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Gold struggles as dovish Fed repricing meets stronger US Dollar, elevated yields

Why Gold and the Dollar are rising together today

The Pound-Canadian Dollar could stay supported if UK services remain resilient, while weaker Canadian jobs data may weigh on the Loonie. The Pound Canadian Dollar (GBP/CAD) exchange rate saw big swings last week, with Sterling hitting a five-week high against the ‘Loonie’ amid UK interest rate hike bets and stronger GDP growth.

At the time of writing, GBP/CAD was trading at CA$1.8878, up over 0.7% on the week.

Latest — Exchange Rates:

Pound to Canadian Dollar (GBP/CAD): 1.887449 (+0.04%)

Euro to Canadian Dollar (EUR/CAD): 1.605032 (+0.09%)

Dollar to Canadian Dollar (USD/CAD): 1.42531 (+0.02%)

DAILY RECAP:

The Pound (GBP) made a positive start to the week, as remarks from Bank of England (BoE) Deputy Governor Dave Ramsden fuelled expectations that the central bank could raise interest rates in November.

A lack of fresh UK data saw Sterling lose momentum on Tuesday, but the currency regained ground midweek after revised figures revealed stronger-than-expected UK economic growth. GDP expanded by 0.5% in the second quarter, reinforcing market bets on a November rate increase.

However, the Pound’s upward momentum faltered on Thursday after the UK’s final manufacturing PMI was revised slightly lower. Despite the downgrade, the index continued to signal an improvement in manufacturing activity.

Sterling ended the week on a firmer footing, drawing support from Burnham’s remarks on strengthening the UK’s ties with Europe and the possibility of rejoining the EU.

The Canadian Dollar (CAD) edged lower at the start of the week as concerns about the ongoing US-Canada trade war offset support from a surge in global oil prices.

The commodity-linked currency then recovered on Tuesday, shrugging off softer oil prices as a rebound in Canadian GDP in August helped lift sentiment.

However, CAD struggled to build on these gains midweek as oil prices remained below $100 per barrel.

The Canadian Dollar rebounded sharply on Thursday after touching multi-week lows, with a fresh jump in oil prices boosting demand for the crude-linked currency.

Nevertheless, CAD ended the week on the defensive as Brent crude fell back below $100 per barrel.

Near-Term GBP/CAD Forecast: Rising Canadian Unemployment to Dent the ‘Loonie’? Looking ahead, the UK’s final services PMI on Monday is the only British data release on the calendar this week. If the figures confirm a slowdown in the crucial sector, the Pound could come under pressure.

Canada’s services PMI is also out on Monday, although its impact may be limited. Markets expect activity to have improved slightly but remained in contraction territory last month.

Friday’s Canadian jobs data is the key release for the week. A forecast rise in unemployment in September could weigh on CAD.

Meanwhile, oil price dynamics will likely continue to drive the currency. Further turbulence could trigger big swings in the Canadian Dollar.

Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.

Gold Price Forecast: XAU/USD languishes below $4,200 amid high US yields

Silver price today: Silver rises, according to FXStreet data

EUR/USD dropped to a low of 1.1160 after Spanish Prime Minister Pedro Sánchez called for an early election, adding to concerns surrounding Europe's fiscal outlook and France's bond market.

USD/JPY Price Forecast: Consolidates below 158.00 as bullish bias persists

TL;DR: The Nikkei 225 is closing in on a fresh record near 72,831.73, but unlike June’s rally—when USD/JPY ran alongside it to 163.97—a faster BoJ tightening cadence, a more patient Fed, credible intervention risk and the absence of a fresh oil shock mean USD/JPY is unlikely to follow through the 160 zone this time.

Why This Matters Japan’s equity rally is again approaching the point where the Nikkei’s strength and Yen weakness were closely linked earlier this year. But the comparison only goes so far. The equity breakout looks genuine, and the question that matters for traders isn’t whether the Nikkei can retest its record—it’s whether USD/JPY has to follow the same script it did in July. Four specific differences argue it doesn’t, at least not yet, and each one has a clear condition that would reverse it.

The Nikkei 225 surged 2.40% to 69,946.64 today, clearing the 69,608.24 August swing high and moving to within roughly 4% of the 72,831.73 record. When the Nikkei last set a record in June, USD/JPY was already above 161 and subsequently extended its advance to 163.97 in late July. This time, USD/JPY is still around 157.7, almost six yen below that peak.

Nikkei Breakout Has Real Momentum The Nikkei’s break above 69,608.24 strengthens the view that price action from 72,831.73 is merely a correction of the rise from 50,566.99, rather than the start of a larger downtrend.

As long as 68,132.16 support holds, the immediate bias stays higher. The next upside target is 71,885.52, the 100% projection of the 60,448.90–69,608.24 advance from 62,726.18. Above there sits the 72,831.73 record high. The chart therefore gives the Nikkei a credible path back to its record. What is much less clear is whether USD/JPY still needs to accompany it.

July’s Run to 163.97 Needed More Than a Rising Nikkei The last Nikkei record was followed by another leg higher in USD/JPY, but the Yen move was not simply a mechanical consequence of Japanese equity strength. By late July, several forces had aligned in the same direction.

The Fed had turned more hawkish, markets were pricing additional US tightening, Treasury yields were elevated and the Yen had spent enough time above 160 for investors to question where Tokyo’s intervention threshold actually stood.

Then oil supplied another impulse. Brent had been near 70 earlier in the summer before surging above 100 as Middle East risks intensified, following the collapse of the US-Iran ceasefire. That created a fresh inflation shock just as markets were debating how much further the Fed might have to tighten. USD/JPY eventually reached 163.97. That combination is important because the current setup looks different in each of those areas.

1. BoJ Tightening Is Arriving Faster The first difference is the BoJ cadence. The Bank of Japan raised rates in December, again in June and then in September. The interval shortened from roughly six months to around three months.

That does not mean every BoJ hike immediately strengthens the Yen. The June move was followed by USD/JPY rising further toward 164, while the Yen also weakened immediately after September’s increase. But the medium-term significance is different: the market can no longer comfortably assume that the BoJ will wait half a year between every move. A roughly quarterly cadence, if sustained, would allow Japanese rates to rise alongside US rates rather than simply watching the Fed move away. That distinction matters more than the immediate FX reaction to any single meeting.

The BoJ has not explicitly committed to that pace, and expectations for another October hike remain low. December is a more plausible window under the current market view. So the argument should not be that the BoJ is embarking on an aggressive tightening cycle. Rather, the Japan side of the rate differential is now moving faster than it was earlier this year.

2. The Fed Is Still Tightening, But at a More Patient Pace The second difference is the Fed. Markets have not abandoned the tightening cycle. The expected Fed funds midpoint is around 4.12% in December, 4.39% in March and 4.61% in June, before flattening around 4.65–4.70% later in 2027. That is still a hawkish rate path.

But it is a patient tightening path, not an assumption of rapid back-to-back hikes. October hike probability has fallen sharply, while the curve increasingly spreads additional tightening over subsequent meetings. That matters for USD/JPY because the policy gap is not obviously entering another period of rapid expansion.

The most revealing market comparison is elsewhere. US yields have recently traded above the levels seen around July’s USD/JPY peak, yet USD/JPY remains almost six yen beneath 163.97. That suggests the simple mapping between US yields and USD/JPY has weakened. Higher US rates still support Dollar against Yen. But the same yield environment is producing less Yen depreciation than it did in July, indicating that BoJ policy and intervention risk are now carrying greater weight on the Japan side of the equation.

3. Above 160, Intervention Risk Is No Longer Abstract The biggest change since July is not simply that Japan has intervened before. It is that 160 now carries the memory of a joint US-Japan operation, reinforced by persistently tougher official rhetoric since then.

Earlier in the summer, the market had become increasingly comfortable trading above 160. USD/JPY spent weeks above that threshold, and repeated warnings from Tokyo failed to trigger immediate action. That encouraged the view that officials were prepared to tolerate a materially weaker Yen, allowing speculative positioning to build as the pair pushed toward 163.97.

The end-July intervention changed that calculation decisively. The operation was not just another unilateral attempt by Japan to slow Yen weakness; US participation gave the move much greater signalling power. Even though the exchange-rate effect faded relatively quickly, the message was harder to dismiss: both sides were prepared to act when Yen depreciation became disorderly enough.

Since then, Japanese officials have also maintained a consistently tougher rhetorical stance, keeping intervention risk alive rather than allowing the warning to fade with time. That matters because traders are now approaching 160 with a very different risk-reward calculation. The level is no longer merely a psychological threshold or a place where verbal intervention might intensify. It is the zone around which coordinated action has already occurred.

That does not make 160 a hard cap. Intervention cannot permanently overpower monetary-policy fundamentals, and USD/JPY recovered much of its initial decline after the July operation. But it does mean that long positions above 160 now carry a known and credible tail risk that was far less respected during the previous run toward 164.

4. July Had an Oil Shock; Today Has High Oil Oil may be the most important difference. Brent is still expensive above $100, but the dynamic is very different from July. The crucial distinction is: high oil is a condition. Rising oil is a catalyst.

The July USD/JPY rally was reinforced by a rapid oil surge that changed the inflation outlook and encouraged markets to price a more aggressive or extended Fed cycle. Brent near 101 today does not deliver the same incremental shock. Markets already know energy prices are high.

For oil to recreate July’s transmission mechanism, it likely needs to re-accelerate through 109.97 and decisively above the 110 area, rather than simply remain around 100. That would revive the transmission chain: an oil shock would lift inflation expectations, encourage more aggressive Fed pricing and renew pressure on Yen. Until then, energy is providing a high inflation floor without the fresh momentum that helped drive USD/JPY toward 164.

What Could Put 164 Back Into Play? The argument against another immediate move to 164 is conditional, not absolute. The cleanest invalidation would be another oil shock. A decisive Brent break above 109.97–110, particularly if driven by renewed Middle East escalation, could force markets to reconsider the persistence of inflation and push the expected Fed rate plateau higher again.

A second trigger would be a renewed acceleration in Fed tightening expectations. The upcoming FOMC minutes are relevant here: evidence that officials are comfortable with an extended sequence of hikes into 2027 would reinforce the Dollar side of the equation.

The third would simply be price itself. A decisive USD/JPY break through the 159.73–160.38 resistance cluster would indicate that the decline from 163.97 has likely completed. That would put the 162.51 100% projection back into view and dramatically reduce the distance to 163.97. But until those conditions emerge, the July analogy looks incomplete.

ActionForex’s Technical View on the Nikkei 225 Nikkei’s immediate technical structure is bullish while 68,132.16 holds. The break above 69,608.24 resumes the rebound from 60,448.90 and points toward 71,885.52. A break there would put the 72,831.73 record high directly in focus.

The significance of 68,100–68,132 is especially strong because structural support coincides with the 61.8% retracement near 68,101. Holding that zone would keep the latest breakout intact even after a short-term pullback. A close back below 68,100 would weaken the breakout and shift attention toward the 55 D EMA at 65,862.82. For now, however, the chart favors another test of the record.

ActionForex’s Technical View on USD/JPY USD/JPY presents a much less straightforward bullish structure. The rebound from 152.87 stalled at 159.02, and subsequent trading has been consolidative rather than impulsive. Price is currently around 157.7 and pressing the 55 D EMA around 158.09. A fresh rise cannot be ruled out while 156.36 holds, but there is little open space above.

The resistance sequence is:

158.09 — 55 D EMA 159.02 — September swing high 159.73 — 61.8% retracement of 163.97–152.87 160.16 — 61.8% projection of 152.87–159.02 from 156.36 160.38 — structural resistance 160 area — intervention-risk zone

That cluster is the technical expression of the article’s macro thesis. A decisive break through 160.38 would be important: it would suggest the decline from 163.97 has completed and expose 162.51, the 100% projection level, followed by a potential retest of 163.97. But rejection from the zone would leave USD/JPY trapped well below the level reached during the previous Nikkei record run. Below 156.36, attention would return to 155.22, with a deeper break reopening the 152.87 low.

The Nikkei therefore has the clearer bullish chart. Japan’s equity market can retest 72,831 without USD/JPY returning to 164. For the Yen to recreate July, it likely needs more than another equity record—it needs a renewed oil shock, stronger Fed acceleration, or enough momentum to force its way through the intervention-heavy 160 zone.

Key Takeaways The Nikkei 225 surged 2.40% to a fresh high, closing within roughly 4% of its 72,831.73 record—but USD/JPY sits nearly six yen below where it traded during June’s record run. A faster BoJ hiking cadence (roughly quarterly versus the prior six-month gap) means Japan’s side of the rate differential is now moving faster than earlier this year. The Fed’s tightening path remains hawkish but more patient, and US yields above July’s peak are producing less Yen depreciation than before—suggesting BoJ policy and intervention risk now carry more weight. The end-July US-Japan coordinated intervention, plus sustained tougher rhetoric since, has made 160 a zone with known, credible tail risk rather than just a psychological level. Without a fresh oil shock (Brent decisively above 109.97–110) or a hawkish surprise from Fed policy or price action through 160.38, USD/JPY’s path back to 164 looks far less automatic than it did in July.

ActionForex

ActionForex.com was set up back in 2004 with the aim to provide insightful analysis to forex traders, serving the trading community for two decades. We started providing only a daily and a mid-day report, now known as Action Insights. Gradually, we added a lot more in-house contents to the site. Technical Outlook section was expanded to cover more pairs. In addition to that, Top Movers, Heat Map, Pivot Point Charts and Pivot Meters, Action Bias and Volatility Charts, are tools used by traders from all over the world.

Gold: Recovery hinges on lower yields – OCBC

Dollar Index: Soft Jobs Data Dents Fed Case, but Yield Support Persists September’s payrolls printed significantly below consensus. Nonfarm payrolls increased by 29,000, with the unemployment rate increasing to 4.2%. Traders quickly pared back expectations for another rate hike in October. However, despite the slower pace in labor market prints, U.S. yields remain elevated, increasing the appeal for the U.S. dollar. Higher U.S. yields and firming U.S. growth remain positive for the dollar despite the softer Fed outlook.

Euro: French Fiscal Strain Is More Relevant than Inflation The euro’s largest issue is increasingly more fiscal than monetary. French government bonds sold off last week as investors questioned Paris’ ability to stabilize public finances ahead of the 2027 presidential election. The spread between French and German 10 year bonds briefly reached levels last seen during the eurozone’s sovereign debt crisis.

While the ECB was holding firm, euro-area inflation was running at 3.8%. Monday, ECB policymaker Joachim Nagel, said, “We are data dependent.” The recent rise in inflation expectations has dangled the prospect of further ECB tightening.

GBP: BoE Tightening Bets Clash with Difficult Budget Cable has recently been rattled by a hawkish BoE and fears of rising UK fiscal spending. Officials at the BoE have said that they expect further energy cost inflation, which they expect will require more policy tightening. Market expectations are for a BoE hike in November. The UK economy surprised to the upside in the second quarter, growing at 0.5%. Although UK public finances overshot estimates, yield levels on longer-dated UK debt have remained high. The government has promised fiscal discipline in the October 28 budget, which adds a further layer of uncertainty and sensitivity to UK yields and the currency.

U.S. Dollar Index Technical Analysis: DXY Holds 101.76 as 102.49 Becomes the Next Upside Test

Dollar Index Price Chart – Source: Tradingview The DXY is currently trading at 102.18, with a lot of bullish interest near the rising trendline and 50-period moving average. While the pullback is deeper than the last few, it is still not deep enough to suggest that the structure is failing, and thus I view it as an opportunity for bulls to step in at current levels.

GBP/USD Price Forecast

Every new GBP/USD analysis as it publishes, today's technical signal and key levels, live price — on one page.

See all GBP/USD forecasts The first notable resistance is at 102.49, with 102.70 and 102.95 coming in next. If we get a break of 101.76, 101.49 and 101.16 would be the next levels to watch.

Momentum is positive, and the Relative Strength Index (RSI) is in a positive territory suggesting that a brief period of consolidation would be considered normal. Overall, I am in agreement with the prevailing structure, and a break of the rising trendline, or the 101.49 region, would require a better explanation. Conversely, a move over the 102.49 region would open the door to 102.70, and possibly 102.95.

GBP/USD Technical Analysis: Sterling Holds $1.3180 Support as $1.3250 Caps the Recovery

GBP/USD Price Chart – Source: Tradingview GBP/USD is trading around 1.3230 on the 4 hour chart, bouncing from the 1.3180 area. So far, I’ve seen bulls defend the 1.3180 area, but I’ve noticed that price continues to trade below both moving averages and a descending trendline. Because of this, I think the current move is a correction within the bigger picture.

There is potential resistance at 1.3250, and a break above this level would open 1.3294 and 1.3339. 1.3180 is the first key support level. Further declines would have 1.3147 and 1.3116 coming into play.

RSI continues to trade below 50, indicating bulls are still lacking momentum. I favor a bearish bias as long as GBP/USD is trading below 1.3250 and a descending trendline. A close above 1.3294 would be slightly bullish and a close below 1.3180 would be somewhat bearish.

EUR/USD Technical Analysis: Euro Breaks 1.1225 Support as 1.1090 Becomes the Next Downside Test

EUR/USD Price Chart – Source: Tradingview EUR/USD is trading at 1.1200 on the daily chart as price extends lower from 1.1225. While price is well below the moving averages and the descending trendline, and also trading below the recent lows, the larger bearish structure remains the same.

The next support comes in at 1.1090. If this level breaks, lower prices at 1.0945 can be expected. From a resistances standpoint, 1.1225 is the first level of interest, and if prices rise even higher, resistance comes in at 1.1331.

RSI has moved into oversold territory, indicating a potential bounce in price. Although, the bear trend remains in place as long as EUR/USD is trading below the 1.1225 level and the falling trendline. A break above 1.1331 would shift the focus to the bulls, and a break lower toward 1.1090 strengthens the bear case.

XAU/USD price outlook: Gold Spot/US Dollar rejects failed arc breakout

Euro weakens across the board – How low can EUR/USD and EUR/JPY go? [Video]

GBP/USD starts the new week of October at 1.3237. The pound is seizing every opportunity to rebound from three-month lows after a weak US labour market report put pressure on the dollar.

The US economy added just 29,000 jobs in September, compared with expectations of 90,000. This has reinforced expectations that the Federal Reserve could leave rates unchanged in October, with the probability of a move in December now appearing higher.

In the UK, markets are now pricing in approximately 30 basis points of Bank of England policy tightening before year-end and around 90 basis points by the end of 2027. Several Bank of England officials, including Andrew Bailey, have recently signalled greater openness to the possibility of raising rates if high energy prices persist, reflecting concerns that inflation could remain above target for longer.

Additional support for the pound came from Prime Minister Andy Burnham’s comments in favour of closer UK ties with the EU ahead of a summit expected around 20 November. The possibility of revisiting EU membership around the next general election is also being discussed.

Technical Analysis

On the H4 GBP/USD chart, the pair maintains a steady downward structure. Following a corrective move towards resistance at 1.3303, the market resumed its decline and returned to the 1.3201 area. The price remains within the descending channel, while the sequence of local highs confirms continued selling pressure.

The main scenario envisages a continuation of the third downward move, with an initial target at 1.3180. A break and consolidation below this level could open the way for a decline towards 1.3108 and subsequently 1.3044. The 1.3303 level remains key resistance and the invalidation point for the current bearish scenario.

The MACD indicator supports the bearish scenario. It remains in negative territory, while its structure continues to point downwards. At the same time, the shrinking negative histogram suggests that a local correction is possible before another downward move.

On the H1 GBP/USD chart, the market completed its corrective rise around 1.3252 and developed renewed downward momentum. The nearest support is at 1.3185. A break below this level could open the way for a decline towards 1.3108 and subsequently 1.3044. The Stochastic oscillator has fallen well below 50 and is approaching the oversold zone, confirming strong short-term selling momentum. A technical pause or slight correction is therefore possible around 1.3185. However, while the price remains below 1.3252 and particularly below 1.3303, the main direction for the upcoming trading session remains downwards. A return above 1.3252 would temporarily ease selling pressure but would not alter the overall bearish structure on H1.

Conclusion GBP/USD has edged higher as the pound attempts to recover from three-month lows, supported by a weak US jobs report that has reduced expectations of an October Fed rate hike. Markets now see a higher probability of a move in December.

In the UK, expectations of BoE tightening have increased, with policymakers including Andrew Bailey signalling greater openness to rate hikes if high energy prices persist, amid concerns that inflation could remain above target for longer. Political developments, including Prime Minister Andy Burnham’s push for closer ties with the EU, have also supported the pound.

From a technical perspective, GBP/USD remains bearish below 1.3252 and 1.3303. The main H4 scenario envisages a decline towards 1.3180, with a break and consolidation below this level potentially opening the way towards 1.3108 and subsequently 1.3044. A return above 1.3252 would ease short-term selling pressure but would not alter the broader bearish structure, while 1.3303 remains the invalidation point for the current bearish scenario.

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Razan Hilal, StoneX Media Market Analyst, maps the support and resistance zones on the gold and silver charts across multiple timeframes. Gold is testing the 78.6% Fibonacci retracement of its July to August 2026 advance, with the 2026 yearly lows separating a correction from a deeper drawdown.

British Pound: Rebound capped as downside bias lingers against US Dollar – UOB

EUR/USD continental collision — 12-timeframe bearish cascade slams into 1.1190 weekly demand floor

The Pound-Euro could consolidate near ten-week highs if UK data remains resilient, although stronger Eurozone releases may help the single currency recover. The Pound Euro (GBP/EUR) exchange rate strengthened last week, as growing expectations of a Bank of England (BoE) interest rate hike and stronger UK growth helped Sterling outperform the single currency.

At the time of writing, GBP/EUR was trading at €1.1765, its highest level in ten weeks and up 1.1% on the week.

Latest — Exchange Rates:

Pound to Euro (GBP/EUR): 1.175942 (-0.06%)

Pound to Dollar (GBP/USD): 1.3241 (+0.01%)

Euro to Dollar (EUR/USD): 1.12599 (+0.07%)

DAILY RECAP:

The Pound (GBP) started the week on a firm footing, with comments from Bank of England (BoE) Deputy Governor Dave Ramsden adding to speculation that interest rates could rise in November.

Sterling struggled to find a clear direction on Tuesday as a quiet UK data calendar left the currency without a fresh catalyst. Prime Minister Andy Burnham’s speech at the Labour conference also failed to spark much movement.

Midweek brought renewed support for the Pound, following an upward revision to UK GDP figures. The revised data showed the economy expanded by 0.5% in the second quarter, bolstering expectations of a November rate hike.

Sterling’s gains proved less consistent on Thursday, as the UK’s final manufacturing PMI was revised slightly downwards. However, the index still pointed to improving conditions across the manufacturing sector.

The Pound finished the week on a stronger note, finding support in Burnham’s comments about rebuilding the UK’s relationship with the EU and the prospect of rejoining the bloc.

The Euro (EUR) faced headwinds at the start of the week as a sharp rise in European gas prices fuelled concerns about the bloc’s energy outlook, while the US Dollar (USD) also exerted pressure on the single currency.

EUR extended its losses on Tuesday as the US Dollar continued to strengthen. Eurozone economic sentiment data offered little relief, with the index unexpectedly declining in September for the first time since April.

The single currency traded unevenly midweek as mixed German economic data saw weaker-than-expected retail sales temper the impact of a stronger-than-forecast inflation print.

The Euro came under further pressure on Thursday as a selloff in government bonds, particularly in France, raised fresh concerns about public debt across the Eurozone.

EUR remained on the defensive at the end of the week, despite Eurozone inflation climbing to a three-year high of 3.8% in September. However, steady core inflation of 2.5% supported expectations that the European Central Bank (ECB) would leave interest rates unchanged this month.

Near-Term GBP/EUR Forecast: Eurozone Data to Help EUR Recover? Looking forward, the only UK release due out this week is the final services PMI on Monday. Confirmation of a slowdown in the vital sector could dent GBP.

Meanwhile, the Eurozone services PMI could confirm an acceleration in services activity, which may support EUR.

Tuesday could see mixed movement in the Euro. German factory orders are forecast to have contracted in August, but Eurozone retail sales are expected to have rebounded in the same month.

Midweek EUR may receive a boost, as Germany’s industrial production figures are anticipated to show a strong recovery in August.

Finally, the ECB meeting minutes on Thursday could also underpin the single currency, if they show a hawkish bias amongst policymakers.

EUR/JPY Price Forecast: Tests ascending channel lower boundary near 176.50

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Silver Price Forecast: XAG/USD gains near $61.00 as Fed rate hike odds decline