Track market-moving stories before they get noisy

USD/CAD Price Forecast: Falls to near 1.4200 after pulling back from nearly 18-month highs

EUR/USD Price Forecast: Next move hinges on US NFP data

Key Highlights

USD/JPY remained supported above 156.40 and climbed higher. It cleared a bullish flag pattern with resistance at 157.35 on the 4-hour chart. EUR/USD declined heavily and traded below 1.1300. The US nonfarm payrolls could change by 90K in Sep 2026. USD/JPY Technical Analysis The US Dollar found bids near 156.40 against the Japanese Yen. USD/JPY formed a base and started a fresh increase above 157.00.

Looking at the 4-hour chart, the pair cleared a bullish flag pattern with resistance at 157.35. There was a clear move above the 61.8% Fib retracement level of the downward move from the 159.03 swing high to the 156.37 low.

The pair even settled above the 100 simple moving average (red, 4-hour) and the 200 simple moving average (green, 4-hour). If the bulls remain in action, they could aim for a move above the 159.03 high.

The first major resistance might be near the 1.236 Fib extension level of the downward move from the 159.03 swing high to the 156.37 low at 159.66. The next key resistance could be near 160.40 or 160.65.

A close above 160.65 could result in a fresh rally. In the stated case, the bulls could aim for a move to 162.00. If there is another pullback, the pair might find support near the 200 simple moving average (green, 4-hour) at 157.40.

The first major support might be 156.40 and the 100 simple moving average (red, 4-hour). A close below 156.40 might accelerate the decline. In the stated case, the pair might drop to 155.00.

Looking at EUR/USD, the bears took control, pushed the pair below 1.1300, and they might aim for more downside.

Upcoming Key Economic Events:

US nonfarm payrolls for Sep 2026 – Forecast 90K, versus 162K previous. US Unemployment Rate for Sep 2026 – Forecast 4.1%, versus 4.1% previous.

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Gold struggles to lure buyers amid bullish USD; eye US NFP for Fed rate cues

TL;DR: The OAT-Bund spread widened past 140.6bp, its widest since the 2012 eurozone debt crisis, as French 10-year yields surged to 4.935% while German Bund yields fell to 3.529%—a divergence pointing to a France-specific sovereign risk premium that EUR/CHF is now starting to transmit into FX.

Why This Matters Europe’s bond selloff has stopped being one trade. Investors are now separating France from Germany—and EUR/CHF is starting to reflect the same divide. When two countries share a currency and a central bank but their bond yields move in opposite directions, that is not a generic rates story; it is markets pricing one government’s fiscal credibility differently from another’s. For traders, that makes the spread itself, not the outright yield level, the cleanest signal of how far this repricing could run, and it gives EUR/CHF a specific technical path to watch for confirmation.

Currency Heat Map.

France Is Being Asked to Pay More for Fiscal Risk The immediate backdrop is France’s 2027 budget. Prime Minister Sebastien Lecornu’s government has presented a package targeting around EUR 54bn of savings, seeking to reduce the deficit from 5.4% of GDP in 2026 toward 5% next year. Measures include spending restraint and targeted tax changes, but the legislation now faces a difficult parliamentary process in a divided legislature and is likely to be amended substantially.

The bond-market mechanism is straightforward. When investors become less confident that a government can stabilise its deficit and debt trajectory, they demand a larger yield premium to hold that government’s debt. In France’s case, that premium is visible against Germany, whose Bund market serves as the Eurozone’s core benchmark.

That distinction matters because France and Germany share the same currency and the same ECB policy rate. A global rates shock can push both yields higher together. It does not easily explain French yields accelerating toward 5% while German yields fall. That is why the spread, rather than the outright OAT yield, is becoming the cleanest gauge of whether markets are escalating their concerns about France.

The French 10-year chart reinforces the severity of the move. Yield is well above the 4H 55 EMA near 4.616%, with RSI above 80 and MACD still positive. German yields, by contrast, have fallen back toward their 55 EMA near 3.535%, while RSI has slipped below 40 and momentum has rolled over. The technical picture is therefore telling the same story as the spread: French risk is accelerating while demand for German duration is returning.

Inflation Makes the Backdrop Harder, but Does Not Explain the Divergence Europe’s inflation backdrop is adding pressure, but it cannot by itself explain the France-Germany split. French national CPI accelerated from 2.4% to 3.0% y/y in September, while the comparable harmonised measure rose from 2.6% to 3.4%. Germany’s harmonised inflation also accelerated to 3.3%, with energy inflation reaching 14.9%. In France, energy inflation was even stronger at 21.2%.

That helps explain why European yields remain structurally elevated. Renewed energy pressure and the Middle East conflict have revived concerns about how quickly inflation can return sustainably toward target. But the common inflation shock actually makes the OAT-Bund divergence more informative: if inflation alone were driving Thursday’s bond move, French and German yields should be responding more similarly. Instead, Bunds rallied while OATs sold off.

Inflation is therefore an amplifier of France’s problem, not a complete explanation for it. The widening spread reflects the interaction of higher inflation risk, higher term premia and French fiscal uncertainty, a combination also highlighted by market strategists as the premium on French debt widened.

European Equities Add Context, but the Spread Carries the Cleaner Signal European equities sold off alongside the bond-market stress, with CAC 40, DAX and FTSE all under pressure. Yet the equity move is a noisier measure of French-specific risk. German and British shares are exposed to the same higher-energy, higher-yield environment even without France’s fiscal problem, which makes a broad European equity decline compatible with several different macro explanations.

Wall Street, meanwhile, managed to close modestly higher after the US 10-year Treasury yield retreated from its 5.34% intraday peak, with company-specific technology developments also providing support. The more useful hierarchy is therefore clear: OAT-Bund spread first. EUR/CHF second. Equities third. The first strips away much of the global-rates noise. The second shows whether FX traders are transmitting the same European risk discrimination into the Swiss franc.

140bp Is Now the Key Sovereign-Risk Test The spread itself is the most direct test of whether this develops into something more persistent. At around 140.6bp, investors are already demanding substantially more compensation to own French debt than German Bunds. Reuters had recorded the spread at 132.86bp on October 1, already its widest since the 2012 eurozone debt crisis. The subsequent move beyond 140bp therefore represents another meaningful extension.

From here, continued widening would strengthen the case that markets are making a structural adjustment to France’s risk premium, rather than simply reacting to a single difficult session. A stabilization around current levels would suggest investors are waiting for more clarity from the budget process. A meaningful reversal toward the 90–95bp area seen before the latest acceleration would weaken the argument that a durable repricing is underway.

That makes France’s parliamentary budget process the next hard domestic catalyst. The government has laid out the fiscal arithmetic; markets now need to judge how much of it can actually survive the legislative process.

ActionForex’s Technical View: EUR/CHF Is Starting to Transmit the Same Message FX is beginning to reflect the bond-market divergence. EUR/CHF has reversed sharply from 0.94850 to around 0.9340, falling back below its daily 55 EMA near 0.9371. Momentum has deteriorated with RSI below 40 and MACD rolling lower.

Franc strength has not been confined to Euro either—USD/CHF and GBP/CHF have also fallen, showing broader CHF demand. But EUR/CHF remains the more useful instrument for the French-risk thesis because it directly pits the common currency against Europe’s traditional low-risk funding currency.

Technically, however, the move remains at an early stage. The rise from 0.89790 to 0.94850 puts the 38.2% Fibonacci retracement at around 0.92917 and the 61.8% retracement at 0.91723. EUR/CHF has not yet reached the first level. That gives a useful hierarchy:

A hold above 0.92917, followed by a recovery, would keep the decline consistent with a relatively shallow correction within the broader advance from 0.89790. A sustained break below 0.92917 would strengthen the bearish case. A move toward 0.91723 would suggest a substantially deeper repricing and put the broader recovery from 0.89790 into question. But the bond spread must remain part of the confirmation. A EUR/CHF break below 0.92917 alongside another widening in OAT-Bund would provide a much cleaner signal that French fiscal risk is spreading through European assets. The same EUR/CHF break occurring while OAT-Bund stabilizes or narrows would be less convincing—it could instead reflect generic Euro weakness, broader CHF demand or positioning around US data.

NFP Can Blur the Signal Before France Gives the Next Answer Today’s US nonfarm payrolls release, with consensus around 90K, adds a major external complication. A large payroll surprise could dominate global rates, Dollar and risk sentiment, potentially obscuring the France-specific signal for several hours. That makes relative moves more useful than outright FX moves after the release.

The most informative configuration would be continued OAT-Bund widening accompanied by renewed EUR/CHF downside. That would suggest French risk is still driving the move even through the US data noise. If USD/CHF moves sharply after NFP while EUR/CHF remains relatively stable, the Dollar channel would be doing more of the work. If EUR/CHF continues falling while USD/CHF does not, the European risk signal becomes cleaner.

But NFP is ultimately an external interruption. France’s budget process remains the harder test. The market has already pushed the OAT-Bund spread beyond 140bp. EUR/CHF has begun to respond, but it has not yet broken its first major retracement level.

France and Germany still share a currency and a central bank. For now, their bond markets are increasingly pricing them as very different risks.

Key Takeaways The OAT-Bund spread has widened past 140.6bp, its widest since the 2012 eurozone debt crisis, as French yields rise and German yields fall simultaneously. The divergence points to a France-specific fiscal risk premium tied to Prime Minister Lecornu’s 2027 budget, not a generic eurozone rates move—inflation is running hot in both countries but cannot explain the split. EUR/CHF has reversed from 0.94850 to around 0.9340 but has not yet broken its first key retracement at 0.92917; a break there alongside continued spread-widening would be the cleanest confirmation signal. The recommended watch order is OAT-Bund spread first, EUR/CHF second, European equities third, since equities are a noisier read on French-specific risk. Today’s NFP release could temporarily obscure the France signal; watch whether EUR/CHF moves independently of USD/CHF to judge whether European risk, not the Dollar, is driving price action. Related Reading Sterling Broadens Gains as BoE Repricing Builds and GDP Confirms Resilience Dollar Index Completes Double Bottom, Targets 100.59 as Markets Look Beyond Fed’s 4.1% 2027 Median Gold Holds 4,113 Support, but 4,235 and 4,335 Still Block the Bull Case Stay ahead of Europe’s sovereign-risk divergence—subscribe to ActionForex’s daily market commentary for real-time technical and fundamental analysis.

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Synopsis

The US dollar is experiencing a significant surge, reaching a 17-month peak as global bond yields continue to rise. Investor anxiety over inflation and increased government borrowing is steering market trends. As a result, yields on 10-year US Treasuries have soared to their highest point since 2002. Meanwhile, the euro is under pressure due to concerns regarding France's fiscal health and escalating political uncertainties in Europe.

APThe US dollar headed for its third straight week of gains on Friday, perched at a 17-month high as a bond market rout pushed borrowing costs across the globe to multi-decade peaks in the face of inflationary fears over higher oil prices.

Investors were reeling from a steep global bond sell-off on Thursday that sent yields on benchmark US 10-year Treasuries to 5.344%, their highest since 2002, ahead of a US jobs report that could influence the near-term policy outlook.

The 10-year yield was last at 5.249% in early trading on Friday while the rest of the bond market also steadied.

The euro was at $1.1237, hugging its lowest level since May 2025, dragged by worries around France's fiscal health. The yen was steady at 158 per US dollar after data showed annual core inflation in Tokyo accelerated in September at the fastest pace in 10 months.

The dollar index, which measures the US currency against six rivals, was at 102.08, set for a 1% gain this week, its third consecutive weekly gain, a run it last had in May 2025.

Charu Chanana, chief investment strategist at Saxo, said investors are confronting the uncomfortable mix of sticky inflation, heavy government borrowing and large bond supply.

"The fact that long-end yields are pushing higher even as expectations for an immediate Fed hike have eased suggests this is increasingly about the term premium and fiscal risk, not just the next Fed decision," she said.

Data on Wednesday showed US consumer prices rose less than expected in August, along with downward revisions to July's figure, leading traders to rein in wagers of a rate hike from the Federal Reserve later this month.

Two of the Fed's top policymakers this week staked out an unusually clear case for taking in more data before deciding about another hike.

That has sharpened the focus on the US payroll report due later in the day, with data likely to show that job growth slowed in September and the unemployment rate is forecast to have been 4.1% for a third straight month.

"With the Fed now myopically focused on inflation and price pressures, a hot wages print could prove particularly influential for US rates, Treasuries and the USD," said Chris Weston, head of research at Pepperstone.

Brent crude futures were back above $100 per barrel as traders kept an eye on the stalled talks between US and Iran to end the conflict in the Middle East.

Sterling was at $1.3187 while the Australian dollar was 0.18% softer at $0.6918, both hovering around their three-month lows. The New Zealand dollar slipped 0.22% to $0.5591, hitting its lowest level since November 2025.

"Clearly the market is not pricing for a hawkish Fed," said Prashant Newnaha, senior rates strategist at TD Securities. "This is a flight-to-safety move spurred on by developments in Europe. In this scenario expect the dollar index and the yen to strengthen at the same time."

Much of the dollar's recent strength has come at the expense of the euro as the rising political risk in Europe and the energy shock from the seven-month-long war in the Middle East dented sentiment on the single currency.

The euro has also struggled against the yen and the Swiss franc, while yields on French debt have surged to a 14-year high as worries about France's shaky finances swirl.

Pepperstone's Weston said the nature of the dollar move is shifting. "Increasingly, the story is becoming less about US exceptionalism and more about problems elsewhere, particularly in Europe."

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EURCHF: ⬇️ Sell

– EURCHF reversed from long-term resistance level 0.9445

– Likely to fall to support level 0.9300

EURCHF currency pair recently reversed down from the long-term resistance level 0.9445, which previously stopped wave (b) in the middle of June of 2025, wave (B) in the middle of August of 2025 and wave 3 in the middle of September, and which coincides with the upper daily Bollinger Band.

The downward reversal from this resistance level broke the support trendline of the daily up channel from the start of June, which enclosed the previous waves 1, 2 and 3.

Given the strength of the resistance level 0.9445 and the strongly bullish Swiss franc sentiment seen today, EURCHF currency pair can be expected to fall further toward the next support level 0.9300 – which stopped wave (iv) in the middle of August.

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USD/CAD went on an incredible bullish run in September, surging more than five full big figures. However, after a false break above key resistance on Thursday, we've seen a clear bearish reversal pattern print.

Spot gold daily chart shows larger trend structure Rallies Face Resistance in Downtrend As noted above, price action continues to be bearish and needs to show strength before the possibility of a rally improves. It is also important to remember that rallies will be heading into resistance in a downtrend structure. Therefore, moves may be less reliable and sustainable.

$4,219 Sets First Recovery Trigger Since a lower swing high of $4,219 has been established at Wednesday’s high, that is short-term resistance and the first level that would need to be recovered before there is a chance that gold goes higher. Resistance that would follow is near the lower swing high at $4,316. A recovery above each of those levels would signal a reversal of the very short-term downtrend, which is bullish.

Confluence Near $4,316 Raises Stakes The $4,316 area gains significance since it is reinforced by the confluence of several indicators, including the 20-day and 50-day moving averages, and a downtrend line. A sustained reclaim of the moving averages, now near $4,300 and $4,325, respectively, would be a sign of strength that may be sustainable. The next key upside target would then follow at the lower swing high of $4,511.

Gold defies US Dollar surge as US yield slide revives Bullion demand

Gold alert: The USD Index soars to new 2026 highs

NZDUSD: Price tests 0.5600 for the first time since November 2025

The Fed side gives silver a little room. CME FedWatch has an October quarter-point hike down to 32.7%. A week ago that number was 68.6%, and the softer PCE report is what pushed traders toward a pause.

Another hike hasn’t come off the market’s calendar, and oil and inflation are still in the trade. What’s gone is the scramble over October. With that pressure easing on the same day the long end finally backed off its high, the bond market isn’t leaning on silver nearly as hard as it was earlier in the week.

What to Watch Friday’s Non-Farm Payrolls report is the next shot at yields and the dollar, and silver walks into it having survived a stop-run under Tuesday’s low. The 10-Year turning lower off its high is what gave the recovery room Thursday, with the dollar still holding near its top.

The main trend is still down on the swing chart. Silver dug down to Thursday’s low and was back over $60.84 by late afternoon, the level buyers have to keep under them. At 17:39 GMT it’s trading just below $61.04, the first offer buyers have to chew through. The minor top at $61.73 is the trigger that turns the minor trend up and gives this recovery some structure going into the jobs number.

More Information in our Economic Calendar.

The yield of 10-year Treasuries declined towards the 4.80% level, while the yield of 30-year Treasuries settled near 5.60%. Falling Treasury yields served as a positive catalyst for gold markets today.

U.S. dollar rallied against a broad basket of currencies and tested yearly highs. It looks that short-sellers were forced to start closing their positions as the move was strong. At this point, gold markets did not react to dollar’s rally. However, strong dollar may present a problem for gold bulls in the upcoming trading sessions.

From the technical point of view, gold continues its attempts to settle above the support level at $4160 – $4180. If gold manages to settle above the $4180 level, it will head towards the next resistance, which is located in the $4300 – $4320 range. A move above the $4320 level will push gold towards the $4400 level.

On the support side, a move below $4160 will open the way to the test of the next support, which is located in the $4000 – $4020 range.

Silver Remains Stuck Near Support At $61.00 – $62.00

Mexican Peso rout deepens as USD/MXN blasts through 18.30

Both bank's exchange rate forecasts put the Dollar-Yen rate above its latest level, but UBS expects a retreat to 158 in 2027 while JPMorgan's older projections stay at 164. The gap between UBS and JPMorgan's Dollar to Yen forecasts widens next year, with UBS anticipating a partial Yen recovery after renewed weakness into December.

UBS's 29 September outlook puts USD/JPY at 160 in December 2026, followed by 158 at the March, June and September 2027 quarter-ends.

JPMorgan's 18 September forecast table, reproduced in its 28 September equity-strategy report, projects 164 across all four dates.

The US Dollar to Japanese Yen exchange rate (USD/JPY) traded at 157.93 on Thursday, up 0.23%, after falling 1.37% during September.

UBS's year-end target is roughly 1.3% above that level, compared with around 3.8% for JPMorgan's 164.

In its broader Asia outlook, UBS describes persistent obstacles to currency gains against the Dollar.

"The macroeconomic backdrop of elevated oil prices, high US yields, and a firm USD is likely to persist through the remainder of the year."

It also identifies a risk that US fiscal policy could keep interest rates higher after the midterm elections.

"A scenario involving bipartisan compromise on fiscal spending may prove more expansionary than currently expected, potentially keeping inflation pressures elevated and encouraging the Federal Reserve to maintain a restrictive policy stance for longer."

Intervention remains a complication for forecasts of renewed Yen weakness, following the late-September Yen rebound.

An August assessment from Goldman Sachs distinguished official support from the changes needed to sustain a recovery:

"In the longer term, policy measures convincing Japanese investors to shift back towards Japanese assets could help reverse the yen's low valuation."

UBS's 158 forecast for September 2027 is already close to Thursday's quote, whereas JPMorgan's older 164 projection implies a more persistent setback for the Yen.

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

The American currency is moving higher as economic reports highlight the strength of the economy.

Daily candlestick chart of Silver showing consolidation near the 61.530 level below the 50-day EMA. The silver market has bounced slightly after initially falling earlier this week. At this point in time, though, we are paying attention to the same thing, and that, of course, is going to be interest rates. Interest rates continue to rise in the United States. That is not good for silver, and therefore we see this pressure.

The jobs number will be paramount on Friday. Between now and then, it would make a bit of sense to go sideways and chop. I just don’t see a situation where the whole thing changes quickly, and in this environment, it’s likely that we will see a lot of back and forth, a lot of selling of the initial rally that shows signs of exhaustion, just as we will have buyers of dips as well.

The Calendar Changed. The Market Regime Did Not. What’s happening: Q4 opened as a continuation of Q3. Global sovereign bonds extended their selloff, the US 10-year Treasury yield rose to around 5.34%, the Dollar pushed higher after a sixth consecutive quarterly gain, and EUR/USD broke below 1.13. This came even though softer August PCE inflation had already reduced conviction in another Fed hike in October.

Why it matters: The long end refused to rally on softer inflation data, which makes the 10-year Treasury yield, not the Fed calendar, the cleaner real-time signal for the Dollar. Renewed fuel-supply stress, with Brent back above USD 100, keeps that inflation-and-yield loop alive. Today’s US ISM Manufacturing report and Friday’s NFP are therefore the first tests of whether the Q3 regime can be interrupted.

Within hours of the fourth quarter opening, the dominant themes of Q3 had reasserted themselves. Global sovereign bonds extended their selloff, the Dollar pushed higher, EUR/USD broke below 1.13, and renewed fuel-supply stress kept the inflation backdrop uncomfortable. Even AUD, despite rebounding on the day, remained the weakest major currency over the broader weekly horizon.

The significance is less that these trends survived September than that the quarter boundary produced no reset whatsoever. Q4 has so far opened as a continuity trade. That makes today’s US ISM Manufacturing report the first meaningful test of whether the Q3 regime can finally be interrupted, with Friday’s payrolls report providing the larger test still ahead.

Bond Selloff Crosses the Quarter Boundary The bond market remains the central driver.

Global Yield Snapshot US 10-year Treasury yield: around 5.34% earlier in the day, its highest level since 2002 US 10-year Treasury yield, Q3: largest quarterly rise since 1994 Britain 30-year yield: touched 6% for the first time since 1998 French borrowing costs: pushed to multi-year extremes Japanese yields: remained around multi-decade highs The selloff remained global rather than US-specific, and that matters because the forces behind the move are broader than the next central-bank meeting. Markets are pricing a combination of persistent inflation risk, heavy sovereign borrowing, fiscal strain, large capital demands from AI and defence investment, and a diminished willingness to hold long-duration debt at lower yields. The global rise in borrowing costs is also increasingly threatening government finances as well as equities and credit.

The most revealing US signal came before the new quarter even began. Softer August PCE inflation reduced conviction in another Fed hike in October, yet the long end refused to rally. Instead, the 10-year yield pushed through 5.3%.

Fed timing has become less aggressive. Long-term financial conditions have not.

Dollar Still Trades the 10-Year More Than the Fed Calendar That distinction continues to support the Dollar.

Dollar Data Points DXY: sixth consecutive quarterly gain entering Q4 DXY: extended higher as Treasury yields climbed again Dollar Index: near its strongest level since mid-May The rise in long-term US yields is outweighing the reduction in immediate Fed-hike expectations. The mechanism is the same one that limited Gold’s reaction to softer PCE a day earlier.

The market can simultaneously price less urgency from Fed officials and demand a higher yield to own longer-dated US debt. As long as the second force dominates, the Dollar retains support even without a fresh increase in October-hike pricing.

That makes the 10-year Treasury yield a cleaner real-time Dollar signal than the precise probability attached to the next FOMC meeting. For Q4 to begin differently from Q3, that relationship probably needs to break.

Euro Breaks 1.13 as Structural Pressures Persist The Euro provided the clearest FX extension of the Q3 trend.

EUR/USD Data Points EUR/USD: dropped through 1.13 for the first time since May 2025 EUR/USD, September: decline of nearly 2.5%, the largest monthly fall since July last year The combination of higher energy costs, rising European bond yields and political uncertainty continues to act as a headwind.

The energy channel remains particularly important. Europe is a net importer facing renewed pressure from crude and refined-product prices just as inflation concerns are rebuilding. At the same time, fiscal concerns have pushed French yields sharply higher, while German bonds have not escaped the wider global selloff.

That leaves the Euro caught between higher domestic borrowing costs and a terms-of-trade disadvantage from expensive imported energy.

The move should not be overstated as uniform Euro weakness against every major currency, however. Intraday cross-performance has been mixed. The more durable signal is EUR/USD itself and the broader September decline. The break of 1.13 therefore matters more than any single-session heat map.

Oil Keeps Feeding the Inflation-Yield Loop Oil and refined fuels provide the connective mechanism between the rates and FX stories.

Fuel Supply Data Brent: moved back above USD 100 as global fuel-supply concerns intensified China: refiners suspended exports of oil products beyond Hong Kong and Macau from October US request to the EU: release of 120mn barrels of emergency diesel over six months Germany and France: hold more than a third of the bloc’s strategic diesel reserves Chinese refiners are prioritising domestic supply, potentially removing an important source of diesel, jet fuel and gasoline from already tight international markets. The strain has also moved into strategic stockpiles. The Trump administration has pressed Germany and France to release emergency diesel stocks, with one source saying Washington requested the 120mn-barrel EU release.

This should not be treated as a separate geopolitical sidebar. It feeds directly into the bond story.

Restricted fuel supply keeps inflation risk alive; persistent inflation risk keeps pressure on long-duration bonds; higher long yields reinforce Dollar strength and squeeze energy-importing economies.

That is the same mechanism that carried markets through much of Q3, and it has reappeared almost immediately in Q4.

ISM Is the First Test of the Script The first opportunity to disrupt that pattern comes with today’s US ISM Manufacturing report.

A firm reading would reinforce the existing configuration: resilient US activity alongside persistent energy and inflation risks, giving the long end another reason to stay under pressure and Dollar another source of support.

A weak number would be more interesting, but only if the rates market reacts.

After softer PCE failed to push the 10-year yield sustainably lower, simply missing an economic forecast may no longer be enough. A genuine change in the Q3 script would require weaker data to translate into lower long yields.

Friday’s NFP report then becomes the larger test.

Until that transmission changes, Q4 has opened with remarkably little evidence of a new regime.

The global bond rout continues. Dollar remains supported. Euro has broken another important level. Fuel stress is still feeding inflation concerns.

Day One offered no evidence of a turn. The calendar changed. The market regime did not.

Related Coverage US Rates, Fed and Gold Gold Holds 4,113 Support, but 4,235 and 4,335 Still Block the Bull Case: the Gold view of the same PCE-versus-yields disconnect, with 4,235 and 4,335 as the next decisive tests. US Jobless Claims Fall to 197K, Offering No Sign of Labor Weakness Ahead of NFP: both initial and continuing claims moved lower, setting the labor backdrop for Friday’s payrolls test. Fed’s Kashkari Says Softer PCE Does Not Change Inflation Story: a Fed official arguing that resilient growth and a solid labor market keep further tightening in play. Europe and the Energy Shock Eurozone PMI Manufacturing Reaches 52-Month High as New Orders Accelerate: manufacturing at 52.9, with new orders at their strongest pace since March 2022, a firmer activity picture to set against the Euro’s break below 1.13. UK PMI Manufacturing Rises to 51.9, but Output Growth Slows as Prices Reaccelerate: improving orders and hiring, but slower output growth and returning price pressure. Swiss CPI Rises to 1.0%, but Core Inflation Stays Subdued at 0.5%: energy and imported prices drove the headline acceleration while the core measure stayed low. ECB’s Schnabel Warns Against Looking Through Energy Shock: the ECB view that waiting for second-round inflation to appear could mean acting too late. Asia-Pacific Data and the BOJ BOJ Members Signal More Hikes Ahead, Some Open to Faster Tightening: some members are prepared to accelerate tightening if inflation starts to overshoot, relevant to the multi-decade-high Japanese yields. Japan Tankan Shows Manufacturing Confidence at Eight-Year High, Inflation Expectations Stay Firm: large manufacturers’ sentiment at +24, with inflation expectations still above 2%. Japan PMI Manufacturing Falls to Six-Month Low, Yet Export Orders Remain Strong: the PMI eased to 54.1, but export orders and hiring kept the sector firmly in expansion. Australia PMI Manufacturing Falls to 49.6 as Demand and Output Weaken: a slide back into contraction, the data backdrop behind AUD’s position as the weakest major over the weekly horizon. FAQ Why is the Dollar rising when Fed hike expectations have eased? The market can price less urgency from Fed officials while still demanding a higher yield to own longer-dated US debt. Softer August PCE reduced conviction in another October hike, yet the 10-year Treasury yield pushed through 5.3% and reached around 5.34% on October 1. As long as the long-end yield dominates, the Dollar keeps its support, which is why the 10-year is a cleaner real-time Dollar signal than the probability attached to the next FOMC meeting.

Why did EUR/USD fall below 1.13? EUR/USD dropped through 1.13 for the first time since May 2025, extending a September decline of nearly 2.5%. Higher energy costs, rising European bond yields and political uncertainty are the main headwinds. The Euro is caught between higher domestic borrowing costs and the terms-of-trade disadvantage of expensive imported energy. The weakness is not uniform against every major currency, so EUR/USD itself and the broader September decline are the more durable signals.

What would show that Q4 is breaking from Q3? A genuine change would require weaker data to translate into lower long-term yields. A firm US ISM Manufacturing reading would reinforce the current setup, while a weak number matters only if the rates market reacts. Today’s ISM report is the first test, and Friday’s NFP report is the larger one.

Key Takeaways Q4 opened as a continuity trade: the bond selloff, Dollar strength, Euro weakness and fuel-supply stress all carried over from Q3 with no reset at the quarter boundary. The US 10-year Treasury yield climbed to around 5.34% earlier in the day, its highest level since 2002, and the selloff is global, spanning France, Britain and Japan. Softer August PCE reduced conviction in an October Fed hike, but the long end did not rally: Fed timing has become less aggressive while long-term financial conditions have not. The Dollar extended higher after a sixth consecutive quarterly gain, trading the 10-year yield more than the Fed calendar. EUR/USD broke below 1.13 for the first time since May 2025, squeezed between higher domestic borrowing costs and expensive imported energy. Brent above USD 100 and tightening fuel supply keep the inflation, bond-yield and Dollar loop intact. Breaking the Q3 script requires weaker data to translate into lower long yields. What to Watch Next Today’s US ISM Manufacturing report is the first test of the Q3 regime. A firm reading would reinforce the current setup, while a weak number matters only if long-term yields respond. Friday’s NFP report is the larger test still ahead.

Beyond the data, watch whether the US 10-year yield can fall back from the 5.3% area on weaker numbers, whether EUR/USD can recover the 1.13 level it just lost, and whether fuel-supply stress eases, with Brent back above USD 100, Chinese product-export curbs from October and the US request for an EU diesel release all in play. Until those relationships change, the market regime has not.

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  The Euro managed to break below the support trend at 1.1390. If prices hold below the daily close of 1.1410, more of a drop is likely towards the 1.1200-50 zone.