The Indian Rupee has recovered below 96 per US Dollar, but Goldman's six and twelve-month forecasts still point to renewed USD/INR weakness. The US Dollar to Indian Rupee (USD/INR) exchange rate has already traded above Goldman Sachs' three-month forecast of 96, although Wednesday's recovery in the Rupee has taken it back below that level.
USD/INR stood at 95.8982 on Wednesday morning, down 0.16% from Tuesday's close of 96.0509.
This was another test of 96 rather than a new milestone, with the pair also closing above that level earlier in September.
Goldman forecasts 97 in both six and twelve months, roughly 1.1% above Wednesday's rate.
MUFG's path is gentler: 95.50 in December 2026, 96.00 in March 2027 and 96.50 in June.
That December projection allows some Rupee appreciation first, preserving the distinction in the banks' earlier USD/INR forecasts.
MUFG identifies the external forces working against RBI support:
"The rupee weakened most clearly towards the end of the period as the sharp rise in US Treasury yields and renewed oil-price gains strengthened the dollar and worsened India's external backdrop."
Those pressures persisted after publication, with Tuesday's move through 96 accompanied by elevated crude prices and foreign equity selling.
India's dependence on imported energy makes oil particularly important for both currency demand and monetary policy.
"August inflation of 4.82%yoy has already moved above the RBI's 4% target, while India's reliance on imports for roughly 90% of its crude requirements increases its exposure to further energy-price gains."
MUFG says RBI liquidity withdrawals are also adding upward pressure to domestic rates, but the direction of US yields and oil remains central to its currency outlook:
"A sustained 10-year Treasury yield above 5% and further oil-price gains would maintain depreciation pressure, while lower yields or signs of Middle East de-escalation would provide some relief."
Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.
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.
The SPX500 takes a step back as the ongoing rally loses momentum, while AUDUSD and EURJPY continue to face key technical levels. AUDUSD tests support The Australian dollar remains pressured as the greenback continues to push.
USDCHF currency pair recently broke through the key resistance level 0.8280, which previously stopped upward impulse in September and which intersects with the daily up channel from August.
The breakout above the resistance level 0.8280 accelerated the active impulse wave iii of wave (c) from September.
Given the clear daily uptrend and the strong US dollar bullish sentiment, USDCHF currency pair can be expected to rise further toward the next key resistance level 0.8400.
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Elevated U.S. inflation and frequent issuance of U.S. Treasuries have driven the 10-year U.S. Treasury note yield above 3.6% and put a lid on bonds, supporting the greenback. The U.S. Dollar is set for a strong month.
It is true that major rises in energy costs as a result of the conflict in Iran have hurt the euro recently. Along with rising geopolitical tensions, French bonds are once again far less attractive than their German counterparts, pushing yields up by 115 basis points. The euro looks set for its worst monthly performance against the dollar in over a year.
Looking at sterling, Britain’s budget deficit remains large, but recent actions by the government have signaled a greater commitment to reigning in spending. Along with signs of tighter spending, Bank of England data has shown that unsecured consumer lending picked up in August. This raises concerns about the health of the UK labor market, and further complicates the challenges posed by the Bank’s efforts to control inflation.
Looking at these factors, the dollar has a moderately bullish bias against the euro and a bearish bias against the pound. Major moves in either currency are expected to come from the release of the U.S. PCE report and the jobs report on Friday.
U.S. Dollar Index Technical Analysis: DXY Holds 101.33 as 101.61 Becomes the Next Upside Test
Earlier rate hike expectations pushed the prices of Gold and Silver lower. More recent comments by New York Fed President John Williams indicated that the Fed will likely only raise rates by 0.25% on one more occasion in 2022.
Challenges remain in the bond market. The 10-Year Treasury yield has risen to levels not seen since 2007, and July through September have seen rising yields due to increasing inflation and government debt issuance and strong economic data. The U.S. dollar has also risen this quarter.
Higher yields and a rising dollar increase the opportunity cost of holding non-yielding investments such as gold and silver. The dollar is also less attractive to foreign investors.
Geopolitical factors also affect gold and silver prices. However, these factors are supporting, and not controlling, prices. The U.S. is considering easing sanctions on Iran in exchange for changes to their nuclear policy. There is also the potential for an increase in global oil supply. However, if this happens, it could also contribute to renewed inflation.
While monetary policy is controlling silver prices, the same can not be said for gold.
Fundamental view: Expect gold and silver prices to move lower. The focus is on the PCE Inflation Report.
The Pound-Euro could face resistance if German inflation revives ECB hike bets, while UK GDP revisions may offer Sterling some direction. The Pound Euro (GBP/EUR) exchange rate edged slightly higher on Tuesday, although a lack of UK data limited Sterling’s success.
At the time of writing, GBP/EUR was trading at €1.1663, up marginally on the day.
Latest — Exchange Rates:
Pound to Euro (GBP/EUR): 1.166066 (+0.06%)
Pound to Dollar (GBP/USD): 1.320995 (-0.33%)
Euro to Dollar (EUR/USD): 1.132865 (-0.39%)
DAILY RECAP:
The Pound (GBP) struggled to find a clear direction on Tuesday as a lack of UK economic data left the currency with little impetus.
Wider factors also failed to prompt a clear direction in GBP. Average diesel prices in the UK hit a new record high, which simultaneously boosted Bank of England (BoE) interest rate hike bets while also fuelling concerns about the UK’s cost-of-living crisis.
Additionally, the Labour Party Conference kept GBP investors hesitant. Rumours swirled around greater public control of energy, and what this could mean for other utilities, as well as how a national care service – a potential manifesto commitment at the next general election – could be funded.
Meanwhile, the Euro (EUR) slipped on Tuesday, with the single currency seemingly dented by its strong negative correlation with the US Dollar (USD), as the latter rose.
New Eurozone data failed to provide EUR with support. The bloc’s economic sentiment index unexpectedly declined in September, easing from 98.4 to 97.9, rather than rising to 99. This was the first decline since April, snapping a four-month winning streak.
Near-Term GBP/EUR Forecast: German Data to Lift the Euro? Looking forward, Wednesday’s session kicks off with Germany’s latest retail sales figures. An anticipated 2% recovery in August could see the single currency start the session on positive footing.
EUR investors will then turn their attention to Germany’s preliminary consumer price index for September, due in the afternoon. A forecast acceleration in inflation could boost the Euro amid increased bets on another interest rate hike from the European Central Bank (ECB).
However, movement may be limited ahead of the CPI figures for the Eurozone as a whole, due on Friday.
As for the Pound, the UK’s final GDP growth rate for the second quarter could influence the currency. Confirmation of a decent expansion could offer Sterling modest support, while GBP could slump or strengthen if the final result is revised lower or higher, respectively.
Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.
TL;DR: EUR/JPY and AUD/JPY have broken key technical support this week, but the weekly performance breakdown shows only 0.1–0.3 percentage points of that weakness comes from genuine Yen strength—the rest reflects Dollar and Yen as the two strongest majors, with intervention risk capping USD/JPY and forcing Euro, Aussie, Sterling and Kiwi weakness to pass directly into their Yen crosses.
Why This Matters When several Yen crosses break support in the same week, the reflexive read is a broad Yen rally. But cross rates are arithmetic, not sentiment, and the underlying math this week tells a more specific story: Yen is not surging broadly, it is being held up by an intervention ceiling on one specific pair. That distinction matters directly for how far EUR/JPY and AUD/JPY can fall, and it hands traders a clean diagnostic—USD/JPY itself—for telling a contained cross-driven move apart from the start of a genuine Yen rally.
It Looks Like a Yen Rally, but the Arithmetic Says Otherwise EUR/JPY and AUD/JPY have both broken important technical support this week. GBP/JPY and NZD/JPY have weakened alongside them. At first glance, the price action looks like a broad Yen rally. But the weekly performance breakdown tells a more specific story.
EUR/USD is down around -0.91%, compared with a -1.04% decline in EUR/JPY. AUD/USD has fallen roughly -1.82%, while AUD/JPY is down -1.97%. The same pattern extends to Sterling and Kiwi: GBP/USD is down around -0.69% versus -0.98% in GBP/JPY, while NZD/USD has fallen -1.12% against -1.41% in NZD/JPY.
That means only around 0.1 to 0.3 percentage point of the weakness in those Yen crosses reflects additional Yen appreciation beyond what is already happening against the Dollar. USD/JPY itself is almost unchanged on the week. The real picture is therefore that Dollar and Yen are the two strongest major currencies, while Euro, Aussie, Sterling and Kiwi are losing ground against both.
That raises the more interesting question: why is that relative strength producing outright breakdowns in EUR/JPY and AUD/JPY while USD/JPY itself is barely moving?
Dollar Strength Survives a Collapse in October Hike Odds The Dollar side of the equation is particularly notable because one of its recent supports has weakened sharply. CME FedWatch pricing now puts the probability of an October Fed hike at around 47%, down from roughly 71% a day earlier. The shift followed New York Fed President John Williams’ remarks in Buffalo on Tuesday. Williams said there was “no need for urgency” after September’s rate increase and that, if the economy develops broadly in line with his forecast, one further hike may be appropriate “late this year.”
That has turned October from something markets were leaning toward heavily into something much closer to a coin flip. But it has not produced a corresponding collapse in the Dollar.
Part of the reason is that Williams’ message was about timing, not an outright rejection of further tightening. Federal Reserve Governor Michael Barr continued to argue that further policy adjustments are likely to be required, while Chicago Fed President Austan Goolsbee warned that keeping inflation above target for so long was “playing with fire.”
More importantly, U.S. Treasury yields remain historically elevated even after easing from their latest highs. The 10-year yield reached its highest level since 2007 this week, while the broader bond selloff has kept U.S. yields high enough to preserve substantial structural support for the Dollar. So the Dollar story has changed, but not reversed: the market has lost conviction that the next Fed hike must come in October, but it has not lost the high-yield environment that made the Dollar attractive in the first place.
Yen Strength Comes From an Intervention Ceiling The Yen is being supported by a very different mechanism. The BOJ raised its policy rate to 1.25% on September 18, the highest in 31 years. But the Yen did not respond with a sustained rally because Governor Kazuo Ueda stopped short of delivering a clearly accelerated tightening path, while two board members dissented from the hike.
What changed subsequently was the intensity of the currency-policy warning. U.S. President Donald Trump raised concern over Yen weakness directly with Japanese Prime Minister Sanae Takaichi during their September meeting. Finance Minister Satsuki Katayama subsequently said both governments shared concerns about the Yen’s undervaluation, while Katayama and U.S. Treasury Secretary Scott Bessent agreed to maintain close communication on foreign exchange. Those exchanges came after coordinated U.S.-Japan Yen-buying intervention earlier in the year. Japan’s top currency diplomat Atsushi Mimura then reinforced the message on Monday, telling markets to take the “very clear” warning from Tokyo and Washington “at face value.”
That history makes the current jawboning harder to dismiss as routine rhetoric. But the effect so far is more specific than a generalized surge in Yen demand—it is acting as a ceiling over USD/JPY. And that distinction explains what is happening in the crosses.
Why Intervention Risk Hits the Crosses Harder Cross rates are arithmetic. EUR/JPY can be expressed through EUR/USD and USD/JPY, and the same relationship applies to AUD/JPY, GBP/JPY and NZD/JPY.
In a conventional broad-Dollar rally, the two legs partially offset each other. Suppose EUR/USD falls because the Dollar strengthens: under normal circumstances, that same broad Dollar strength would also lift USD/JPY, cushioning the decline in EUR/JPY. This week, that cushion is largely absent. Intervention risk is preventing USD/JPY from participating fully in the Dollar’s wider advance—the Dollar can strengthen sharply against Euro, Aussie, Sterling and Kiwi without making comparable progress against Yen. The weakness in those currencies therefore passes much more directly into their Yen crosses.
That is why EUR/JPY can break lower even though USD/JPY is barely moving, and why AUD/JPY can suffer an even sharper decline when Aussie is already under independent pressure following the RBA and Governor Michele Bullock’s cautious guidance. The key mechanism is therefore not that intervention risk is generating enormous standalone Yen demand—it is that intervention risk is removing the offset that would normally cushion Yen crosses during a broad Dollar rally.
ActionForex’s Technical View on EUR/JPY, AUD/JPY and USD/JPY EUR/JPY Heads Toward the 175.26–175.41 Test
The technical picture in EUR/JPY fits that mechanism closely.
The break of 177.82 support argues that the decline from 187.93 has resumed. Near-term risk therefore remains on the downside while 181.53 resistance holds.
But the larger fall can still be treated as a correction of the medium-term rally from 154.77 to 187.93, rather than a confirmed trend reversal.
The key test is the 175.26–175.41 support zone.
The 175.26 level represents the 38.2% retracement of the 154.77–187.93 advance, while 175.41 corresponds closely with the 2025 high. That makes the area an important technical confluence where a stronger rebound could emerge.
A sustained recovery above 181.53 would be the first meaningful indication that a short-term bottom has formed.
A decisive break through 175.26–175.41, however, would materially weaken the medium-term structure and increase the risk that the decline has become more than a correction. In that case, the 167.44 area, the 61.8% retracement of the same advance, would become the next major downside reference.
AUD/JPY Has the Cleaner Bearish Structure
AUD/JPY is technically more vulnerable.
The decline from 114.95 resumed with the break of 109.66, while the subsequent loss of 109.25 confirms that the correction is now retracing the much larger advance from 86.03.
The bearish case is also reinforced by the pair’s earlier rejection from the daily 55 EMA.
The next downside objective is around 107.32, representing the 100% projection of the 114.95–109.66 decline measured from 112.61.
A firm break there would expose 103.90, the 38.2% retracement of the entire 86.03–114.95 rally.
Any rebound should remain corrective while 112.61 resistance holds.
That gives AUD/JPY a cleaner downside structure than EUR/JPY, while the fundamental backdrop also reinforces it: Aussie is absorbing both broad Dollar strength and its own post-RBA repricing at the same time that intervention risk is preventing USD/JPY from providing an offset.
USD/JPY Is the Control Chart
USD/JPY is the most important chart for deciding whether this interpretation remains valid.
The pair has retreated from 159.02, but the decline has so far looked more like a corrective pullback than a renewed collapse from the larger 163.97 high.
Price is now testing the 156.67 area, corresponding to the 38.2% retracement of the rebound from 152.87 to 159.02.
If that support holds and USD/JPY turns higher, the intervention-cap interpretation remains intact. Officials may be limiting the Dollar’s upside against Yen, but they have not yet produced a decisive bearish reversal.
A recovery through 159.02 would strengthen that view and reopen 160.38.
By contrast, sustained weakness through the current support area would begin to signal something broader than an intervention-constrained Dollar rally. A break back through 152.87 would materially weaken the rebound structure and expose 151.92, around the 50% retracement of the larger rise from 139.87 to 163.97.
That creates a useful diagnostic:
If USD/JPY holds while EUR/JPY and AUD/JPY continue falling, the relative-strength mechanism remains intact. If USD/JPY itself starts breaking major support, then the story is becoming a genuine broader Yen rally. When Does This Become a Real Yen Rally? The technical picture currently mirrors the fundamental thesis unusually well. EUR/JPY and AUD/JPY have both broken important support and are carrying weak momentum. USD/JPY, by contrast, remains caught between a strong Dollar backdrop and increasingly credible Japanese intervention warnings, leaving the Yen crosses to absorb most of the adjustment. For EUR/JPY, 175.26–175.41 is the next major structural test; for AUD/JPY, the immediate focus is 107.32, with 103.90 becoming vulnerable if the correction extends.
But USD/JPY remains the control chart. As long as it holds around the current support structure, the breakdown in Yen crosses can still be understood primarily as weak Euro, Aussie and other currencies being transmitted through a USD/JPY pair capped by intervention risk. A sustained USD/JPY break lower would change that conclusion. Until then, the crosses may look like they are leading a broad Yen rally. The arithmetic says they are mostly revealing what happens when Dollar strength has nowhere to go against Yen.
Key Takeaways Only 0.1–0.3 percentage points of this week’s EUR/JPY, AUD/JPY, GBP/JPY and NZD/JPY weakness reflects genuine Yen strength beyond what’s already priced against the Dollar. October Fed hike odds fell to 47% from 71% after Williams’ remarks, but elevated Treasury yields have kept the Dollar’s structural support intact. Japan’s intensifying intervention warnings, from Trump-Takaichi talks through diplomat Atsushi Mimura, are capping USD/JPY specifically rather than lifting Yen broadly. That cap removes the usual offset in Yen crosses, so Euro, Aussie, Sterling and Kiwi weakness passes more directly into EUR/JPY and AUD/JPY. USD/JPY is the key diagnostic: holding support near 156.67 keeps this a cross-driven story, while a break below 152.87 would signal a genuine broad Yen rally.
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The short‑term Elliott Wave outlook for EURUSD indicates that a five‑wave impulsive structure is developing from the August 21, 2026 high. From that peak, wave (i) concluded at 1.1566, followed by a corrective rally in wave (ii) that terminated at 1.1654. The pair then resumed its decline in wave (iii), which is unfolding with internal subdivision into another five‑wave sequence of lesser degree. Within this sequence, wave i ended at 1.145, while wave ii retraced modestly to 1.1495.
The market continued lower in wave iii, reaching 1.1359, before a brief rally in wave iv that ended at 1.141. Current price action suggests that wave v of (iii) is nearing completion. Once this segment concludes, EURUSD should enter a corrective bounce in wave (iv), which will provide temporary relief before the broader decline resumes. In the near term, as long as the pivot at 1.1654 remains intact, rallies are expected to fail within corrective formations of three or seven swings. This reinforces the bearish outlook and signals that further downside remains likely.
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USD/CAD started a steady increase and traded above 1.4150. A bullish trend line is forming with support at 1.4165 on the 4-hour chart. Bitcoin remained supported and might attempt a fresh increase above $85,500. The US GDP could grow 1.5% in Q2 2026 (Preliminary). USD/CAD Technical Analysis The US Dollar gained bullish momentum above 1.3950 against the Canadian Dollar. USD/CAD rallied above the 1.4000 and 1.4120 resistance levels.
Looking at the 4-hour chart, the pair settled well above 1.4000, the 100 simple moving average (red, 4-hour), and the 200 simple moving average (green, 4-hour). The pair even tested the 1.4200 resistance.
If the bulls remain in action, the pair could rise further toward the 1.4240 level. The first major resistance might be 1.4265. A close above the 1.4265 resistance could spark another upward movement.
In the stated case, the bulls could aim for a move to 1.4350. If there is a downside correction, the pair might find bids near a bullish trend line at 1.4165.
The first major support might be 1.4100. A close below 1.4100 might accelerate the decline. In the stated case, the bears could aim for a move to 1.3980 and the 100 simple moving average (red, 4-hour).
Looking at Bitcoin, the bulls are still in action above $80,000, and they might aim for a fresh move toward the $86,500 resistance.
Upcoming Key Economic Events:
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Headline and trimmed mean inflation modestly undershoot expectations
November RBA hike probability slumps from 44% to 20%
AUD/USD tests 0.6964 as downside momentum remains dominant
ASX 200 breaks higher as hawkish rate pricing unwinds
Australia’s August inflation report has undershot expectations, adding to the unwind in hawkish RBA pricing that began after Governor Michele Bullock’s press conference following the bank’s interest rate decision on Tuesday.
ASX 200 and Australian three-year bond futures have broken higher, while AUD/USD has resumed its unwind to test a key support zone.
Inflation miss adds to RBA pricing unwind
On the August inflation figures themselves, there was a modest undershoot in both headline and trimmed mean inflation, the latter important given it is the RBA’s preferred measure of underlying price pressures.
Headline CPI rose 0.4% for the month and 4.0% over the year compared with expectations for 0.5% and 4.1% respectively.
Trimmed mean rose 0.2% against 0.3% expected, while the annual rate came in at 3.6%, unchanged from July and in line with expectations.
Source: ABS
Looking at the unrounded index, though, the monthly trimmed mean increase was a relatively high 0.24%, while the annual rate was 3.57%. So while there was a modest undershoot, it was still basically in line with both the prior month and what markets had been looking for.
While the year-on-year rate appears to be rolling over, fitting with the view expressed by Bullock yesterday that policy settings are now restrictive, the nearer-term inflation pulse still leaves plenty of room for caution. Trimmed mean inflation is running at a 4.12% annualised pace over three months and 3.94% over six months, keeping the prospect of additional rate hikes firmly on the table.
However, the market is showing a clear inclination to jump on even the smallest dovish signal after what had been a very significant hawkish move in RBA pricing, and that's exactly what we've seen following the inflation report.
The implied probability for a 25 basis point hike at the RBA’s next meeting on November 3 now sits at just 20%, down from 44% last week.
Source: TradingView
Domestic inflation detail looks softer
Looking at the underlying detail in the August report, there was a clear trend within the data, with tradable inflation, which largely reflects global rather than domestic factors, rising 1.3% to be 2.9% higher than a year earlier.
In contrast, domestically derived categories were soft. Non-tradables were flat on the month, although still up 4.5% on a year earlier. Goods, largely reflecting higher energy prices, surged 1% to be 4.2% higher, but services, which often have linkages to wage pressures, and discretionary categories both declined 0.2%.
Source: ABS
While one month is not enough to create a trend, it fits with the view that high inflation, tighter monetary policy and recent declines in house prices across the country may be combining to curtail consumer demand.
That was also evident in a separate report released on Tuesday ahead of the RBA decision, which showed household spending was flat in August.
Rates unwind drives bullish breakout in threes
Source: TradingView
With front-end RBA hawkish pricing unwinding rapidly, Australian three-year government bond futures have staged a bullish breakout, successfully pushing above resistance at 95.035 that had capped bounces earlier this month.
With RSI (14) shifting back into neutral territory and MACD staging a bullish crossover while remaining in negative territory, evidence is accumulating that we may have seen the lows for threes, at least in the near term.
If that is the case, 95.16, which was a breakdown level earlier this month, and 95.26 are the immediate overhead levels to watch.
If we were to see a reversal of the move, which at this stage appears unlikely, 94.875 is where the price bounced on two separate occasions earlier this month.
AUD/USD sinks to its lowest since July
Source: TradingView
The move in front-end rates has seen the modest corrective bounce in AUD/USD overnight reverse and then some, sending the pair to its lowest level since late July on the back of the inflation data.
The price is now testing a key support zone comprising horizontal support at 0.6964 and the 23.6% Fib retracement of the April 2025 to June 2026 bull move.
On the topside, 0.7004 is the immediate focal point from where the pair now trades. Unless the price can reclaim that level, the bias remains towards further downside.
A sustained break beneath the Fib level would point to the potential for an unwind back towards support at 0.6920. Below that, there’s not a lot to speak of until 0.6865, the swing low set in June this year.
The message from the oscillators continues to favour selling into strength and downside breaks, with RSI (14) struggling to recover from oversold territory, while MACD remains deeply negative after crossing the signal line from above.
AUD/USD just looks heavy on the charts.
ASX 200 loves the rates unwind
Source: TradingView
While the Aussie dollar is struggling with the unwind in hawkish pricing, Australia’s ASX 200 is loving it, breaking to its highest level in more than a week after clearing downtrend resistance drawn from the highs set in August.
With the breakout now in place and the oscillators indicating that upside strength is rebuilding on the four-hourly timeframe, buying dips and bullish breaks is favoured in the near term.
8710 had been the top of the prevailing sideways range the index was trading in prior to the RBA, so it looms as a level of interest underneath where the index now trades, along with 8750, where the price stalled in overnight trade.
Overhead, 8810 has acted as resistance on multiple occasions this month, with 8840 and 8890 the other nearby levels of note.
Fed repricing has driven NZD/USD sharply lower since August
NZ-US yield spreads remain the most consistent macro driver
NZD/USD is deeply oversold and testing 0.5639 support
Payrolls may decide whether support breaks or Kiwi rebounds
The latest hawkish recalibration of the Fed interest rate outlook has weighed heavily on NZD/USD, sending the pair tumbling from the highs hit in late August. It now finds itself dangling just above 0.5639, an important support level that held the last time it was tested in June.
With NZD/USD in a strong downtrend, trading beneath its key medium and long-term moving averages, and downside momentum continuing to build, the macro and technical pictures remain aligned towards further weakness.
However, history shows the Kiwi can stage savage counter-trend bounces after reaching similarly oversold conditions. That means a failure to break beneath 0.5639 could provide the fuel for a similar outcome on this occasion.
Hawkish Fed shift weighs heavily on the Kiwi
It’s no coincidence that the Kiwi’s latest lurch lower has coincided with a significant hawkish recalibration of the Fed interest rate outlook. As the graphic below shows, pricing that had looked for around two rate hikes from the Fed out to the middle of next year began to increase rapidly in late August.
Source: TradingView
Including the September rate increase we’ve already seen from the Fed, markets still have more than three full 25 basis point hikes priced into the curve, a factor that is clearly weighing on NZD/USD.
A simple correlation test backs that up, with NZ-US yield spreads across the front end and belly of the curve showing the strongest and most consistent relationship with movements in the Kiwi. Over the past 5, 10 and 20 sessions, the correlation with the 2-year spread has been +0.58, +0.64 and +0.67 respectively, while the 5-year spread has come in at +0.61, +0.58 and +0.62.
The RBNZ outlook is similarly hawkish in terms of the magnitude of tightening expected, with markets pricing a similar amount of additional tightening to that expected from the Fed. The key difference is the starting point. New Zealand policy remains comparatively stimulatory, while Fed policy is already assessed to be around neutral or even a touch tight.
So it’s not that the RBNZ isn’t hawkish right now. It clearly is. It’s just that those signals have been overwhelmed by the increasingly hawkish message coming from the Fed.
Kiwi momentum remains firmly skewed lower
Source: TradingView
The pressure coming from the macro side of the equation is reinforced by the technical picture, with the Kiwi now in a firm downtrend from the highs set in late August, having broken beneath its key medium and long-term moving averages.
The latest leg lower has seen the pair retrace to 0.5639, a support level that dates back to late last year. The last time it was tested in June, it held, ultimately delivering a decent run higher in the Kiwi.
However, with Tuesday’s candle printing as a bearish engulfing pattern, RSI (14) sitting around 25 and continuing to push lower, already extreme downside momentum continues to build. That message is backed up by MACD, which also sits deeply in negative territory after crossing beneath its signal line.
The potential for an extension of the bearish move is clearly there, putting the swing low set in November last year at 0.5581 in play. If that were to break, a far more important support zone comes into view, comprising the Liberation Day low set in April last year and the COVID low around 0.5470.
Overhead, downtrend resistance is located around 0.5660 today, with 0.5696 the next topside level of note before a more pronounced resistance zone kicks in around 0.5750.
Oversold conditions have often produced sharp rebounds
While the macro and technical signals favour an extension of the current bearish move, history provides a cautionary tale against acting pre-emptively without a definitive break. Similar oversold conditions to those we’re seeing now have often resulted in sharp counter-trend squeezes, and in many instances marked an eventual turning point over the medium term.
Source: TradingView
To test that, I screened the daily data for periods when RSI (14) had fallen to 28 or below while price was trading at least 3.0 ATR (50) beneath its 50-day average. To avoid double-counting the same selloff, only independent episodes were included, with RSI needing to recover back above 40 before a fresh signal could be counted. I also excluded the COVID episode given how unique that period was.
That left eight comparable historical instances.
The remaining results are more interesting than definitive, at least in the near term. NZD/USD was higher three sessions later in six of the eight cases, higher after five sessions in six of eight, and higher after 20 sessions in six of eight. The median gain after five sessions was 0.86%, increasing to 1.96% after 20 sessions.
However, as the graphic above shows, the path has not always been smooth. The two notable failures in the sample came in April and September 2022, when the Fed was aggressively hiking interest rates and US dollar strength was building. In those cases, already stretched conditions became even more stretched before the eventual rebound arrived.
And that is highly relevant to what we’re seeing today. The Kiwi is obviously oversold and at risk of some form of counter-trend squeeze. But for something more meaningful to take place, it may require fresh information that makes markets question the degree of hawkishness currently priced into the Fed interest rate outlook.
Payrolls needs to be weak to shift the Fed outlook
Enter September’s non-farm payrolls report, due on Friday.
While we receive the Fed’s preferred core inflation measure, the PCE deflator, later today, history has shown that it now rarely generates much volatility at all. Unless we see some kind of unusual weakness or outlier outcome in the accompanying income and spending data, it really suggests payrolls will loom as the key catalyst capable of providing the spark for a more meaningful rebound in the Kiwi.
The Fed has made it clear that the price stability side of its dual mandate is its primary focus right now. So for payrolls to materially alter the current rates outlook, the outcome would need to be unquestionably weak, enough to force the Fed towards a more symmetric reaction function across both sides of its mandate rather than maintaining such a heavy focus on the inflation outlook.
Support Breakdown Strengthens Bearish Pressure Bearish implications for gold have increased this week as Monday’s break below a key support zone confirmed a renewed shift in control to sellers. The larger bearish correction is therefore reasserting itself. The recent low of $4,235 had established support near the 61.8% Fibonacci retracement level, but both levels failed to hold on Monday. Aggressive selling followed the breakdown, with the next lower potential support zone also failing to hold.
That zone included the prior swing high of $4,203, which previously served as key resistance for the bottom consolidation range, as well as a short-term uptrend line, and the lower boundary of a falling wedge pattern that never confirmed. The failure of this confluence of support adds further weight to the bearish breakdown.
Silver formed a closing price reversal bottom at $60.30, but PCE must cool rate-hike expectations to bring follow-through buying into the market.
Spot Silver Reverses Earlier Weakness at Key Long-Term Support Spot Silver (XAGUSD) traded under the 50% retracement of its all-time high Tuesday, hit $60.30 and was back above the level late in the New York session. Buyers didn’t just sit on bids at $60.84. Silver traded through it to $60.30 first, then came back over $60.84 and the $61.04 level. The swing from the low to the high of the day was $1.15. That’s more than an ordinary intraday bounce. Sellers had taken out the 50-day moving average and the $61.04 to $62.98 zone on the way down from $67.55. The 50% level is where they finally ran out of room. It took a lot of broken support to get there.
The dollar is through its September high and Treasury yields are sitting near their highs. Buyers showed up with both of them still pressing. The main trend is still down. This is the first real chance buyers have had to show the long-term value area is drawing more than passive bids.
At 19:05 GMT, Spot Silver is trading at $61.35, up $0.71 or +1.16%. It traded from $60.30 to $61.45.
The Dollar Is Still Pressing, and Silver Turned Anyway
Daily US Dollar Index (DXY) The Dollar Index is near 101.58. It cleared the 100.56 breakout level and took out the September high at 101.40 on the way there. Buyers are still taking it higher, with 101.80 and 101.98 next. Currency traders have a clear reason to own dollars right now. That’s a lot of dollar strength for silver to fight. Silver didn’t wait for it to stop.
Silver’s reversal came with the dollar through its September high. A bounce off a collapsing dollar wouldn’t have told traders much. This one came against it, and I’d pay more attention to that than to the size of the move.
Yields Haven’t Given Silver Buyers Any Cover
Daily US Government Bonds 10-Year Yield After touching 5.293% earlier in the day, the 10-Year U.S. Treasury yield is holding near 5.28%. The 5.04% breakout level and the 50-day moving average near 4.80% are well below it. The long end of the curve is still pricing inflation and higher rates. The 10-Year is a basis point off its high, and bond traders have barely backed off.
Silver found buyers at $60.30 with the bond market sitting right at its highs. The 50% level gave them a better risk-reward price, and they used it. Bond traders gave them nothing else to work with.
PCE and Payrolls Decide How Far the Bounce Can Run Oil is still elevated and inflation is still sitting in the rate trade. Traders are pricing a 68.1% chance of another quarter-point Federal Reserve hike in October. Crude is still one Middle East headline away from putting inflation back in front of the bond market. Silver can’t control any of that.
Silver Price Forecast
Every new Silver analysis as it publishes, today's technical signal and key levels, live price — on one page.
See all Silver forecasts The August Job Openings and Labor Turnover Survey (JOLTS) was the soft number, with 7.079 million openings against a revised 7.335 million in July. The October hike trade held anyway. Silver didn’t get any help from it either.
Wednesday’s Personal Consumption Expenditures (PCE) reports are the bigger inflation test, and Friday’s Non-Farm Payrolls report comes right after. Silver is going into both against the same dollar-and-yield trade that drove the sell-off. Softer data is what pulls those two off their highs. Sellers just couldn’t hold it under the 50% level Tuesday. The reversal came on price, not macro relief.
Daily Spot Silver (XAGUSD) Technical Analysis
Daily Spot Silver (XAG/USD) Spot Silver is making a closing price reversal bottom Tuesday after posting a lower low at $60.30 and recovering above the prior close. The pattern needs a follow-through rally on Wednesday to be confirmed. The main trend remains down according to the daily swing chart. A trade through $67.55 will change the main trend to up. A trade through $60.30 will signal a resumption of the downtrend.
The 50% retracement of the all-time high is $60.84. Silver broke under it during the session but recovered above it. That makes $60.84 the first support level. The $61.04 level has been reclaimed and becomes support. The next upside test is $62.98.
The 50-day moving average at $63.90 is the short-term resistance and trend indicator. The 200-day moving average at $73.13 is the long-term resistance and trend indicator. Silver remains below both.
The reversal does not establish a new bottom or change the swing-chart structure.
What to Watch Wednesday is the confirmation test for the reversal, and the PCE reports land the same day. Payrolls comes after that. Tuesday’s buyers need company, and they have to prove themselves quickly.
Sellers took silver to $60.30, and buyers had it back over $60.84 late Tuesday. That’s the level they have to keep on Wednesday. Tuesday’s high at $61.45 is the first price buyers have to take out Wednesday. After that, they have to deal with $62.98 and then the 50-day moving average.
More Information in our Economic Calendar.
James Hyerczyk is a U.S. based seasoned technical analyst and educator with over 40 years of experience in market analysis and trading, specializing in chart patterns and price movement. He is the author of two books on technical analysis and has a background in both futures and stock markets.
USD/JPY Talking Points:
It’s been a dichotomous backdrop in USD/JPY, as longer-term charts illustrate a clear shift into a more bearish backdrop but on a shorter-term look, bulls have continued to pile in after pullbacks.
Last week saw a resistance test at 159 and that drove a pullback to a support level at 156.68. That level gave a 100+ pip bounce yesterday, but noticeably, bulls haven’t continued the push. A heavy dose of data in the back-half of the week may have something to do with that.
One look at the weekly chart and it’s clear that a shift has shown up recently in the USD/JPY pair. And, really, over the past five years there’s been a similar push-pull dynamic of ‘up the stairs, down the elevator.’
That can largely be drawn back to positioning, as a crowded trade sees incremental gains on the way up, with buyers testing and testing as each fresh high prints; while the exit door brings a furious retracement driven by the prospect of change. In 2022, 2023 and 2024, that change was in the form of weakening inflation hitting Fed rate hike and then rate cut expectations. More recently, since July, that’s been due to a dual intervention from the U.S. and Japan.
But, as I pointed out after that first intervention run, when prices were pushing towards the 155.00 level, there was still motive for longs and through the month of August, that’s what showed up as buyers pushed all the way back to the 160.00 level. Another swing developed shortly after that and this time, prices pushed down to the 153 level. And, again, buyers loaded up and prices ran for 600 pips until last week’s test and stall at the 159.00 level.
USD/JPY Daily Chart
Chart prepared by James Stanley; data derived from Tradingview
USD/JPY Shorter-Term
Last week saw both the US and Japan comment on Japanese spot rates, which was one of the factors behind the 250+ pip retracement. And while both would surely like a lower spot rate, that’s been the case for the past two months and perhaps the larger question is whether there’s enough fear of change in the environment to compel longer-term bulls to pare positions.
After all, this was what was behind retracements in 2022, 2023 and 2024 – as weakening CPI drove the fear that the Fed would go less hawkish and then, eventually dovish into a rate cut. We haven’t quite had that situation of late as US inflation is expected to come in at 3.5% tomorrow, which still outpaces inflation in Japan.
There could be another factor, however, as Japan is more vulnerable to surging oil prices as they’re forced to import all of their oil, and a sliding Yen to go along with higher oil prices makes that threat of future inflation an even larger factor.
For tomorrow, however, the focus is much more to the point, as Core PCE in the United States will likely have some form of direct relationship on the pair, with stronger inflation leading to higher odds of more US rate hikes, which further exposes that deviation between the US and Japan.
At this point, USD/JPY is holding support at a key zone, the same 156.68 that was in-play late last week synced up to 157.22. From the daily above, this has an open door for bullish continuation. But – for those that are bearish there could be a justification that I’ll look at a little lower.
USD/JPY Four-Hour Price Chart
Chart prepared by James Stanley; data derived from Tradingview
USD/JPY Shorter-Term
At this point there’s a head and shoulders formation that’s set up on shorter-term charts. This would require a break of last week’s low to trigger, and if it does, that projects to a move of approximately 250 pips, which would point to around the 154 level on the pair.
USD/JPY Two-Hour Chart
Chart prepared by James Stanley; data derived from Tradingview
--- written by James Stanley, Senior Market Analyst, Global Macro
The start of the trading week has not been particularly favorable for gold. This can be seen in recent XAU/USD price action, with the metal falling nearly 4.00% over the last two trading sessions and bringing renewed attention to a bearish bias within the market.
Meanwhile, Fed’s Barr has recently said that additional rate hikes would be needed to slow inflation. He also added that he did not see a clear trend towards a timely return to Fed’s 2% target.
U.S. dollar rallied against a broad basket of currencies as forex traders focused on developments in debt markets. Interestingly, stronger dollar did not put any pressure on gold markets in today’s trading session.
It looks that some traders were ready to buy the dip despite strong dollar and rising Treasury yields. It remains to be seen whether gold will be able to gain additional upside momentum in the near term as the probability of a rate hike at the meeting in October is high.
That said, a potential pullback in the oil markets may provide some support to gold prices. Today, WTI oil declined towards the $90.00 level, while Brent oil settled near $103.00.
From the technical point of view, gold made an attempt to settle back above the $4180 level but lost momentum and pulled back. In case gold settles below the support at $4160 – $4180, it will move towards the next support level, which is located in the $4000 – $4020 range. RSI remains in the moderate territory, so there is plenty of room to gain additional downside momentum in the near term.
AUD/USD heads into the quarterly close under sustained pressure after the late-summer rally failed to clear major resistance. The decline has now carried Aussie back toward the lower bounds of the broader 2025 advance, where the next reaction could prove increasingly important for the medium-term outlook.
The GBP/USD forecast gap widens from five cents around year-end to thirteen cents by September 2027 as Sterling slips towards 1.32. Goldman Sachs and UBS disagree increasingly about the British Pound to Dollar (GBP/USD) exchange rate as their forecasts extend into 2027.
Goldman's twelve-month projection of 1.28 sits thirteen cents below UBS's September 2027 target of 1.41, comparing broadly equivalent horizons.
Pound Sterling traded at 1.3208 on Tuesday afternoon, down 0.35% from Monday's close and around 2% below its pre-Fed-decision close on 15 September.
Those year-ahead forecasts imply roughly 3.1% downside or 6.8% upside from that snapshot.
Image: GBP/USD intraday chart Goldman forecasts 1.33 in three months and 1.29 in six months before reaching 1.28.
UBS's projected Sterling recovery runs through 1.38 in December 2026 and 1.39 in March 2027, reaching 1.41 in June and holding there in September.
Even Goldman's near-term forecast therefore allows a modest recovery from today's level before renewed weakness.
How much support can the Dollar retain? Goldman links the recent move to US policy and energy costs:
"We see recent Dollar strength as a function of Fed follow-through, pressure from commodity prices, and the associated move higher in yields."
UBS thinks investors have become too aggressive about further tightening:
"While we acknowledge US resilience, we also see stronger European data and believe market pricing has reached peak hawkishness-especially for the Fed."
UBS adds: "That said, we only expect one more rate hike, and believe the data would need to beat expectations strongly for the Fed to tighten beyond that."
The growth comparison remains challenging for Sterling.
S&P Global's September surveys showed the US leading the four largest developed economies, with the UK the weakest performer despite continued expansion.
Yet Goldman's bearish Sterling forecast does not depend on an unqualified call for more Fed hikes.
Its broader Dollar assessment also gives weight to US investment returns:
"We expect relatively low total returns outside of carry, and more mixed Dollar performance from spot levels given our relatively dovish Fed call but solid capital return prospects in the US."
Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.
The Euro-Dollar has slipped into Lloyds' critical support zone, putting the June low in focus as Goldman forecasts further losses over six months. The Euro to Dollar (EUR/USD) exchange rate has reached the support zone Lloyds says could determine whether the decline becomes a broader reversal of the 2025-26 rally.
EUR/USD traded around 1.1334 on Tuesday afternoon, down 0.34% from Monday's close after touching 1.1329 intraday.
That leaves the pair below Lloyds' initial 1.1340-1.1354 support band but still above June's 1.1325 low.
The bank's warning is conditional:
"If we see a failure of 1.1325-54 it would suggest a broader reversal of the 2025-26 rally is underway, leaving 1.1214 exposed, but creating potential for a decline sub-1.1000."
Lloyds also identifies intervening support at 1.1276.
A move below 1.10 is therefore a technical risk following a breakdown, with no deadline attached.
Image: EUR/USD intraday chart Goldman Sachs supplies a more moderate, dated forecast path of 1.14 in three months and 1.12 at both six and twelve months.
Its six-month projection implies roughly 1.2% downside from Tuesday's level, although the three-month call allows a modest rebound first.
In its broader Dollar assessment, Goldman identifies the conditions that could strengthen the US currency further:
"On the other hand, we see risks to the upside from more pronounced inflation pressures or a more prolonged capital expenditure cycle that would require stronger policy steps to tighten financial conditions."
The latest decline also brings EUR/USD close to the 1.1320-1.1330 area highlighted by ING and JPMorgan last week.
ING's assessment linked downside risks to higher oil prices and stronger US data.
A recovery would need to clear Lloyds' 1.1411 resistance before challenging its more demanding reversal threshold:
"To really turn that tide we would need a recovery back through 1.1455/69, a tall order here."
Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.
The Australian-US-Dollar rate fell below 0.70 after the RBA hike, while ING kept its December recovery forecast and warned of greater near-term downside risk. The Australian Dollar to US Dollar (AUD/USD) exchange rate fell despite Tuesday's interest-rate rise, as the RBA's admission that it had considered holding policy steady overshadowed the increase to 4.60%.
AUD/USD traded around 0.6974 on Tuesday afternoon, down 0.59% from Monday's close and roughly 2% below its level a week earlier.
The 25-basis-point increase delivered the September move Goldman had anticipated, but Governor Michele Bullock's comments raised doubts about how quickly another hike might follow.
ING identified the reasons for considering a pause:
"Governor Michele Bullock said policymakers considered holding rates today, given risks to the housing market and a potentially slower global economy due to the Middle East conflict."
Image: AUD/USD intraday chart ING nevertheless retained its December forecast of 0.720, explaining why Australian rates alone cannot deliver that recovery:
"Our call for AUD/USD at 0.720 in December has always relied heavily on the USD softening into year-end and easing global liquidity conditions."
That target requires a gain of around 3.2% from Tuesday's snapshot.
Goldman's forecasts, published before the RBA decision, put AUD/USD at 0.72 in three months, 0.73 in six months and 0.74 in twelve months.
UBS's pre-decision projections are more cautious initially, with 0.70 for December 2026, followed by 0.71 in March 2027, 0.72 in June and 0.73 in September.
The banks therefore envisage different recovery speeds, with UBS allowing little improvement before year-end.
ING's assessment after the decision preserves the longer-term argument while acknowledging that the immediate outlook has deteriorated:
"AUD's fundamentals remain solid, and this hike supports them further, so we remain confident that in that USD-bearish scenario into year-end, AUD would be an outperformer. But clearly, global conditions have worsened, and near-term downside risks have increased for AUD/USD."
Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.
UBS has trimmed its near-term Mexican Peso recovery expectations, although it still sees interest rates supporting the MXN.
Foreign exchange analysts at UBS have raised year-end US Dollar to Mexican Peso (USD/MXN) exchange rate forecasts to 17.50 from 17.20, scaling back the recovery they expect from the Mexican currency.
Its March 2027 projection also rises to 17.40 from 17.20, while June and September remain unchanged at 17.20.
The revision follows a difficult week for the Peso: Federal Reserve exchange-rate data show USD/MXN rising from 17.2252 on 21 September to 17.6932 on 25 September.
UBS's new December target still sits below that Friday reference rate, implying some recovery in the Peso rather than further depreciation.
Higher global yields have reduced Mexico's interest-rate advantage, but UBS retains its case for carry, the income available from holding a higher-yielding currency.
"Despite the narrower US-Mexico rate differential, the global backdrop remains supportive for carry strategies given still benign financial conditions."
The bank expects Mexican policymakers to resist following the Federal Reserve mechanically:
"We expect Banxico to hold rates at 6.50% through 2026, prioritizing domestic conditions over its policy stance relative to the Fed."
Banxico held rates in September but removed guidance favouring an extended pause.
Goldman Sachs envisages a stronger near-term Peso recovery, forecasting USD/MXN at 16.75 in three months and 17.00 in six months.
Its twelve-month target of 17.25 is slightly above UBS's September 2027 forecast of 17.20, leaving little disagreement at that horizon.
UBS identifies US growth and trade relations as potential threats to the Peso's interest-rate appeal:
"A significant slowdown in the US economy would pressure the peso, as would USMCA trade disputes. Conversely, healthy risk sentiment and a search for carry could boost the peso, as would positive signals to investors from the US president."
Carry can cushion returns, but a large fall in the Peso can outweigh that income.
Exchange Rates UK Research
Our currency coverage draws on live market data, official economic releases and published bank research.
Key Points:EUR/USD pulled back as traders focused on the sell-off in debt markets. USD/CAD made an attempt to settle above 1.4200 amid falling demand for commodity-related currencies. USD/JPY remained stuck near the 157.50 level.
U.S. Dollar Rallies As Treasury Yields Test New Highs
DXY 290926 4h Chart U.S. Dollar Index gains ground as traders focus on rising Treasury yields and react to JOLTs Job Openings report.
The yield of 30-year Treasuries climbed above the 5.61% level as bond market sell-off continued. The yield of 10-year Treasuries tested new highs near the 5.29% level.
JOLTs Job Openings decreased from 7.335 million (revised from 7.271 million) to 7.079 million, compared to analyst forecast of 7.23 million.
Traders also had a chance to take a look at the CB Consumer Confidence report. The report showed that CB Consumer Confidence declined from 88.6 (revised from 89.4) in August to 81.9 in September, compared to analyst consensus of 89.2.
Currently, U.S. Dollar Index is trying to settle above the resistance level at 101.50 – 101.65. In case U.S. Dollar Index manages to settle above the 101.65 level, it will head towards the next resistance, which is located in the 102.35 – 102.50 range. RSI is in the overbought territory, but there is some room to gain additional upside momentum in the near term.
EUR/USD Tests Support At 1.1335 – 1.1350
EUR/USD 290926 4h Chart EUR/USD is losing ground as traders focus on the weaker-than-expected Euro Area Economic Sentiment Index report. The report indicated that Euro Area Economic Sentiment declined from 98.4 in August to 97.9 in September, compared to analyst consensus of 99.
EUR/USD attempts to settle below the support at 1.1335 – 1.1350. If EUR/USD manages to settle below the 1.1335 level, it will head towards the next support at 1.1250 – 1.1265.
GBP/USD Remains Under Pressure
GBP/USD 290926 4h Chart GBP/USD is moving lower as traders focus on general strength of the American currency. The pullback in the oil markets did not provide any support to GBP/USD as traders have mostly focused on the situation in debt markets.
EUR/USD Price Forecast
Every new EUR/USD analysis as it publishes, today's technical signal and key levels, live price — on one page.
See all EUR/USD forecasts In case GBP/USD manages to settle below the 1.3200 level, it will head towards the support level at 1.3150 – 1.3165. RSI remains in the moderate territory, so there is plenty of room to gain additional downside momentum in case the right catalysts emerge.
USD/CAD Tests New Highs As Rally Continues
USD/CAD 290926 4h Chart USD/CAD continues to move higher as traders react to Canada’s GDP report. The report showed that GDP increased by +0.2% month-over-month in August, in line with analyst estimates. Other commodity-related currencies moved lower in today’s trading session.
Currently, USD/CAD is trying to setlte above the 1.4200 level. In case this attempt is successful, USD/CAD will head towards the next resistance, which is located in the 1.4235 – 1.4250 range.
USD/JPY Is Stuck Near The 157.50 Level
USD/JPY 290926 4h Chart USD/JPY is swinging between gains and losses despite rising Treasury yields. The market is stabilizing after the strong rebound from September lows.
The nearest resistance level for USD/JPY is located in the 158.00 – 158.50 range. If USD/JPY manages to settle above the 158.50 level, it will head towards the next resistance level, which is located in the 160.00 – 160.50 range.
On the support side, a move below the 50 MA at 157.48 will push USD/JPY towards the support at 155.00 – 155.50.
If you’d like to know more about how to trade forex, please visit our educational area.
Vladimir is an independent trader, with over 18 years of experience in the financial markets. His expertise spans a wide range of instruments like stocks, futures, forex, indices, and commodities, forecasting both long-term and short-term market movements.
The proverbial rubber band is pulled back across several USD pairs as DXY has continued a strong rally over the past three weeks. The Fed rate decision has certainly played a role, although that rate hike was largely expected even before then.
Daily US Dollar Index (DXY) The Dollar Index tested 101.49 earlier Tuesday and is trading near 101.37. It’s holding most of that move. Dollar buyers are working off the same rate outlook that is weighing on gold.
The CME FedWatch reading for October shows a 68.1% probability of a quarter-point hike. That’s down from the 70% area on Monday. It’s still a rate-hike market. Until those odds cool, gold isn’t going to get more than a short-covering bounce.
Higher Oil Is Working Against Gold Through Inflation The Middle East conflict isn’t helping gold much. Traders are reading higher energy prices as an inflation problem. That sends them straight back to the Fed.
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 forecastsAs long as yields keep climbing, the inflation side of the story has the upper hand over anything geopolitical.
Daily Spot Gold (XAU/USD) Spot Gold’s main trend is down according to the daily swing chart. A trade through the lower top at $4,399.67 will change the main trend to up. Monday’s low at $4,110.87 is the immediate downside trigger. A trade through that price will signal a resumption of the downtrend.
The long-term retracement zone is $4,319.61 to $4,230.51. Gold broke through the lower boundary Monday, turning the zone into resistance. The 50-day moving average at $4,321.39 is also nearby.
The 200-day moving average at $4,539.93 is providing long-term resistance and trend direction. Gold is trading below both moving averages.
The next major support is the August swing bottom at $3,996.06, followed by the main bottom at $3,942.10. Tuesday’s high at $4,164.50 is only a high at this point. It does not establish a new top or change the swing-chart structure.
What to Watch Wednesday’s PCE reports are the first real chance for the October hike odds to come down, with Friday’s payrolls right behind them. JOLTS gave buyers a softer number. It takes those two reports to change what the rate market is pricing.
The dollar and yields are the tell in between. Gold buyers need both backing off their highs before any recovery can gain traction.
Sellers are in control while gold stays under the broken 61.8% level at $4,230.51. That’s the first decision point for buyers. A recovery through it would show they’re taking offers. They’d still have to get through the $4,319.61 to $4,321.39 area, where the top of the retracement zone meets the 50-day moving average. That’s a difficult area for buyers to recover. On the downside, a break of Monday’s $4,110.87 low puts the August swing bottom at $3,996.06 back in play.
If you’d like to know more about how to trade gold, please visit our educational area.
The AUD/USD was unable to benefit from the Reserve Bank of Australia’s 25-basis-point rate hike overnight. The RBA lifted the cash rate to 4.60%, in line with expectations. However, the Australian dollar weakened following the decision, with much of the Bank’s hawkish stance seemingly priced in ahead of the announcement. The US dollar has also remained largely supported following the recent turmoil in the bond markets. The near-term AUD/USD outlook is subject to more volatility with Aussie CPI, US core PCE and jobs data all due for release in the coming days.
Before discussing the macro outlook further, let’s quickly turn our attention to the chart of the AUD/USD which is looking quite interesting….
Technical AUD/USD forecast: 200-day average, bullish trend and key all level break
Source: TradingView.com
The question now is where the Aussie dollar will close today's session. A break below 0.7000 on a closing basis would be considered a bearish development because that would confirm the break below the 200-day moving average, the bullish trend line, and that psychological level.
In that case, we could then see some follow-up technical selling towards the 0.6900 handle in the days ahead, with the potential for the sell-off to accelerate towards the 0.6800 level, where the previous breakout took place back in January.
So, there is some downside risk now to the AUD/USD outlook, following what was a strong bullish trend previously. That was until the US dollar fought back against all major currencies.
As things stand, the near-term path of least resistance is to the downside. For me to turn tactically bullish again on this currency pair, I'd like to see some technical developments, namely, a quick recovery and a climb back above the 200-day moving average to form a hammer-like candle. That doesn’t have to happen today. And ideally, also, a break above the most recent highs of around 0.7045 would be a clear sign of the bears getting trapped.
If we see that, then at that point, things will start to look bullish once again from a technical analysis point of view. In which case, we could then see some follow-up technical buying towards the resistance around 0.7100, with 0.7120 being the next level of resistance.
So, the burden of proof is with the bulls now to show up and create bullish-looking price action around current areas. If you don't see that, then the risk is tilted to the downside towards the 0.6900 handle.
RBA’s hawkish hike was priced in
The RBA’s decision was unanimous, reinforcing its determination to bring inflation sustainably back to target. Its accompanying statement retained a hawkish tone, with the Board reiterating that it would do whatever it considers necessary to contain inflation. Governor Michele Bullock echoed that message, pointing to tight labour market conditions, resilient demand and persistent inflationary pressures as reasons to maintain a restrictive policy stance.
Bullock also highlighted renewed tensions in the Middle East as an additional source of inflation uncertainty, while cautioning that the full effects of previous rate increases could take up to 12 months to filter through the economy. The Governor pushed back against suggestions that Australia is facing stagflation, arguing that inflation of around 3.5% and unemployment at 4.6% do not fit that description.
Despite the hawkish messaging, the Aussie came under pressure, suggesting investors had already priced in the prospect of further monetary tightening. Attention now turns to the latest Australian inflation figures, due tomorrow, which could influence expectations for the RBA’s next move.
The Bank’s latest stance leaves the door open to another rate increase, with a further 25bp hike in the fourth quarter remaining a possibility. However, a sustained decline in oil prices could ease inflationary pressures and allow policymakers to remain on hold.
Attention to turn to US data
For AUD/USD, the immediate focus will be on the Aussie CPI. But then, the focus will be on US data including the Fed’s favourite inflation measure – the core PCE Price index – on Wednesday, followed by non-farm payrolls report on Friday.
Any strength in any of these US macro numbers should keep the US dollar’s bullish trend alive heading into CPI release next week. For now, the greenback remains the key driver in the AUD/USD, with further direction likely to depend on incoming inflation data, interest-rate expectations and broader market sentiment.
The USD/CAD rally has logged four straight weekly gains, up nearly 3.4% from the August low and now testing the year's highest closing levels. Michael Boutros, StoneX Media Senior Market Analyst, walks through the weekly, daily and four-hour charts and the event calendar framing the move.
