily RSI (2) within the overbought zone, while RSI (14) is now curling lower from its own overbought zone.
US Dollar Pullback Could Remain Shallow
None of this points to a sharp pullback at this stage, and we should keep in mind the strength of the three-week rally that took us to these levels. But with a lack of top-tier data aside from the FOMC minutes, we could now find volatility across FX majors remains on the lower side while a shallow pullback plays out on DXY.
Source: ICE, TradingView
USD/CAD Technical Analysis: US Dollar vs Canadian Dollar
Widening yield differentials between the US and Canada helped USD/CAD enjoy its best three-week rally since December 2024. With the US-Canada 2-year spread remaining pinned near cycle highs, I am not on guard for a deep pullback on USD/CAD.
But given the rally has stalled around the June high, with a shooting star candle followed by bearish range expansion, perhaps a pullback to the 10-day EMA at a minimum is due. And like the US dollar index, the daily RSI (2) on USD/CAD formed a bearish divergence within its overbought zone, while RSI (14) is curling lower from its own overbought zone.
Crude Oil Bounce Could Deepen the USD/CAD Pullback
The 4-hour chart shows support has been found around its 50-bar EMA and weekly pivot point, while RSI (2) is heavily oversold. Perhaps bears may be seeking to fade into moves towards the June high and maintain a near-term bearish bias while USD/CAD remains beneath Monday’s high.
Note the Brent futures chart I have overlaid is inverted, as it tends to correlate positively with USD/CAD. So if oil prices bounce – which I have a hunch they may – it could build the case for a slightly deeper pullback in USD/CAD over the near term.
Daily Spot Silver (XAG/USD) Spot silver is trading higher on Tuesday after holding above the long-term 50% level at $60.835. This is the key decision area on the daily chart. Traders are straddling the midpoint after Friday’s break below it and today’s recovery back above it.
The main trend is down according to the daily swing chart. A trade through the main top at $67.55 will change the main trend to up. A move through Friday’s low at $59.69 will signal a resumption of the downtrend.
The minor trend is down. A trade through the minor top at $62.09 will turn the minor trend up and show that buyers are doing more than defending the midpoint.
The first upside area is the short-term retracement zone at $61.04 to $62.98. Silver is trading inside the lower half of this area. Taking out $62.09 would put the upper level at $62.98 in play, followed by the 50-day moving average at $64.17.
Failure to hold the long-term 50% level at $60.835 would expose $59.69. Below it, the next swing-bottom support comes in at $56.56 and $54.78.
What to Watch Wednesday’s Fed minutes are the next read for a silver market that’s been trading off the U.S. Dollar Index and long-term Treasury yields. Both dipped Tuesday and that was enough to lift spot silver back over the midpoint. Neither one has turned yet.
Spot silver bottomed at $60.28, got back above $60.835 and ran up to $61.71 late Tuesday, within 40 cents of $62.09. The bias is still to the downside while the main trend is down and spot silver remains below the 50-day moving average. The move back above the midpoint gives shorts a reason to be careful.
US Dollar Talking Points:
This was a wide-ranging webinar looking at several macro items, with price action as a center point.
The US Dollar is coming off of overbought conditions on the daily and EUR/USD remains oversold while testing a major spot of long-term interest.
Also looked at in this session: GBP/USD, USD/JPY, USD/CAD, Gold, S&P 500, Nasdaq 100 and Treasuries.
As we go into Q4 the wall of worry is high. Treasury yields have pushed up to their highest levels since the Financial Collapse and with the trove of oncoming debt coming due the onslaught of supply is unlikely to help that theme. These higher borrowing costs make for a more unfriendly backdrop for both corporates and the US government, but, in and of itself, that’s not necessarily a deal killer. The continued bullish price action in equities illustrates that.
I looked into this for the Q4 forecasts, and the video below highlights that.
This content was created by an affiliate of FOREX.com and represents the views and opinions of the author/speakers, not the views and opinions of Forex.com, StoneX Group Inc., or its subsidiaries. The content has not been independently reviewed by FOREX.com.
USD
The US Dollar is already at a fresh yearly high and while USD/JPY was the major driver before, now, it’s EUR/USD. As similar debt problems have engulfed European sovereign debt markets, there’s the legitimate concern over European fragility. But, for both the US and Europe it’s in best interests for calm particularly in currency markets.
For the USD, prices are testing a major level at 101.80. As of this webinar, it was short-term support. But, chasing the move is challenging just given how stretched RSI has become, and also taken with a recent illustration of divergence given yesterday’s higher-high on price and lower-high via RSI.
For USD-strength: USD/JPY remains the most compelling market, in my opinion. For USD-weakness, GBP/USD stands out as most attractive with EUR/USD presenting a possible case, as well.
US Dollar Daily Price Chart
Chart prepared by James Stanley; data derived from Tradingview
EUR/USD
A central theme of this webinar was ‘capitulation,’ and I discussed that in-depth regarding the S&P 500, gold, EUR/USD and USD/CAD. For EUR/USD, the week opened with a violent move lower as a major level was tested at 1.1212, which is the golden ratio of the lifetime move in the pair.
So far, that’s led to bounce, which I’ll look at in greater detail below.
EUR/USD Monthly Chart
Chart prepared by James Stanley; data derived from Tradingview
EUR/USD Daily
From the daily chart we can see last week’s reading where RSI closed below 20, which is rare. This was the lowest daily close for RSI since 2015, right after a massive sell-off and it was after that prior reading when price began to bounce.
RSI is not predictive, and this doesn’t have to mean that a low is in place. But it does provide for context that chasing the move lower is a challenge when it’s already so deep into the sell-off. And combined with the possibility of support above, traders can use shorter-terms to try to build the bullish case for the pair.
EUR/USD Daily Chart
Chart prepared by James Stanley; data derived from Tradingview
GBP/USD
I’ve been tracking Cable as more attractive for USD-weakness and as illustration of that RSI has already pushed out of oversold territory. And more recently, as EUR/USD set a fresh yearly low yesterday, GBP/USD was already setting up higher-lows and the bullish move has better development on shorter-terms at this point.
From the daily, we can see another big zone being tested and for those looking for USD-weakness, this can remain as a more compelling option, at this point.
GBP/USD Daily Chart
Chart prepared by James Stanley; data derived from Tradingview
USD/JPY
While USD/JPY remains a massive component of USD-strength, more recently, it’s been lagging behind as the DXY rally has been driven by the meltdown in the Euro.
But – for USD-strength, I still think USD/JPY is the more attractive backdrop from shorter-terms, as the still bullish structure has continued to find buyers on pullbacks such as the six consecutive days of support tests at the key zone of 156.68-157.22.
I wrote about the pair yesterday and my view is largely the same as price has only moved incrementally higher since.
USD/JPY Daily Chart
Chart prepared by James Stanley; data derived from Tradingview
USD/CAD
For much of the USD rally the complication with USD/JPY was that intervention threat, which was especially high when the pair was at fresh highs. USD/CAD, however, has been in the midst of an aggressive uptrend and this is why it was one of my more preferred venues for USD-strength.
The challenge now is the tide may soon be shifting as the overbought trend has started to show turbulence.
USD/CAD Daily Chart
Chart prepared by James Stanley; data derived from Tradingview
Gold
The webinar began with gold and that remains a hot button for me. At this point there’s possibility of a low but it’s still very early stage, and I used this as a central point for that concept of capitulation.
Big picture, as discussed in the macro portion towards the end, I think government reliance on debt keeps gold as an attractive accumulation venue, bigger picture, and on a more near-term basis that draws attention to the $4k level that saw considerable buying interest in June and July, even as the fundamental backdrop should have darkened for the metal.
Gold Daily Price Chart
Chart prepared by James Stanley; data derived from Tradingview
--- written by James Stanley, Senior Market Analyst, Global Macro
The trading week continues to unfold, and the Canadian dollar has begun to show signs of renewed strength in the short term. This can be seen in recent USD/CAD price action, with the pair posting a decline of roughly 0.2% over the last two sessions, allowing the Canadian currency to recover part of the ground lost in previous weeks.
However, this move is still not enough to confirm a consistent shift in market direction. For now, it appears to be driven more by a temporary loss of momentum in the U.S. dollar than by a structural recovery in the Canadian dollar. As a result, a phase of indecision is beginning to develop and could remain relevant for USD/CAD price action over the coming sessions.
Is the USD Beginning to Lose Momentum?
Several sessions have passed since the release of the latest U.S. NFP figures at the end of last week. One of the main consequences of the report was a temporary reduction in expectations for higher interest rates ahead of the Federal Reserve's October meeting.
The slowdown observed in labor market conditions reduced part of the room available for a more aggressive Fed in the short term, a development that is already reflected in monetary-policy probabilities. According to CME Group, markets are currently pricing in more than an 80% probability that interest rates will remain unchanged at the October 28 meeting, keeping the benchmark rate at 4.00%. Expectations of a more patient Federal Reserve have become increasingly evident since the employment data was released.
Source: CMEGROUP
The most visible consequence of this shift in expectations has been a partial loss of momentum in the U.S. dollar. Part of this dynamic is linked to a recent moderation in U.S. Treasury yields, with the 10-year rate moving away from the recent highs observed above 5.3%.
At the same time, this moderation has also started to appear in the behavior of the DXY, the index that measures U.S. dollar strength against its main rivals. After approaching the 102-point area, the index has moved back toward the 101-point zone, reflecting a loss of momentum that coincides with expectations of a less aggressive Federal Reserve in the near term.
Source: TradingEconomics
This dynamic remains particularly important because a moderation in bond yields could also begin to reduce part of the relative attractiveness of U.S. assets. A smaller yield advantage may temporarily slow capital inflows into the United States and limit some of the demand supporting the dollar.
This is precisely the environment that has allowed the Canadian dollar to recover some ground over recent sessions and could continue to support a broader phase of indecision around USD/CAD. However, it is also important to remember that the interest-rate differential continues to favor the United States by a considerable margin. Because of this, the Canadian dollar still carries several weeks of weakness within its medium-term outlook, and any signal suggesting that the Federal Reserve could once again adopt a more aggressive stance may restore strength to the U.S. dollar and could revive the buying pressure that has dominated much of USD/CAD's recent price action.
What About the Trade War?
Another factor that remains relevant for the Canadian dollar is the trade relationship between Canada and the United States.
Significant tariff measures continue to remain in place between both countries. The United States maintains tariffs of up to 50% on certain Canadian goods and, since late September, additional restrictions have also been imposed on selected imports. Canada, meanwhile, continues to apply retaliatory tariffs ranging between 15% and 50% on certain U.S. products.
This situation continues to reflect an environment of trade tension that could affect the region's economic outlook over the coming months.
What stands out is that during the G20 trade ministers' meetings held in October, U.S. representatives indicated that several important issues with Canada remain unresolved. This suggests that, at least in the short term, the economic dispute remains far from a definitive resolution and that negotiations continue to progress slowly.
Although this issue has received less attention than central banks and bond markets in recent weeks, it remains an important consideration for Canada due to its heavy dependence on trade with the United States. More than 70% of Canadian exports are destined for the U.S. market and, if trade tensions continue, they could begin to weigh on Canada's growth outlook over the coming months.
For this reason, unless meaningful diplomatic progress begins to emerge, the trade conflict may continue to represent an obstacle to a stronger recovery in the Canadian dollar. Under this scenario, the situation could continue to favor buying pressure around USD/CAD in the weeks ahead.
USD/CAD Technical Forecast
Source: StoneX, Tradingview
The aggressive uptrend is entering a risk zone: USD/CAD price action continues to reflect a dominant bullish bias developed over recent weeks. This dynamic has helped establish a short-term bullish trendline that continues to guide much of the pair's movement. However, the recent bearish corrections are beginning to place that structure under pressure. If buyers fail to regain momentum above key technical barriers, a broader phase of indecision could begin to develop over the coming weeks.
MACD: The MACD histogram continues to show a gradual slowdown and is moving closer to the 0 neutral line. This reading reflects fading momentum within short-term moving averages and supports the possibility of a more consistent phase of neutrality developing around USD/CAD.
RSI: The RSI also continues to flatten in recent sessions, signaling that the dominance of bullish momentum has begun to moderate. Nevertheless, the indicator remains close to the 70 overbought threshold, a situation that continues to highlight the excess buying pressure accumulated in previous weeks and leaves room for additional short-term corrective declines.
Key Levels:
1.42355 – Key Resistance: The last major barrier observed in recent months and a high not seen since June of this year. Price action that manages to consolidate above this level would not only reinforce the current bullish bias but could also begin to establish a more consistent higher-high structure on the daily chart, opening the door to a broader uptrend.
1.41564 – Near-Term Barrier: An important retracement level observed several weeks ago that now stands as the closest support area to monitor. This reference could become the primary level to watch if recent bearish corrections continue to extend.
1.40526 – Critical Support: An important equilibrium zone established during previous weeks that remains the most significant downside barrier within the current structure. Moves toward this level could begin to reflect a more evident loss of direction, place the current uptrend at risk, and open the door to a broader phase of indecision that could eventually evolve into a more established trading range.
Written by Julian Pineda, CFA, CMT – Market Analyst
Gold 061026 Daily Chart Gold gains ground as traders focus on U.S. dollar’s pullback and react to falling Treasury yields.
U.S. dollar is losing ground against a broad basket of currencies as traders take some profits off the table near yearly highs. Dollar’s weakness is bullish for dollar-denominated commodities, including gold.
Treasury yields moved lower as some traders were ready to buy the dip. The yield of 2-year Treasuries pulled back towards the 4.80% level, while the yield of 10-year Treasuries settled near 5.27%.
FedWatch Tool indicates that the probability of a rate hike at the next meeting in October is 19.4%. Traders continue to expect that Fed will raise rates at the meeting in December due to high oil prices. Worries about duration of the rate hike cycle serve as a negative catalyst for gold markets.
Oil prices rebounded from session lows, but this move did not put material pressure on the price of gold. Brent oil managed to climb back above the $100.00 level, indicating that oil traders remained focused on escalation risks in the Middle East.
Currently, gold attempts to settle back above the support at $4160 – $4180. If gold manages to settle above the $4160 level, it will head towards the next resistance level at $4300 – $4320. On the support side, a move below the $4100 level will open the way to the test of the next support at $4000 – $4020.
Silver Attempts To Settle Above $62.00
Silver 061026 Daily Chart Silver remains stuck in a tight range as gold/silver ratio is mostly unchanged. it looks that traders are waiting for stronger catalysts.
If silver settles above the $62.00 level, it will head towards the 50 MA at $64.16. A move above the 50 MA will push silver towards the resistance at $65.00 – $66.00. RSI is in the moderate territory, so there is plenty of room to gain additional momentum in case the right catalysts emerge.
On the support side, a move below the psychologically important $60.00 level will open the way to the test of the support at $56.00 – $57.00.
Gold Price Forecast
Every new Gold analysis as it publishes, today's technical signal and key levels, live price — on one page.
See all Gold forecasts
Platinum Moves Lower As Traders Ignore Falling Treasury Yields
Platinum 061026 Daily Chart Platinum is losing ground despite weaker dollar and falling Treasury yields. Traders focus on the rebound in the oil markets, which is bearish for platinum. High oil prices put significant pressure on global economy and may reduce demand for platinum. Palladium markets are down by -0.1%, which is neutral for platinum.
The technical picture remains unchanged as platinum continues its attempts to settle below the support level at $1700 – $1720. Platinum has already made a number of attempts to settle below $1700, but these attempts yielded no results. If platinum stays below the $1700 level, it will head towards the support level at $1600 – $1620.
On the upside, platinum needs to climb above the $1720 to gain upside momentum in the near term. In this case, platinum will head towards the 50 MA at $1760. A move above the 50 MA will open the way to the test of the resistance level at $1780 – $1800.
If you’d like to know more about how to trade gold and silver, please visit our educational area.
The first thing that stands out on Gold’s daily chart is a fresh local low at 4133.
That move allowed sellers to test the important support zone we discussed yesterday:
“(…) Not far below current prices, the bulls have another potential ally: the bullish gap from early August at 4098-4135. This is now the nearest important support zone, and it is additionally reinforced by the 78.6% Fibonacci retracement mentioned above.
That gives this area a realistic chance of slowing the bears down during the coming week.(…)”
And so far, that’s exactly what happened.
The support zone encouraged buyers to step back in, pushing Gold back above the psychological 4200 barrier.
That’s the good news.
The harder part begins now.
Gold is approaching an important resistance combination built around the upper boundary of the black declining channel and the red short-term downtrend line that started in late August.
So, the real question isn’t whether Gold can bounce.
It already did.
The question is whether buyers are strong enough to turn that bounce into something bigger.
Until those resistance lines are broken, we remain in observation mode and wait for price to give us a clearer signal.
What would damage the bullish case? A daily close below 4100 and the loss of the key 4098-4135 bullish gap.
Daily Takeaway
We will watch 4098-4135 support and the resistance lines above the current price.
Hold above support → bulls remain alive → attack on channel resistance stays in play.
Break above the black channel + red downtrend line → first stronger confirmation that buyers are regaining control.
Daily close below 4100 → bullish recovery scenario weakens significantly.
Bounce confirmed. Reversal? Not yet.
Final Thought: today’s Lab has one very clear theme: a reaction is not the same thing as confirmation.
Dollar and Gold are only part of today’s story. Silver, Platinum, Palladium, and Copper are sitting around their own key technical decision zones – and some of them may be very close to confirming their next larger move.
The American currency moved away from yearly highs as traders focused on falling Treasury yields.
U.S. Dollar Pulls Back From Yearly Highs
DXY 061026 4h Chart U.S. Dollar Index is losing ground as traders take some profits off the table after the strong rally and react to the pullback in Treasury yields.
The yield of 2-year Treasuries declined below the 4.80% level, while the yield of 10-year Treasuries settled near 5.27%.
The nearest support level for U.S. Dollar Index is located in the 101.50 – 101.65 range. If U.S. Dollar Index manages to settle below the 101.50 level, it will head towards the next support, which is located in the 100.75 – 100.90 range.
EUR/USD Rebounds As Traders Buy The Dip
EUR/USD 061026 4h Chart EUR/USD gains ground despite the disappointing Euro Area Retail Sales report. The report showed that Euro Area Retail Sales increased by +0.1% month-over-month in August, compared to analyst forecast of +0.2%.
Traders also had a chance to take a look at Germany’s Factory Orders report. the report indicated that Factory Orders declined by -10.6% month-over-month in August, compared to analyst forecast of -1%.
Currently, EUR/USD is trying to settle above the resistance at 1.1250 – 1.1265. In case this attempt is successful, EUR/USD will head towards the 50 MA at 1.1310. If EUR/USD climbs above the 50 MA, it will move towards the next resistance level, which is located in the 1.1335 – 1.1350 range.
GBP/USD Tests Resistance At 1.3285 – 1.3300
GBP/USD 061026 4h Chart GBP/USD gained ground as traders reacted to falling Treasury yields and focused on general weakness of the American currency.
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 forecastsGBP/USD climbed above the 50 MA at 1.3234 and is trying to settle above the resistance level at 1.3285 – 1.3300. If this attempt is successful, GBP/USD will move towards the next resistance, which is located in the 1.3385 – 1.3400 range. RSI is in the moderate territory, so there is plenty of room to gain momentum in case the right catalysts emerge.
USD/CAD Pulls Back As Traders Take Profits After Rally
USD/CAD 061026 4h Chart USD/CAD moved away from recent highs as traders have started to take profits after a multi-day rally. Other commodity-related currencies have also gained ground in today’s trading session.
If USD/CAD styas below the 1.4235 level, it will head towards the 50 MA at 1.4204. A move below the 50 MA will open the way to the test of the support level at 1.4135 – 1.4150.
On the upside, USD/CAD needs to settle back above the 1.4250 level to have a chance to gain upside momentum in the near term. In this case, USD/CAD will move towards the next resistance at 1.4350 – 1.4365.
USD/JPY Gains Ground As Traders React To Ueda’s Speech
USD/JPY 061026 4h Chart USD/JPY remains stuck near resistance at 158.00 – 158.50 despite the pullback in Treasury yields. I’d note that USD/JPY has become less sensitive to Treasury yield dynamics in recent trading sessions.
Today, traders focused on BoJ Governor Ueda speech. Ueda said that BoJ would continue to raise the interest rate.
If USD/JPY climbs above the 158.50 level, it will move towards the next resistance level at 160.00 – 160.50. On the support side, a move below the 50 MA at 157.76 will push USD/JPY towards the 157.00 level. If USD/JPY settles below 157.00, it will head towards the support level at 155.00 – 155.50.
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Gold remains stuck between a rock and a hard place, with the directional bias remains tilted to the downside. While dovish Federal Reserve repricing and lower oil prices in the last couple of days has provided some support, the metal is still undermined by the elevated yields and the risks that oil prices may rebound and create fresh volatility for financial markets. Meanwhile, the technical resistance is also there with the metal now stuck in a bearish trend. Uncertainty over US-Iran situation continue to create the highest source of pressure, while central bank buying means downside is also limited. For now, the path of least resistance and the near-term risks to our gold outlook remain slightly tilted to the downside.
Gold rebounds – for now
Gold briefly slipped below last week’s low of $4,111 before recovering as oil prices and Treasury yields retreated. The pullback in yields has been particularly helpful, after a period of rising borrowing costs and a stronger US dollar put considerable pressure on the precious metal. However, nothing significant has changed fundamentally to support sustained pressure yields or the dollar.
Granted, we have seen some weaker US macro data of late, while comments from Fed officials John Williams and Philip Jefferson, who have pushed back against expectations of an October rate hike, have also helped gold. Friday’s weaker-than-expected US jobs report saw the probability of an October increase fall to just 20%. The resulting dovish repricing has helped limit gold’s downside.
Next week’s US CPI report is the next big data release. A softer inflation reading would probably reinforce the recent dovish Fed repricing and give gold another leg higher. But a hotter number, particularly if Middle East tensions remain unresolved, could push yields higher and expose gold to another round of selling.
Central banks continued to purchase gold in August
Central bank demand remains a structural positive for gold. According to the World Gold Council, global central banks reported net purchases of 39 tonnes in August, taking reported year-to-date buying to around 170 tonnes. China was the largest buyer during the month, followed by Uzbekistan and Poland. Continued official-sector accumulation provides an important floor for gold, even if it does little to resolve the short-term bearish picture.
Technical Gold outlook and levels to watch
Today’s false breakdown below last week’s low of $4,111 is technically a positive sign, but only if it leads to a sharp squeeze higher. So far, the gains have been modest at best, so the picture remains less convincing – and the bearish trend could resume.
Source: TradingView.com
Indeed, the larger trend is still bearish. Gold has been trending lower since its January peak, although the psychologically important $4,000 level managed hold during the summer months. This remains the key long-term line in the sand. A decisive break below it would significantly weaken the broader bullish structure.
In fact, as can be seen on the weekly chart, gold is currently testing a major support zone between $4,000 and $4,120. The market has bounced from this area, which is encouraging for the bulls, but it needs to build on that recovery.
Source: TradingView.com
If the above support breaks on the weekly time frame, then it could a cold autumn for gold bulls.
Meanwhile, the daily chart is more concerning. Spot gold remains below both its 21-day exponential moving average and 200-day simple moving average, while the sequence of lower highs and lower lows remains intact. The recent bounce could therefore still prove to be nothing more than short covering.
For the technical picture to turn convincingly bullish, and for us to drop out near-term bearish gold outlook, the metal needs to break the near-term bearish trend and reclaim the $4,235–$4,282 resistance zone at the very least. Until that happens, the sellers retain the advantage.
A decisive break below $4,106 would instead expose the $4,000 area, followed by the June low around $3,942.
For now, consolidation is the name of the game. Gold has fundamental support from persistent central-bank demand, but the technical trend has yet to turn. The next major move is likely to be dictated by the combination of US-Iran developments, oil prices, bond yields and next week’s CPI report.
For the New Zealand Dollar (NZD), easing price pressures complicate the case for an October hike despite Westpac's bullish US Dollar forecast. New Zealand businesses are growing more confident, but Tuesday's Quarterly Survey of Business Opinion (QSBO) exposed the distance between improving sentiment and the recovery underpinning Westpac's New Zealand Dollar forecast.
The QSBO's seasonally adjusted business confidence balance climbed to a net 40% positive from 14%, while the balance reporting stronger trading activity slipped to -1% from +1%.
Selling-price measures also eased, complicating the argument for an immediate interest-rate increase.
In its assessment of the survey, Westpac said there was no compelling reason for the Reserve Bank of New Zealand (RBNZ) to abandon its October pause strategy.
Economist Michael Gordon cautioned that "there is still a wide gap between hopes and reality."
The bank sees NZD/USD reaching 0.59 in December 2026, 0.63 in June 2027 and 0.65 in December 2027, alongside a substantial rise in domestic interest rates.
At the time of writing, the New Zealand Dollar traded near US$0.5606, up 0.14% on the day after losing 0.30% on Monday.
September's 4.86% decline leaves a considerable recovery ahead if those forecasts are to be met.
Image: NZD to USD exchange rate performance over last 2 days Why Westpac expects the RBNZ cash rate to reach 4% Westpac's broader economic assessment describes an uneven recovery, with rural regions benefiting from strong export earnings:
"Agriculture remains the main engine of growth, with the strength in commodity export earnings helping to boost incomes, confidence and spending in regions with strong rural backbones."
Inflation presents a more persistent problem, particularly in electricity, insurance and council rates.
"Those increases have persisted for an extended period, and we expect further sizeable increases in many of these costs."
That supports the bank's expectation of renewed tightening after an October pause:
"We are forecasting a 25bp rate rise at the RBNZ's December meeting and expect the OCR to peak at 4% next year."
Higher New Zealand interest rates would improve the return on holding the currency, although Westpac acknowledges that tighter policy will also restrain growth and employment.
Image: NZD/USD 3-month chart The weakness extends beyond the US Dollar pair, with Sterling recently reaching a ten-year high against the Kiwi.
Westpac nevertheless identifies the dominant influence on NZD/USD:
"The slide in the Kiwi is mainly due to the strength of the US dollar, with NZD/USD down nearly 5% since the start of September to sit just below 0.56 at the time of writing."
The next domestic test is September-quarter inflation on 22 October, ahead of the RBNZ's 28 October decision.
Westpac considers that release potentially more informative for policy than today's improvement in business optimism.
Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.
A stronger Canadian Dollar features in Crédit Agricole's forecasts, with USD/CAD falling to 1.34 by June 2027 and 1.32 that December. Crédit Agricole forecasts a sustained Canadian Dollar recovery through 2027, even as its broader outlook allows for US borrowing costs to rise further first.
The bank puts USD/CAD at 1.38 in December 2026, 1.34 in June 2027 and 1.32 in December 2027.
A falling rate means a stronger Canadian Dollar, with fewer Canadian Dollars required to buy one US Dollar.
US yields remain an obstacle before 2027 relief Crédit Agricole's wider US outlook cautions against assuming an immediate collapse in Dollar support:
"We expect Treasury yields to continue rising into early 2027. The rates market has priced in a more restrictive policy path, reflecting persistent inflation pressures and growing expectations that policymakers may need to tighten in the months ahead. Inflation has proven more resilient than expected, while recent increases in energy prices risk creating additional upside pressure on headline inflation in the coming months."
The bank also warns:
"Front-end yields are likely to remain particularly sensitive to incoming inflation data and Fed communication over the coming quarters."
Crédit Agricole's currency path therefore allows for Canadian Dollar gains even while US yields remain a headwind.
Later in 2027, its broader currency analysis identifies a potential change:
"The US fiscal outlook could worsen further, and servicing US debt could start dominating the fiscal (and monetary) policies once US inflation subsides in 2027. We expect the Fed to cut rates in Q427, in a blow to the USD rate appeal."
At the time of writing, USD/CAD traded near 1.4249, down 0.11% on Tuesday after rising 2.77% in September.
Reaching 1.32 would require the pair to fall approximately 7.4% from that level, making this a substantial recovery forecast.
Canadian growth and employment face an early test Crédit Agricole expects Canadian economic growth to strengthen from 1.5% in 2026 to 1.8% in 2027, with annual inflation averaging 2.1% and 2.0%, respectively.
Tuesday's trade figures provided some encouragement: Canada's merchandise surplus widened to C$4.2 billion in August from a revised C$787 million in July.
Statistics Canada noted that tariff announcements can prompt importers to bring shipments forward before the duties take effect.
The next major domestic test is the September employment report on 9 October, following a setback in hiring.
Statistics Canada described August's weakness plainly:
"Employment declined by 42,000 (-0.2%) in August and the employment rate fell 0.1 percentage points to 60.8%. The unemployment rate was unchanged at 6.4%."
The labour-market risk also features in our Pound-to-Canadian Dollar outlook.
Another employment decline would make the recovery harder to establish, particularly if it weakened expectations for Canadian interest rates relative to US rates.
Friday's jobs figures will test whether Canada's economy can begin supplying its own support before that forecast reduction in US rates arrives.
RBI support limits the Indian Rupee's (INR) vulnerability, but MUFG sees USD/INR reaching 97.50 by September 2027 as demand for US Dollars persists.
Wednesday's Reserve Bank of India decision exposes a disagreement over how soon interest rates need to rise, with MUFG expecting a hold while Goldman Sachs and Morgan Stanley anticipate an increase.
For the Indian Rupee, however, MUFG's longer-term concern is that stronger currency defences cannot eliminate persistent demand for US Dollars.
The bank forecasts USD/INR at 96.00 in December 2026 and 97.50 in September 2027.
At the time of writing, the pair traded near 96.4031, up 0.06% on Tuesday after rising 0.19% on Monday.
MUFG's path allows an initial Rupee recovery, including USD/INR at 95.50 in March 2027, before renewed weakness later next year.
An October hold would still leave hikes ahead
MUFG expects the RBI to leave its repo rate at 5.25% on 7 October, but sees scope for a shift away from a neutral policy stance.
"We see a good chance RBI will also move its stance away from neutral to signal a tightening bias."
Goldman Sachs and Morgan Stanley instead expect a 25-basis-point increase on Wednesday, as does Crédit Agricole, which highlights oil, food prices and Rupee weakness.
MUFG favours a later start:
"We as such continue to forecast RBI to hike rates by 50bps in total, with 25bps each in the December 2026 and February 2027 meetings, and our conviction level is now higher especially post the hawkish tilt from RBI's Minutes in August."
That would take the repo rate to 5.75%, with the bank identifying a larger 75-basis-point cycle as a risk rather than its central forecast.
More reserves can contain volatility without reversing depreciation
MUFG estimates that facilities introduced to support the Rupee have attracted more than US$140 billion, strengthening the RBI's capacity to intervene.
The distinction is between accumulating Dollar reserves and selling those Dollars into the market:
"Note that there is no immediate US dollar selling transaction in the market from RBI's FX measures, but it does result in a larger stock of FX reserves on RBI's balance sheet."
Foreign investors repatriating investment proceeds remain a source of Dollar demand, while MUFG also flags India's strong pipeline of initial public offerings.
"Nonetheless, given still strong underlying Dollar demand including from gross FDI repatriation and a strong IPO issuance pipeline, we are still forecasting USD/INR to move higher."
The associated Rupee liquidity creates a further policy challenge as credit growth accelerates:
"RBI's most immediate challenge is to deploy its suite of tools to mop up this excess liquidity as a side effect of the inflows from these FX measures."
MUFG therefore expects stronger defences against a disorderly sell-off, alongside a weaker Rupee later in 2027 even after its forecast rate increases.
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Swiss Franc Technical Outlook: USD/CHF Multi-Timeframe Analysis
The USD/CHF technical outlook shows a six-week rally stalling at long-term resistance as U.S. Treasury yields keep climbing. Michael Boutros, StoneX Media Senior Market Analyst, breaks down USD/CHF across three timeframes and the bond market backdrop. The broader USD/CHF uptrend from the yearly lows remains intact, while an outside daily reversal signals near-term pullback risk. U.S. Treasury yields keep rising even as Fed funds futures price in a Federal Reserve hold, reflecting concern about inflation and the U.S. fiscal situation. FOMC minutes and University of Michigan sentiment data headline the U.S. calendar.
This content was created by an affiliate of FOREX.com and represents the views and opinions of the author/speakers, not the views and opinions of Forex.com, StoneX Group Inc., or its subsidiaries. The content has not been independently reviewed by FOREX.com.
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US Dollar Technical Outlook: DXY Bulls Meet Resistance at Yearly Highs
British Pound Technical Outlook: GBP/USD Rebound Challenges September Downtrend
Canadian Dollar Technical Outlook: USD/CAD Seven-Day Rally Tests Major Resistance
Australian Dollar Technical Outlook: AUD/USD Breakdown Threatens Deeper Correction
--- Written by Michael Boutros, Senior Technical Strategist
Ultimately, this is a market that, over the longer term, I do like because of all of the debt and financing concerns in various countries around the world, France being the one in the headlines at the moment. It does make a certain amount of sense that people do like the idea of owning gold, as there is so much uncertainty out there at the moment.
Rallies at this point in time, though, will probably face some headwinds, not only from the bond market and the concerns of energy, but also from the moving averages that are now crossing, with the 50-day EMA and the 200-day EMA indicators looking like a potential resistance barrier.
Nonetheless, we are in an area of confluence, and typically that means we’ll have to make a longer-term decision fairly soon. With a little patience, the market should finally tell us where it is going soon.
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Watching Interest Rates Closely This, for me at least, is all about interest rates and what they are doing. Interest rates rising typically work against silver, but we are starting to see a little bit of a rollover, so maybe that gives the opportunity for a bit of a reprieve here.
Longer term, I like silver a lot. There is plenty of demand for silver as far as industrial use is concerned, and the resupply of silver stock is not very aggressive these days, as has been the case for some time now. Certainly, at one point or another, it seems like demand very well could overwhelm supply, and we saw a little preview of that about a year ago.
Ultimately, I like the idea of buying dips from a longer-term standpoint, but in the short term, I think we have a lot of volatility ahead of us.
The Euro broke below the 1.1200 support and if prices remain below the daily close at 1.1240, the drop pressure could continue towards the target 1.1065. A close above 1.1240 could lead to a rebound toward 1.1330-50.
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 still holds inside a trading zone while support remains around 4100-25 and resistance is at 4220-45. The market could hold this zone for some time while a break below or above could push for further movement in that direction.
USD/JPY edged higher to 157.90 on Tuesday, with the yen remaining within a narrow range. Markets are assessing the direction of Prime Minister Sanae Takaichi’s government, which continues to pursue stimulative fiscal policy despite concerns over the weak yen and the funding of government spending.
In a speech to parliament, Takaichi pledged to cut the consumption tax on food. At the same time, she stressed that the government would seek to finance its spending without issuing additional bonds. This should provide some reassurance to markets amid concerns over rising public debt and yields.
This week, investors are awaiting several key reports from Japan: August wage data, the current account and household spending, as well as September indicators of consumer confidence and machine tool orders.
Attention is also focused on the Bank of Japan. The summary of opinions from its September meeting reflected growing concern that inflation could remain above the 2% target for longer. This keeps the prospect of another rate hike before year-end alive, although the timing of the next move ahead of the October and December meetings remains unclear.
Technical Analysis
USD/JPY maintains a short-term upward structure but is trading within a narrowing range. On H4, following a recovery from the 156.50 area, the pair settled above 157.54 and formed a consolidation range around 157.86–157.96. The main scenario envisages a further rise towards resistance at 158.77. A break above this level could open the way towards 159.36, although 158.77 remains the primary target for now. After testing this level, a correction back towards 157.96–157.86 is likely.
On H4, the price remains above the ascending support line, while further gains are capped by the descending boundary of the local structure. A triangle is therefore forming, with gradually rising lows. The MACD indicator is near zero: the histogram retains slight positive momentum, supporting the bullish scenario while also indicating moderate buying momentum. A move below 157.54 would weaken the bullish scenario and increase the likelihood of a return towards 156.50.
On H1, the pair also remains in consolidation around 157.96. The latest move is higher, and the Stochastic oscillator has risen above 80, confirming buying momentum. At the same time, the oscillator’s position in the overbought zone increases the likelihood of a local pullback following the rise. As long as the price remains above 157.80, the priority is for a move towards 158.77, followed by a correction towards 157.96. A confirmed break and consolidation above 158.77 would bring 159.36 into focus as the next medium-term upside target. Until the triangle is broken, volatility may remain limited, while holding above 157.96 would confirm the current scenario.
Conclusion USD/JPY is trading marginally higher as markets assess Prime Minister Takaichi’s fiscal plans and await a series of Japanese economic releases. Her pledge to cut the consumption tax on food without additional bond issuance has partially eased concerns over debt sustainability. Meanwhile, the BoJ’s September meeting summary highlighted growing inflation concerns, keeping the prospect of another rate hike before year-end alive, although the timing remains uncertain. Technically, the pair maintains a mild bullish bias within a narrowing triangle, with 158.77 as the immediate target and 159.36 as the next medium-term target. A break below 157.54 would weaken the bullish scenario and expose 156.50, while holding above 157.96 would reinforce the current scenario.
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A stronger British Pound against the US Dollar features in BofA's forecasts, with GBP/USD reaching 1.37 by end-2026 despite UK policy uncertainty. Foreign currency strategists at Bank of America see the Pound Sterling recovering against the US Dollar by year-end, but want greater clarity on UK policy before taking a more positive near-term view.
Its recent exchange rate forecasts/predictions show GBP/USD at 1.37 at end-2026, 1.45 at end-2027 and 1.47 at end-2028.
The Pound to Dollar exchange rate traded near $1.3209 on Tuesday morning, down 0.08%, after slipping 0.15% on Monday.
That leaves BofA's year-end forecast approximately 3.7% above the current rate, following September's 2.10% decline.
"Elsewhere, we maintain a constructive medium-term view on GBP but prefer to await greater clarity on UK policies."
Image: Pound to Dollar exchange rate one-month chart Pound Sterling: BofA sees improvements beyond interest rates The bank argues that Sterling has become less vulnerable to fiscal concerns than other major currencies, despite the approaching Budget.
It identifies overseas investment as one source of support:
"Sticky FDI inflows have provided a meaningful fillip to the UK's balance of payments"
FDI means foreign direct investment, which can provide longer-lasting funding than short-term portfolio flows.
BofA also says gilts have held up better than other bond markets, helped by the Bank of England's overhaul of its bond-sales programme.
Closer relations with Europe form another part of its argument:
"Finally, strengthening EU-UK ties now appears a more focused objective for the UK government. While serious negotiations are unlikely near-term, the prospect of all options being on the table is a medium-term positive for GBP. We stay constructive."
US Dollar (USD) strength remains an immediate obstacle BofA's near-term Dollar analysis still sees scope for further gains, making its Sterling forecast a recovery call rather than an endorsement of current momentum.
Monday's upward revision to the UK services PMI failed to prevent GBP/USD ending the day lower.
Image: GBP/USD 48hr chart Our reading is that stronger domestic data alone may be insufficient: BofA's case also depends on confidence in UK policy and sustained investment inflows.
Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.
Brazilian Real gains against the US Dollar put USD/BRL near 5.00, with Goldman's 4.50-4.80 scenario dependent on tighter fiscal policy. The Brazilian Real surged after the first round of Brazil's presidential election, bringing Goldman Sachs' favourable fiscal scenario closer as investors looked ahead to the 25 October runoff.
The US Dollar to Brazilian Real exchange rate fell to 4.9992 on Monday from Sunday's quoted 5.2261, a decline of 4.34%.
A lower USD/BRL rate means a stronger Real, as fewer Reais are needed to buy one Dollar.
With 99.99% of ballot boxes counted, Flávio Bolsonaro led with 47.03% of valid votes against President Luiz Inácio Lula da Silva's 45.16%.
Neither secured the majority needed to avoid a second round.
Goldman says Bolsonaro outperformed polling expectations, while pro-Bolsonaro and right-of-centre candidates also exceeded expectations in Senate and gubernatorial races.
Image: USD to BRL exchange rate crashes on latest Brazilian election news What would take USD/BRL towards 4.80? Goldman sees room for further Real appreciation, but its range depends on the policy implications of the eventual result.
"More broadly, we see 4.50-4.80 as a plausible range for USD/BRL under an election outcome that is perceived as market-friendly and conducive to a tighter fiscal stance."
This is a conditional valuation scenario, not an unconditional base forecast or a target for runoff day.
From Monday's rate, reaching 4.80 would require USD/BRL to fall approximately another 4%, while 4.50 would imply a decline of roughly 10%.
The upper end of that range has a specific rationale:
"In particular, trading at 4.80 would be consistent with the 'residual' fiscal premium from the 2024 BRL depreciation episode fully compressing as well as longer-run valuations."
In practical terms, investors would remove the remaining discount applied to the Real because of concerns about Brazil's public finances, a distinction explored in our earlier coverage of Goldman's election scenarios.
Policy commitments become the next test Goldman draws encouragement from 2018, when the Real continued appreciating after the first round and reached its strongest level just before the runoff.
But the bank expects attention to turn increasingly towards the feasibility of reform.
"Governability concerns may be less acute this time around, but given the highly challenging fiscal backdrop we still expect policy announcements to gain greater importance as we get closer to and through the second round."
It will watch how supporters of eliminated candidates redistribute their votes, alongside policy commitments and personnel announcements from both contenders.
Stronger gains would require more than an initial favourable market reaction:
"The Real could appreciate beyond these levels if fiscal consolidation efforts justify a 'positive' fiscal premium and if the external backdrop is also supportive for BRL."
Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.
European Central Bank (ECB) flexibility is challenged by rising inflation. On the 6th of October ECB Chief Economist, Philip Lane, stated that they do not have strong evidence of a general second-round inflationary effect resulting from the energy price shock. Lane states that they will maintain a cautious, data-dependent, approach to policy.
GBP: BoE Tightening Risk Weighs on Fiscal Policy Sterling is relatively supported against its peers due to expectations the Bank of England (BoE) will further increase interest rates. The BoE believes inflation will rise above 4% in early 2023, and markets believe there is a high chance of a rate increase in November.
The prospect of further fiscal expenditure by the UK government poses a risk to already elevated UK bond yields. On October 28th the finance minister will outline his plans to maintain fiscal responsibility during these tough economic times.
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U.S. Dollar Index Technical Analysis: DXY Holds 101.76 as 102.49 Remains the Next Upside Test
Dollar Index Price Chart – Source: Tradingview The U.S. Dollar Index is trading near 102.09 on the 2-hour chart, and what stands out to me is the fact that price continues to hold above the rising trendline and both moving averages despite the latest pullback to the 102.49 resistance area. Price action has formed a series of higher highs and higher lows.
102.49 is the first level of resistance, and a clear break above that would open 102.70 and 102.95 to the upside. The rising trendline and the 101.76 level come in as the first line of support, and beyond that 101.49 and 101.16 come in to play.
RSI has cooled from overbought territory, but is still in overbought territory, and as long as that remains the case, I will remain bullish on DXY. A break below 101.76 would negate the bullish case while a break above 102.49 would validate the case for a move to 102.70 and 102.95.
EUR/USD Price Chart – Source: Tradingview The EUR/USD is trading at 1.1231 on the daily chart and has extended lower and broken through the 1.1331 support area. In the short-term, the bearish outlook is intact while price is below both the moving averages and the bearish trend line. Add to that the recent break lower has pushed price toward the 1.1225 Fibonacci extension, and the larger picture is also bearish.
Support is located at 1.1225, and if broken, support at 1.1095, 1.1018 and 1.0950 would be next in line. Resistance would come in at 1.1331 and 1.1475, if the bulls took control.
RSI is also in oversold territory, indicating the decline is exhausting and a bounce should be expected. However, I am of the bearish camp until the Euro breaks and closes above 1.1331 and the bearish trend line. A close above 1.1475 would put a new long-term bullish view in place. A break below 1.1225 would confirm the bearish view and target 1.1095.
Gold: Fed Pause Hopes Collide With a Renewed Bond-Market Selloff The big picture backdrop for gold is split. U.S. September employment data showed just 29,000 nonfarm payroll jobs created, and other months’ data was revised down. The data has significantly lowered expectations of another FOMC rate increase in October. Currently, the markets expect just a 23% chance of a rate hike in October, while November and December rate hikes remain priced in at a slightly higher level.
The relief is being offset by selling in the bond market. 10-year and 30-year Treasury yields are at 24-year highs. Along with persistent inflation, heavier government borrowing is putting upward pressure on yields. Add to that rising U.S. fiscal deficits and a stronger dollar, and you have even more inflation headwinds. The U.S. services sector, like the U.S. manufacturing sector, also shows strong demand, and elevated input costs. Long-lasting elevated costs and strong demand point to inflation remaining high and sticky for an extended period.
Despite the commodity rout, gold’s structural demand remains firm. Speakers at this week’s London Bullion Market Association conference reflected on gold’s role as a reserve diversifier due to geopolitical fragmentation and rising sovereign debt. As such, forecasts for central bank purchases remain firm at around 720 tonnes by 2026.
Silver: High Investment Demand More Than Offsets Softer Solar Consumption Similar to gold, the USD and interest rate dynamics impact silver. The Silver Institute expects a sixth consecutive annual silver market deficit for 2026, even with a projected 1.5% increase in global silver supply. Physical investment for silver is expected to increase 20% to about 227 million ounces in 2026.
While consumption by solar manufacturers is expected to decline, there are several other industry sectors that are expected to increase silver consumption for 2026, including AI infrastructure and data centers, the automotive industry and electrical grid construction. In addition, the latest U.S. power sector data for 2022 reflect continued growth in the U.S. solar industry. In addition, data center electricity consumption is increasing as well.
Gold Technical Analysis: XAU/USD Tests $4,112 Support as $4,160 Caps the Recovery
Gold – Chart Gold is trading near $4,133 on the 4-hour chart. Currently price remains pinned close to the $4,112 support area after a failed recovery above $4,160. The broader structure is bearish as the price of gold is still under both of the moving averages and the descending trendline. The recent bounces in gold are also still producing lower highs.
The first area of support that I am watching is $4,112. A breakdown through $4,112 would bring about $4,073 and $4,030 in to play. Looking to the upside, $4,160 and $4,190 offer some resistance. Further resistance comes in at $4,214 and $4,238.
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See all Gold forecastsRSI is in the lower half of its range which shows that momentum is still weak but not deeply oversold. Looking at the above, I am still inclined to look for lower prices, especially if $4,160 and $4,190 continue to provide resistance and the descending trendline continues to slop down. $4,214 would have to be taken out to give reason to change view to the upside, and a break below $4,112 would confirm lower prices toward $4,073.
Silver Technical Analysis: XAG/USD Holds $59.96 as $61.72 Remains the Key Breakout Level
Silver – Chart Silver (XAG/USD) is currently traded at $60.73. Last week, price tried consolidating above the $59.96 support area. Overall, the structure of the price action is still leaning towards the sellers in the 4-hour time frame, despite the recent sideways price move.
As long as Silver remains below the descending trendline and both moving averages, as well as $61.72, expect selling opportunities.
With the 4-hour time frame, the nearest resistance is at $61.72. The next supports below the 4-hour trend line is at $59.96, $58.94 and $57.64 respectively.
The RSI is at 50 indicating a neutral consolidation, neither favoring buyers nor sellers.
I will maintain my bearish bias while Silver is below the $61.72 and the trendline. A break above $63.06 will shift my focus to $65.09 and a break below $59.96 will validate a shift to the next support at $58.94.
XAGUSD finds a bounce Silver (XAGUSD) attempts to break away from the recent triple bottom after confirming its position above 61.00. A jump above 62.00 would force more sellers to cover, stirring volatility.
The Pound-Dollar could strengthen if dovish Fed remarks further reduce rate hike expectations, while improving risk appetite may also support Sterling. The Pound US Dollar (GBP/USD) exchange rate fluctuated on Monday amid a shifting market mood.
At the time of writing, GBP/USD was trading at $1.3226, down marginally on the day but up from an earlier low of $1.3192.
Latest — Exchange Rates:
Pound to Dollar (GBP/USD): 1.320765 (-0.24%)
Euro to Dollar (EUR/USD): 1.120491 (-0.42%)
Dollar to Yen (USD/JPY): 158.05779 (+0.13%)
DAILY RECAP:
The US Dollar (USD) initially strengthened as markets opened at the start of the week, as a risk-off mood boosted demand for the safe-haven currency.
Sentiment soured amid the ongoing crisis in the Middle East, with shipping traffic in the Strait of Hormuz virtually grinding to a halt on Monday following attacks in the vicinity over the weekend.
However, the mood improved as the session unfolded. Markets took encouragement from the recent sharp repricing in Federal Reserve interest rate bets, following Friday’s weak payrolls data.
This pullback in Fed bets also weighed directly on the US Dollar, seeing it quickly trim its initial gains.
Meanwhile, the increasingly risk-sensitive Pound (GBP) slipped against the US Dollar during the early hours of Monday morning amid the risk-off market mood.
Sterling was able to regain lost ground later on, however, thanks in part to the UK’s final services PMI. September’s survey was revised slightly higher, printing at 52.1 versus the preliminary 51.7. Although this was still a slowdown from August’s 52.5, the better-than-expected figures aided GBP.
Near-Term GBP/USD Forecast: Fed Speeches to Dent the Dollar? Looking forward, two Federal Reserve officials are due to speak on Tuesday – Michelle Bowman and John Williams. Both policymakers are considered to be on the dovish end of the spectrum, so their comments could dent USD, if they suggest that they won’t support an interest rate hike this month.
Meanwhile, the data calendar for GBP is quiet, which may limit movement in the Pound.
Market risk appetite may also influence the GBP/USD exchange rate. A risk-off mood would likely support the safe-haven Dollar, while an improvement in market sentiment could underpin the increasingly risk-sensitive Pound. Any shifts in risk appetite could also drive fresh volatility.
Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.
Pound-New Zealand Dollar could stay elevated if risk appetite remains weak, although stronger NZ business confidence may offer the Kiwi some support.
The Pound New Zealand Dollar (GBP/NZD) exchange rate hit a fresh ten-year high on Monday as Sterling continued to attract support.
At the time of writing, GBP/NZD traded at NZ$2.3647, up almost 0.3% on the day.
Latest — Exchange Rates:
Pound to New Zealand Dollar (GBP/NZD): 2.362863 (+0.20%)
Euro to New Zealand Dollar (EUR/NZD): 2.004679 (+0.03%)
New Zealand Dollar to Dollar (NZD/USD): 0.559005 (-0.43%)
DAILY RECAP:
The Pound (GBP) continued to attract support at the start of this week, following last week’s impressive gains.
The recent upward revision to UK GDP growth in the second quarter, increased bets on a Bank of England (BoE) interest rate hike in November, and hopes of closer UK-EU ties following the Labour conference last week all continued to provide the Pound with support.
In addition, the UK’s finalised services PMI on Monday was revised slightly higher. The PMI printed at 52.1 in September, still down from August’s 52.5 but above the preliminary estimate of 51.7. While the upward revision was modest, it helped keep Sterling’s momentum alive.
Meanwhile, the risk-sensitive New Zealand Dollar (NZD) struggled as this week’s session began, with a gloomy market mood weighing on NZD demand.
Investors remained concerned about high global energy prices and the ongoing crisis in the Middle East.
Activity in the Strait of Hormuz came to a near standstill on Monday, following attacks near the vital waterway over the weekend.
Near-Term GBP/NZD Forecast: NZ Business Confidence to Support the ‘Kiwi’?
Looking ahead, the NZ Institute of Economic Research will publish its latest business confidence survey on Monday night. A forecast improvement in the third quarter could lend the ‘Kiwi’ support during Tuesday’s Asian session and into European trade.
Economic data then thins out, likely leaving GBP/NZD to be driven by market risk dynamics. Any shifts in sentiment could drive volatility. Federal Reserve interest rate expectations and US-Iran war news could determine the market mood.
Exchange Rates UK Research
Our currency coverage draws on live market data, official economic releases and published bank research.
