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USD/CAD depreciates after two days of gains, trading around 1.4260 during European hours on Tuesday. The technical analysis of the daily chart indicates that the price is remaining within the ascending channel pattern, suggesting a persistent bullish bias.

The USD/CAD pair is extending its advance while holding above both the nine- and 50-period Exponential Moving Averages (EMAs), which reinforces a bullish near-term bias. The 14-day Relative Strength Index (RSI) at 68.07 hovers just below the overbought threshold, hinting that upside momentum remains strong but increasingly stretched as price presses against recent highs.

The USD/CAD pair may rebound toward the 18-month high of 1.4298, recorded on October 9. A successful break above this level would support the pair to test the top trendline of the ascending channel around 1.4390, followed by the psychological level of 1.4300.

On the downside, the primary support lies at the nine-day EMA of 1.4236. A break below the short-term price average would weaken the bullish bias and put downward pressure on the USD/CAD pair to navigate the region around the bottom trendline of the ascending channel around 1.4110, followed by the 50-day EMA of 1.4062.

USD/CAD: Daily ChartHammack leans hawkish as Fed rhetoric underscores need for tighter policyFed’s Hammack delivers a notably more hawkish message, with an FXS Speechtracker score of 8.4/10 compared to the established baseline of 7.5/10, emphasizing that interest rates need to be higher and that more tightness is needed in the economy. The focus on widespread inflation pressures, strong demand beyond energy, and the risk of an inflationary mindset becoming ingrained, alongside a preference for frequent, smaller policy tweaks, signals a restrictive bias even as financial conditions are described as neutral and trend inflation is seen stuck in the mid-to-high 2% range for some time. Hammack’s insistence that inflation expectations should not be assumed anchored, and that Fed officials must clarify the reaction function, reinforces a message of readiness to act relatively quickly to keep policy tight until the 2% target is credibly in sight.

The FXS Fed Sentiment Index rose by 0.59 points to 138.92, keeping Fed rhetoric firmly in hawkish territory well above the neutral 100 threshold and aligning with the elevated FXS Speechtracker score. This combination of a stronger hawkish tone and a high index level suggests sustained support for a tighter policy path, which is typically Dollar-positive and a headwind for risk-sensitive currencies.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

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The Indian rupee extended its recovery against the US dollar on Tuesday, October 13, as the Reserve Bank of India (RBI) introduced another round of foreign exchange restrictions, intensifying efforts to contain dollar demand and stabilise the currency.

USD/INR fell to approximately 95.20, down 0.58% during the session, after briefly approaching the 95.00 level. The rupee strengthened to its highest level since early September, building on Monday’s 1% advance, its largest single-day gain in more than six months.

The recovery represents a striking reversal from last week’s record lows near 97.00, when rising crude oil prices, foreign investment outflows and increased demand for dollar hedging placed considerable pressure on the Indian currency.

However, the RBI’s increasingly aggressive intervention has also unsettled parts of the foreign exchange market, raising questions about how long the rupee’s recovery can continue without improvements in India’s underlying economic conditions.

RBI Intervention Pushes USD/INR Lower for a Second Day The RBI expanded its foreign exchange restrictions on Monday, extending a recently introduced cash reserve requirement to a broader range of hedging transactions undertaken by banks. The revised measures now cover transactions involving banks’ own assets and liabilities, rather than focusing exclusively on certain customer-related foreign exchange exposures.

The central bank has also tightened rules governing non-deliverable forward contracts, restricting how eligible financial institutions can offer rupee derivatives to overseas clients. These changes follow Saturday’s announcement of a special dollar window for three state-owned oil marketing companies: Indian Oil Corporation, Bharat Petroleum and Hindustan Petroleum.

By allowing the companies to meet their dollar requirements directly through the RBI, the facility reduces their immediate reliance on the regular spot foreign exchange market. The combined measures are intended to discourage excessive dollar buying and limit speculative activity that could accelerate rupee depreciation.

Tuesday’s gains were also supported by dollar sales from state-run banks, which traders suspect were conducted on behalf of the RBI.The intervention has helped reverse expectations that USD/INR would quickly break above 97.00.

India CPI Inflation Rises to 5.54%, Adding Pressure on the RBI The rupee’s recovery comes as India’s latest inflation figures point to renewed price pressures. September headline inflation accelerated to 5.54% year-on-year, up from approximately 4.83% in August, according to government data released on Monday. Food inflation climbed to 7.74%, reflecting higher prices for essential household goods.

The increase brings inflation closer to the RBI’s upper tolerance limit of 6%, strengthening expectations that policymakers may need to maintain a restrictive monetary policy stance. Higher interest rates could provide additional support for the rupee by making rupee-denominated assets more attractive. However, further tightening would also increase borrowing costs for Indian businesses and households.

Meanwhile, lower crude oil prices have offered some relief to the currency. Brent crude futures declined approximately 1.1% toward $105.47 per barrel on Tuesday, reducing immediate concerns about India’s energy import costs. Foreign capital outflows remain a challenge. Overseas institutional investors sold approximately ₹1,708 crore worth of Indian equities on Monday, highlighting the external pressures that continue to weigh on the currency.

USD/INR Forecast: Can the Indian Rupee Extend Its Recovery? The near-term USD/INR forecast favours further rupee strength while the pair remains below 95.75. A sustained break beneath 95.00 could open the way toward 94.80, a level also identified by CR Forex managing director Amit Pabari as a potential near-term target.

However, the durability of the rally remains uncertain. The RBI’s measures have disrupted dollar demand and changed short-term market expectations, but foreign investment outflows and India’s substantial oil import requirements have not disappeared.

Wednesday’s US CPI inflation report will be another important test. Stronger-than-expected US inflation could revive Federal Reserve rate-hike expectations and support the dollar, potentially slowing the rupee’s advance.

For now, the RBI has succeeded in shifting the immediate momentum away from the dollar. The next challenge is maintaining that stability without creating prolonged disruption in India’s foreign exchange market.

Why is the Indian rupee rising today?

The Indian rupee is strengthening because the RBI has tightened currency hedging regulations, introduced a special dollar facility for oil importers and reportedly intervened through state-run banks.

What is the USD/INR forecast for October 2026?

The short-term outlook remains bearish below 95.75, with support at 95.00 and 94.80. A recovery above 96.05 would weaken the immediate bearish outlook.

What is the RBI doing to support the Indian rupee?

The RBI has introduced a special dollar window for state-owned oil companies, restricted certain foreign exchange derivatives and expanded reserve requirements for banks undertaking currency hedging transactions.

AUD/USD continues to struggle below 70c despite hawkish RBA minutes keeping another rate hike in play. NAB business confidence fell for a third month, while unemployment rose to 4.6%, giving the RBA room to wait. With Australian jobs data and US CPI looming, the 0.7000 resistance area could prove pivotal for the Aussie this week.

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AUD/USD Outlook: Hawkish RBA Meets Softer Business Confidence
Business Confidence Weakens as Forward Orders Lag
The RBA minutes retained a hawkish tone overall, although time appears to be on their side for the next hike - assuming one arrives at all. While policymakers remain alert to inflation pressures beyond the obvious impact of higher energy prices, they also need to weigh softer business and consumer sentiment.

Business confidence deteriorated for a third consecutive month in September, marking its 10th straight month in pessimistic territory according to the latest NAB survey. Inflation concerns, higher interest rates and global uncertainty remain the usual suspects, with NAB noting that “confidence remains negative in all industries except mining” in trend terms. Business conditions were unchanged at -1, leaving them around seven points below their long-run average.

However, while businesses are still increasing capex, suggesting they remain willing to invest in future capacity, forward orders remain negative. That points to a demand pipeline that is not improving at the same pace as investment - a potentially uncomfortable combination if it persists.

Source: NAB, LSEG

 

RBA Minutes Keep Another Hike in Play
Against that softer backdrop, the minutes showed policymakers remain more concerned about persistent inflation than near-term weakness in activity. The Board judged that domestic capacity pressures may be stronger than previously thought, while weak productivity, elevated business inflation expectations and the risk of higher energy costs and AI-related investment were all cited as potential sources of further pressure. Falling house prices were also seen as having only a modest effect on consumption.

Even so, the minutes suggest the RBA still has scope to move cautiously. The Board considered holding rates and acknowledged softer activity risks, leaving another hike firmly in play without implying any urgency. The timing will depend on whether incoming inflation and labour-market data confirm that current policy is still not restrictive enough.

Ultimately, the RBA appears to have time on its side. It can keep the threat of another hike firmly on the table without necessarily having to deliver one, particularly while softer activity and sentiment provide scope to assess how previous tightening feeds through.

Australian Jobs Report Could Shape the RBA’s Next Move
Attention now shifts to Thursday’s labour force report after unemployment rose to 4.6% last month despite a solid headline jobs gain, with full-time employment falling and participation increasing thanks to a rise in part-time work. Another soft composition or further rise in unemployment would strengthen the case for the RBA to wait, while a firmer report could keep another hike firmly in play.

AUD/USD Technical Analysis: Australian Dollar vs US Dollar
The Aussie is holding up well despite the US dollar index rising to an 18-month high on Monday, supported by elevated Treasury yields, geopolitical risks and euro weakness. Hawkish comments from the Fed’s Hammack provided an additional tailwind.

While the Aussie remains in a clear downtrend on the daily chart, it is still within a corrective phase – potentially forming an ABC retracement. With the 200-day EMA and 70c handle providing resistance, bears may seek to fade rallies into these levels, especially if US CPI heats up as expected.

However, with the US dollar index already well bid ahead of US CPI and Kevin Warsh’s remarks, there is room for disappointment and a weaker dollar if hawkish expectations are not met. Either way, the 70c area looks set to be an important pivot zone for AUD/USD traders this week.

Source: ICE, TradingView

USD/JPY Talking Points:
USD/JPY continues to catch bids after pullbacks but bulls remain trepidatious at or around prior highs.
This has built an ascending triangle formation and this puts even more emphasis on the CPI report later this week. CPI has been a significant driver in the USD/JPY carry trade over the past five years, delivering some of the largest moves – in both directions.
With hindsight perhaps the comments from US Treasury Secretary Scott Bessent were ill-timed. The day he said that “I am the house, bet against me if you want” marked a higher-low in USD/JPY, and since then the pair has gained more than 500 pips. That was on September 9th, and in the month since the USD/JPY pair has shown respectable bullish price action, and if it weren’t for a series of comments from President Trump, Bessent and the Japanese Finance Minister, USD/JPY may well be back above the 160.00 handle, at this point.

I have long said that if the pair is going to reverse for anything more than a pullback, there’s going to need to be some help from data. And we can see this in the history of USD/JPY, where interventions or threats thereof might be able to stall a trend – but for buyers to actually sell out of positions there needs to be some legitimate fear of a change in the underlying backdrop.

And this really speaks to the nature of the situation, where comments saying that the USD/JPY spot rate do not reflect fundamentals. Because the fact is – they do, and it does, and so far markets have seen through threats and buyers haven’t been compelled to close out of longs.

But – if there’s one data item that has consistently been able to create that counter-trend movement, it’s been US CPI, as we can see from some of the larger reversals in the pair over the past four years.

USD/JPY Weekly Chart
Chart prepared by James Stanley; data derived from Tradingview

The Crux of the Problem
Inflation has printed at 1.9% for Japan over the past two months. The Bank of Japan hiked rates anyways in September despite inflation being below their target. This is quite abnormal for a bank that tested some very experimental monetary policy while consistently leaning more and more dovish.

And one look at the demographic scenario in Japan and it makes sense as to why. With an aging and dwindling population, growth is already an uphill battle, and after decades of disinflation and deflation – much of which was pushed along by a strong Yen – the political volatility in the country pushed economics as a priority. It’s just, an uphill battle when you’re dealing with a population expected to decrease by a third over the next 30ish years.

But, when the comment is made that the spot price doesn’t reflect fundamentals, that’s what speaks against it – inflation in the US remains higher, rate expectations are more hawkish in response to that inflation, and frankly, there’s still a carry trade in play with the rate disparity between the two nations.

And if a fund or a bank is borrowing capital in Japan at lower rates, and then investing elsewhere, the primary risk is currency risk as a continually weakening Yen could eviscerate any profits seen from the spread. So, hedging that risk makes sense and this is where a long USD/JPY trade can come into play.

When that hedge looks more likely to lose capital – such as a large change in underlying inflation rates, such as we saw from the US in November of 2022 or 2023, or July of 2024; or perhaps a jump in inflation such as what we saw in April of 2024 – market participants are going to factor that in.

It’s the very essence of responding to and incorporating fundamentals. But with seemingly everyone pushing in one singular direction, these trades can become incredibly crowded, and that perhaps acts as a magnifier of sorts, so that when some form of change does show, the result can seem more outsized than normal.

USD/JPY Weekly Chart
Chart prepared by James Stanley; data derived from Tradingview

Interventions
Interventions in the open market are not ideal, nor should they be. It essentially involves the central bank jumping in to manipulate a free market, using their own cash reserves, to influence a trade in the opposite direction that their own monetary policy is encouraging. Part of the design is to shake out the crowded trades as looked at above, but, in reality, the half life of these moves is often limited in scope. Because, after all, the fundamental backdrop that produced the situation in the first place very much remains in place.

What makes the most recent episode as unique is who is involved, as this time, it was a dual intervention with both the US and Japan taking part. Also unique is the fact that the US Treasury Secretary behind the push has extensive experience in currency markets. Yes, that same Scott Bessent who is currently being called out by markets and social media for his “I am the house” quote. He was a key member of Quantum and the George Soros team that broke the Bank of England in 1992. Bessent’s role at Quantum was executing FX trades and in this most recent example of intervention, it was a unique approach of the US Treasury asking the NY Federal Reserve to do a rate check. These normally happened from the Japanese side, which basically involves a very obvious move from the central bank in orchestrating dialog with banks designed to scare them into action. One of these episodes allegedly took place earlier in the year, in January, but the episode in July was far more forceful as Bessent took the next step of getting the US Treasury to actually go out and buy Japanese Yen in the marketplace.

Why would Bessent be so interested in the matter, aside from his obvious history with Foreign Exchange markets? Well in his current role he’s tasked with managing US Treasury debt and there’s a plethora of long-term US debt coming due in the next year. This is part of the reason why yields have scaled so much higher, the thought of that additional supply has driven longs to sell, and many funds are shorting Treasuries in anticipation. Well Japan is the largest national holder of US debt, and if they are to go into markets to intervene by buying JPY against the Dollar, they would probably be selling Treasuries to fund the trade. This means more supply, and higher yields, at a time when Bessent can ill afford such a thing.

This backdrop helps to explain why USD/JPY continues to see so much bullish price action after these pullbacks. Because, frankly, with still positive carry on the long side of the pair, evidence of support sets up an attractive technical backdrop to go with a bullish fundamental bias in the pair.

The problem is the theoretically capped upside given those intervention comments over the past couple of months.

USD/JPY Daily Chart
Chart prepared by James Stanley; data derived from Tradingview

USD/JPY Ascending Triangle to the Line in the Sand
The month of August was actuall quite similar to what’s played out since early-September. There’s a series of higher-lows as bulls have gotten more and more aggressive, but there’s also a line-in-the-sand where that bullish price action has suddenly ceased. In August, that line was at 160. More recently, it’s 159.

But notably neither price has seen an actual intervention, as it was merely threats of intervention that pushed prices lower. And this is what sets the stage for CPI on Wednesday as a big print, which would probably push rate hike expectations higher, could compel a breakout in the pair.

The actual hard line in the sand that was defended by action before was 164. But that 160 spot, much like we saw in August as bulls started to tip-toe above, may be vulnerable, as might 159.

On the flip side, a big miss in CPI would hit rate hike expectations and, like we saw back in November of 2022 or 2023, or again in July of 2024, there might be a stampede for the exits as longs look to get out ahead of what would feel like an inevitable pullback.

This puts a lot of emphasis on the CPI print on Wednesday because, after all, fundamentals impact the matter. It’s just perhaps not always in the way that we expect, or the way that some want.

USD/JPY Four-Hour Chart
Chart prepared by James Stanley; data derived from Tradingview

--- written by James Stanley, Senior Market Analyst, Global Macro

After falling for the fifth consecutive week, the EUR/USD has kicked off this week on a downbeat note. As well as macro pressures, strong bearish momentum prevented the pair from staging a meaningful comeback earlier in the day, leading to weakness in the afternoon trade. The popular pair could be heading towards the 1.10 handle barring a surprise reversal in the dollar’s bullish trend, or improvement in euro area fundamentals. But further ahead, perhaps later in the year or in early 2027, the EUR/USD outlook could a lot more stable. For now, only with a sharp drop in oil prices, or if we see the return of the US dollar debasement trade amid concerns over US fiscal policy, could one expect the single currency to end its bearish bias. For now, US inflation remains sticky, Treasury yields are elevated and expectations of tighter Fed policy should keep the greenback supported against major currencies.  A potentially hot US September CPI report this week could reinforce these expectations.

French fiscal risks, oil pressure keep EUR/USD outlook undermined
The US dollar remained in demand in the first half of Monday’s session, weighing on the major FX pairs. News over the weekend, including continued Houthi strikes in Riyadh has had negative impact on foreign currencies so far, especially those where the economy relies on energy imports. The EUR/USD is particularly vulnerable as lingering concerns over French fiscal policy continue to undermine the euro. With French elections in April 2027, fiscal concerns could continue to weigh on the single currency in the weeks ahead. For now, I expect the EUR/USD to remain in a moderately bearish trend and potentially visit the 1.10 level in the coming days or weeks.

A sharper deterioration in French bonds could accelerate the euro selling pressure, especially if the contagion spreads to other European countries. That outcome could force the ECB to abandon further rate hikes and potentially even halt quantitative tightening. In that scenario, it will have to absorb higher inflation in order to avoid further chocking the economy.  

For now, high US yields, elevated energy prices and rising cross-market volatility create a tougher environment for the euro and emerging-market currencies. The dollar remains the safer bet until the macro backdrop starts to turn.

Technical analysis: EUR/USD on the brink
The EUR/USD remains under heavy pressure, having closed lower for the fifth consecutive week last week. From a technical analysis perspective, therefore, momentum is clearly bearish, with price consolidating near the recent range lows in recent days.

Source: TradingView.com
The 1.1215/20 level, marking the 127.2% Fibonacci extension level of the last upswing that began back in June, has now turned into resistance. So, this is an important level to watch on the EUR/USD chart in the week ahead. A break back above it could see the level turn back into support and potentially signal some stabilisation.

If that doesn’t happen and we continue to see weakness in the currency pair, the immediate downside target is the liquidity sitting below last week’s low, around 1.1160.

If that level breaks, 1.1000 would become the next major downside target, with 1.1100 likely to attract some attention on the way down.

Meanwhile, the 161.8% Fibonacci extension of the last upswing that began back in June comes in at around 1.1085, making this another important downside level to watch.

On the upside, 1.1215/20 is the first key resistance. Above that, there isn’t much in the way of obvious resistance until the 1.1325–1.1355 area.

The Euro to Dollar (EUR/USD) exchange rate slipped to 1.1182 on Monday as French fiscal worries and renewed Middle East tensions kept the US Dollar supported.

US inflation figures and Eurozone price data could decide whether the sell-off extends.

Latest — Exchange Rates:

Euro to Dollar (EUR/USD): 1.118203 (-0.17%)

Pound to Dollar (GBP/USD): 1.32329 (0.00%)

Dollar to Yen (USD/JPY): 158.62013 (+0.18%)

WEEKLY RECAP:

EUR/USD ended Friday at 1.1201 and fell again on Monday, moving towards October's 1.1163 low.

The pair dropped 2.5% in September and has already lost more than 1% during October.

French fiscal pressures remain a major drag.

The French-German 10-year yield spread has hovered near 140 basis points as investors question Paris's proposed €43 billion in budget savings.

ING's Chris Turner favours further declines, writing that "a further dip towards 1.1100/1120 looks more likely."

German industrial production rose 2% in August, but that resilience has failed to lift the Euro.

MUFG's Lee Hardman sees "no obvious positive catalyst" to reverse bearish positioning as leveraged funds rebuild short Euro positions.

The US Dollar, meanwhile, has benefited from renewed Middle East tensions and Brent crude trading above $100 a barrel, maintaining demand for the currency.

Federal Reserve tightening expectations have eased following softer US employment figures, but Wednesday's inflation report could change that calculation.

Scotiabank described the Euro as "soft but failing to hit fresh lows" amid elevated European bond-market stress.

Near-Term EUR/USD Forecast: US CPI and French Debt Risks in Focus For the Euro, Tuesday brings Germany's final September inflation figures.

Eurozone industrial production follows on Thursday, with Friday's final CPI expected to confirm headline inflation at 3.8% and core inflation at 2.5%.

For the Dollar, Wednesday's US CPI report is the main test, with annual inflation forecast at 3.6% and monthly core inflation at 0.2%.

US producer prices, retail sales and jobless claims follow on Thursday, while Fed Chair Kevin Warsh speaks on Friday.

A stronger-than-expected US inflation reading or renewed French bond selling could push EUR/USD towards 1.1100.

Softer US data and calmer European bond markets could instead encourage a rebound towards 1.1300.

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

The Pound-Australian Dollar rate could remain supported if risk appetite stays weak, with the Aussie vulnerable to further geopolitical and bond-market pressure. The Pound Australian Dollar (GBP/AUD) exchange rate firmed on Thursday as a souring mood weighed on the risk-sensitive 'Aussie'.

At the time of writing, GBP/AUD was trading at AU$1.9006, up around 0.2% from its earlier low point.

Latest — Exchange Rates:

Pound to Dollar (GBP/USD): 1.323299 (+0.03%)

Australian Dollar to Dollar (AUD/USD): 0.698362 (+0.35%)

DAILY RECAP:

The risk-sensitive Australian Dollar (AUD) weakened on Thursday as a souring market mood weighed on the currency.

Sentiment deteriorated amid a fresh rise in oil prices following recent attacks on oil tankers in the Strait of Hormuz. In addition, energy companies in the US have shut down some offshore oil and gas platforms in the Gulf of Mexico due to risks posed by an approaching hurricane.

Furthermore, the prospect of higher interest rates globally and reports that some large tech companies are trying to raise billions of Dollars in debt spooked investors.

As a result, the risk-sensitive 'Aussie' struggled to attract support.

Meanwhile, the Pound (GBP) lacked a clear direction on Thursday as British economic data remained thin on the ground.

Sterling also fluctuated as UK gilt yields hit multi-year highs before retreating from their peaks. The initial rise unnerved GBP investors, with rising government borrowing costs creating a challenge for the Treasury ahead of the Autumn Budget.

However, the pullback eased these concerns a little and helped the Pound recoup early losses.

Near-Term GBP/AUD Forecast: Risk Appetite and RBA Outlook in Focus Looking ahead, movement in the Pound to Australian Dollar exchange rate may continue to be driven primarily by wider market sentiment and expectations surrounding Reserve Bank of Australia policy.

The Australian Dollar remains particularly sensitive to shifts in risk appetite, with global bond markets, oil prices and developments in the Middle East all capable of driving volatility.

A further deterioration in risk conditions could weigh on the risk-sensitive 'Aussie' and push GBP/AUD higher.

However, the Australian Dollar may find some support if investors become more confident that the RBA will need to raise interest rates again before the end of the year.

The RBA has already lifted rates to 4.6%, and persistent inflation pressures mean another increase remains possible.

China will also remain an important influence given Australia's close trade links, with upcoming Chinese economic data likely to affect sentiment towards the Australian Dollar.

For the Pound, the UK calendar is relatively light in the immediate term, potentially leaving Sterling particularly sensitive to movements in global markets and expectations surrounding the Bank of England.

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

Daily chart of AUD/USD on TradingView (2026), tracking price movement around 0.697050 following a retracement from the year-to-date peak of 0.727800. US CPI Inflation: Why a Miss Matters More Expectations heading into the US CPI data suggest both YY headline and core will rise to 3.7% (from 3.4% in August) and 2.5% (from 2.4%), respectively. MM headline is also forecast to increase to 0.6% (from 0.4%), while core is expected to ease to 0.2% (from 0.3%).

AUD/USD Price Forecast

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

See all AUD/USD forecasts The recent US payrolls printed a clear miss: 29,000 against c.90,000 expected, down from August’s initial reading of 162,000. Revisions then took 31,000 off July (now -10,000) and 29,000 off August (now 133,000), leaving the two months a combined 60,000 below previous estimates. Unemployment ticked up to 4.2% from 4.1%, though unrounded, the rate rose only from 4.14% to 4.18%, with wage growth coming in cooler. The August US PCE numbers were also recently released and came in below expectations across the board. Although the BEA changed its methodology, price pressures remain above the Fed’s 2% target.

Ultimately, for this week’s US CPI, I would expect a miss – with focus on core measures – to deliver more volatility than a beat. A miss would likely unwind October tightening bets (and perhaps take a hike off the table in December), unwind USD bullish positioning, and follow on from recent soft jobs and PCE data. A hot print largely confirms current pricing and, at most, adds a little premium for a fourth hike.

Australian Employment The only other economic data I will be watching closely this week is the Aussie employment report. Consensus suggests that the Australian economy added 20,000 new jobs, down from 39,500 in August, with unemployment expected to remain steady at 4.6%.

Following RBA Governor Michele Bullock’s comments, markets have reduced the probability of a year-end rate hike to a coin toss, and next-year expectations to just one rate hike from two. Bullock noted that the Board considered both a hike and a hold at its recent meeting and said she hoped further policy tightening would not be needed. With this, I feel a broad miss – employment down and unemployment up – would likely offer the most bang for your buck, as this could prompt investors to price out November tightening (c.7 bps) and trigger AUD downside.

Earnings: Banks Kick Off Q3 Q3 earnings season starts with Citi, Goldman Sachs, JPMorgan, Wells Fargo, Bank of America, BlackRock, and Morgan Stanley. Their commentary on credit quality, loan demand, and deposit costs will offer useful insight into consumers and businesses.

The risk is that expectations are high after a strong Q2, so even solid results or cautious guidance could disappoint. Equities are near record highs despite elevated oil, sticky inflation concerns, and multi-decade-high yields, so earnings are carrying much of the weight.

The Pound-Dollar rate could come under pressure if UK GDP contracts, while hotter US inflation may revive Federal Reserve rate hike expectations. The Pound US Dollar (GBP/USD) exchange rate was choppy last week, fluctuating as the market mood shifted.

At the time of writing, GBP/USD was trading at $1.3232, virtually unchanged on the week.

Latest — Exchange Rates:

Pound to Dollar (GBP/USD): 1.323299 (+0.03%)

Euro to Dollar (EUR/USD): 1.120134 (-0.10%)

Dollar to Yen (USD/JPY): 158.32755 (+0.17%)

DAILY RECAP:

The US Dollar (USD) gained ground on Monday as risk aversion boosted demand for the safe-haven ‘Greenback’. However, a weaker-than-expected US services PMI later limited its advance.

The ‘Greenback’ then retreated on Tuesday as easing oil prices and fading expectations of a Federal Reserve interest rate hike this month improved risk appetite.

USD rebounded on Wednesday, with rising energy prices and higher government borrowing costs unsettling markets and prompting renewed demand for safe-haven assets.

The US Dollar extended its gains on Thursday, supported by renewed inflation concerns and a surprise drop in initial jobless claims to their lowest level since mid-July.

USD initially softened on Friday as sentiment improved, but recovered as the session progressed despite a sharper-than-expected fall in US consumer confidence.

The Pound (GBP) traded unevenly at the start of last week, facing some profit-taking after its strong performance in the previous week. However, an upward revision to the latest UK services PMI helped limit Sterling’s losses.

GBP rallied on Tuesday as expectations of a Bank of England (BoE) interest rate hike next month grew, while the prospect of closer ties between the UK and the EU also lent support to the currency.

Sterling subsequently lost ground on Wednesday before slipping and then recovering on Thursday. Hawkish remarks from BoE Governor Andrew Bailey helped the Pound regain some ground later in the week.

However, GBP wavered on Friday as a quiet UK data calendar left the currency without a clear direction.

Near-Term GBP/USD Forecast: UK GDP to Weigh on the Pound? Looking ahead, several Bank of England policymakers are scheduled to speak over the coming week, with Governor Andrew Bailey due to deliver remarks on both Wednesday and Friday.

Markets will be listening for clues about the BoE’s future policy decisions. Any hawkish signals from policymakers could lend support to the Pound.

On the data front, Thursday’s release of UK GDP figures for August will be the main focus. Growth is forecast to have contracted by 0.1%, a result that could put Sterling under pressure.

For the US Dollar, the US consumer price index for September is due out on Wednesday. An uptick in inflation could lift USD if it boosts bets on a Fed rate hike in December.

A sharp slowdown in US retail sales growth could then dent USD on Thursday.

Meanwhile, market risk appetite could remain a source of volatility for the safe-haven ‘Greenback’ amid the current geopolitical uncertainty.

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

USD/SGD Forecast: Crédit Agricole Expects Further MAS Tightening Singapore Dollar support could strengthen as firm growth and rising inflation prompt another modest MAS policy tightening, says Crédit Agricole. Crédit Agricole expects Singapore to tighten monetary policy again on Wednesday, with technology-led growth and rising inflation supporting the case for a stronger currency despite the US Dollar's recent advance.

The Monetary Authority of Singapore's announcement is scheduled for 14 October.

Crédit Agricole's immediate currency outlook is more restrained, however, with 1.27 described as a strong near-term floor for USD/SGD while US interest-rate expectations continue to support the Dollar.

The latest official inflation release put August core inflation at 2.2%, up from 2% in July, with faster increases in services, retail goods and food prices.

Crédit Agricole strategist Eddie Cheung writes: "Singapore macro fundamentals continue to strengthen amid a global tech upcycle and foreign portfolio inflows, while the negatives from trade tensions have been less than expected."

Demand running above the economy's sustainable capacity would make it harder to absorb imported costs without broader price pressures.

Cheung writes: "At its July meeting, the MAS highlighted a projected widening of the positive output gap for 2026 as a whole-a situation we do not think has changed."

Inflation strengthens the case for another adjustment Crédit Agricole also highlights elevated oil prices as a continuing threat to imported costs.

MAS manages the Singapore Dollar against a basket of trading partners' currencies, using a faster appreciation path to restrain import prices and their spread into domestic inflation.

This is exchange-rate tightening, rather than a benchmark interest-rate rise.

Following April's tightening, MAS announced in its July policy decision: "MAS will therefore increase the rate of appreciation of the policy band very slightly."

It left the band's width and centre unchanged.

Cheung expects a similarly measured move: "Therefore, despite consecutive tightening, we think there is still scope for the MAS to tighten "very slightly" in October-the smaller increment introduced at its July meeting. Even if the MAS were to hold, we would expect a hawkish tilt."

US Dollar strength could delay Singapore Dollar gains Cheung writes: "The SGD has been a relative outperformer in Asia and is among the three regional currencies to have appreciated against the USD year-to-date, underpinned by Singapore's strong macro backdrop, foreign portfolio inflows and MAS tightening."

That assessment follows earlier ERUK coverage of the role of capital inflows and monetary policy in Singapore Dollar resilience.

Cheung estimates that the currency is already well into the upper half of the policy band: "MAS tightening should continue to keep the currency supported, with the SGD NEER currently positioned c.1.5% above the midpoint of the +/-2% policy band."

Those band parameters are the bank's estimates, rather than published MAS boundaries.

A firmer MAS stance can support Singapore's trade-weighted currency without ensuring that it rises against a strengthening US Dollar.

Cheung writes: "The greater risk for USD/SGD lies on the USD side, with the DXY rising to its highest level since Q225. We think the DXY could remain buoyed into end-2026 on the Fed rate hike dynamic before easing more substantially in 2027, leaving USD/SGD more rangebound around current levels."

Crédit Agricole's longer-term projection of USD/SGD at 1.25 by December 2027 allows for further Singapore Dollar gains as that US support fades.

The nearer 1.27 level is the bank's market assessment, not an official MAS boundary.

Cheung writes: "For now, 1.27 remains a strong floor, though we think this level could be tested as the USD weakens anew into 2027."

USD/SGD exchange rate FAQ When is the next MAS policy announcement?

The statement is scheduled for 14 October.

Does MAS tightening mean an interest-rate rise?

The expected adjustment is to the Singapore Dollar's appreciation path against a currency basket.

Is 1.27 an official USD/SGD limit?

No. It is Crédit Agricole's near-term market assessment. Its longer-term forecast is 1.25 by December 2027.

Chinese Yuan Forecast: MUFG Sees Further Gains Against Euro as PBoC Resists Dollar Strength The Chinese Yuan could extend its gains against the Euro as Beijing's currency policy limits the impact of a stronger US Dollar, according to MUFG. MUFG expects further near-term Yuan gains against the Euro as the People's Bank of China resists broader US Dollar strength, with EUR/CNY already around 10% below its January high.

Derek Halpenny, MUFG's head of research for global markets EMEA and international securities, writes: "Recent PBoC fixing in USD/CNY indicate a desire to keep CNY on a strengthening path despite the broader gains for the dollar. EUR/CNY is 10% lower from the January high and we see near-term scope for further declines."

USD/CNY ended Friday at around 6.6924.

The cross-currency effect is significant: if the Yuan holds relatively steady against the Dollar while the Euro falls, each Euro buys fewer Yuan even without a sharp decline in USD/CNY.

Image: USD/CNY chart over last 3 months The pattern extends beyond China, according to Halpenny: "The continued CNY strength is helping isolate Asian currencies from the broader dollar gain. While the DXY has advanced 3.3% from the September low, the dollar against a basket of Asia FX is just 0.7% higher."

Those measures cover different currency baskets, but the contrast helps explain why a broadly rising Dollar has not translated into uniform weakness across Asia.

Earlier ERUK coverage examined how export receipts and Beijing's tolerance of appreciation were supporting the Yuan.

Trade negotiations complicate the currency outlook The Yuan's recent strength has not settled Europe's complaints about Chinese competitiveness.

Writing before Friday's talks concluded, Halpenny said: "Trade Commissioner Maros Sefcovic is in talks with Chinese Commerce Minister Wang Wentao and coinciding with these talks is the release yesterday of a PBOC document defending the FX policy of China and arguing against the level of CNY as being the cause of China's large trade surplus."

In a press conference after the negotiations, EU trade commissioner Maroš Šefčovič outlined an understanding covering Chinese hybrid-car exports, access for European goods and export licensing for critical materials.

The package still required endorsement by EU leaders, leaving its implementation unresolved.

That progress reduces the immediate relevance of a breakdown scenario, although it does not resolve the wider dispute over China's trade surplus or establish a new exchange-rate agreement.

Halpenny writes: "Is the CNY undervalued? The answer seems certainly yes although the scale of undervaluation is debated and while this undervaluation helps boost exports the FX factor is only a partial explanation."

France's fiscal problems also weigh on the Euro in MUFG's analysis, leaving EUR/CNY exposed to developments beyond China's exchange-rate policy.

Halpenny sees energy prices as a further risk, tempered by evidence of economic resilience: "Increased concerns over a terms of trade hit from rising refined energy prices has also played a role and any further notable jumps in natural gas and diesel prices would likely hurt the economies in Europe. Still, we continue to see evidence of economic resilience in Europe that could help stabilise the euro at these lower levels."

Goldman expects Yuan gains against the American Dollar Goldman Sachs's separate forecast points to USD/CNY at 6.40 over the next 12 months, equivalent to roughly 4.6% Yuan appreciation from Friday's close.

Goldman's economic outlook also distinguishes export strength from conditions at home: "In China, we expect real GDP growth of 4.5% yoy in 2026, reflecting broad-based export strength but headwinds from weak domestic demand."

Chinese Yuan forecast: quick questions Will the Yuan strengthen against the Euro?

MUFG sees further near-term falls in EUR/CNY, which would mean a stronger Yuan against the Euro.

What is Goldman Sachs's USD/CNY forecast?

Goldman targets 6.40 over the next 12 months, implying roughly 4.6% Yuan appreciation from Friday's close.

Why do PBoC fixings matter?

They signal Beijing's preferred direction for the currency and influence how strongly broader Dollar moves feed into the Yuan.

2026 Australian Dollar Forecast: Crédit Agricole Sees $0.73 After Near-Term Setback FX analysts expect the Aussie Dollar to recover against the US Dollar, but softer rate expectations and bond-market strains delay its rebound. Crédit Agricole forecasts another setback for the Australian Dollar before a recovery to US$0.73 by December 2027, with fading expectations for further domestic rate rises leaving the currency exposed to global bond-market volatility.

AUD/USD ended Friday near 0.6984, recovering a little ground after September's 3.15% decline.

Latest — Exchange Rates:

Australian Dollar to Dollar (AUD/USD): 0.698362 (+0.35%)

Pound to Australian Dollar (GBP/AUD): 1.894861 (-0.32%)

Euro to Australian Dollar (EUR/AUD): 1.603945 (-0.45%)

The bank's 9 October projections put the pair at 0.69 in December 2026 and 0.70 in June 2027, placing most of the subsequent recovery in the second half of next year.

The immediate question is whether the coming week's Reserve Bank of Australia minutes and employment figures can restore some confidence in the domestic interest-rate outlook.

Image: AUD/USD chart showing performance for last week Markets question how much more tightening is coming Crédit Agricole's senior FX strategist David Forrester links the weaker rate outlook to deteriorating household sentiment.

"A steep drop in Australian consumer confidence led to the Australian rates market reducing the chances of follow-up rate hikes by the RBA."

The deterioration followed September's increase, as our coverage of the Australian confidence slump explained, with consumers questioned after the decision particularly downbeat.

Forrester says: "While the market is still fully pricing in another 25bp rate hike by the middle of 2027, it has pulled back from pricing in a good chance of more than one rate hike."

The issue is therefore the extent of further tightening, rather than a wholesale switch towards expectations of rate cuts.

Investors considering Australian assets compare their prospective returns with those available elsewhere, so a reduced Australian rate path can weaken the currency even when another increase remains expected.

Meanwhile, holding a higher-yielding currency becomes less appealing when exchange-rate losses threaten to outweigh the extra interest earned.

Forrester writes: "Investors also remain rattled by the global bond sell-off reducing demand for the AUD as a carry trade."

Minutes and jobs data could challenge that caution The RBA will publish its September meeting minutes on 13 October, offering more detail on the policy debate behind the latest increase.

Crédit Agricole expects the account to sound firmer than Governor Michele Bullock's press conference.

"While the policy statement was hawkish following the RBA's September rate hike, Governor Michele Bullock sounded less hawkish in her press conference. We note that Bullock tends to present her own view at the press conference and so expect the Minutes to likely be hawkish."

The September labour-market report follows on 15 October, potentially providing a contrast with weakening business sentiment.

Forrester writes: "Business confidence will probably weaken on the back of higher energy prices as well as the market fully pricing in an RBA rate hike at the September meeting. Australian employment demand likely remained firm in September."

Forrester cautions against judging the report solely by its headline unemployment rate.

"While investors will focus on the unemployment rate, which at 4.6% sits 10bp above the RBA's forecast average for H226, we think they should also look at other indicators of labour market slack such as the underemployment, hours based underutilisation and youth unemployment rates to gauge how the RBA will react to the data."

Those measures can show whether spare capacity is increasing beyond what the headline unemployment rate reveals.

Domestic strengths need a calmer global market The longer-term recovery case rests on support that remains present despite the reduction in near-term rate expectations.

Crédit Agricole says: "The AUD is clinging to its rate advantage as sticky inflation forces the RBA to continue raising rates even while other central banks join the tightening cycle, making the currency a favoured carry trade."

It also points to advantages beyond monetary policy: "Adding to the AUD's appeal are elevated commodity prices and low levels of public debt, the latter leaving it immune to concerns about fiscal sustainability."

Australia's comparatively strong public finances can reduce its exposure to the sovereign-debt concerns troubling other markets, although they cannot prevent a general retreat from risk-sensitive currencies.

Forrester expects overseas releases to be influential in the week ahead: "China trade as well as US retail sales and inflation data will be the big international drivers of the Antipodean currencies in the coming week. With UST yields being such a strong driver of investor sentiment, the US data is likely to take centre stage."

AUD/USD Exchange Rate FAQ What is Crédit Agricole's Australian Dollar forecast?

It projects AUD/USD at 0.69 in December 2026, 0.70 in June 2027 and 0.73 in December 2027.

Why could the Aussie weaken before recovering?

Reduced expectations for further RBA hikes and unsettled bond markets are limiting demand for the currency.

Which Australian releases matter next?

The RBA's September meeting minutes arrive on 13 October, followed by September employment figures on 15 October.

Pound to Dollar Forecast: UBS Targets $1.41 as Goldman Sachs Sees $1.28 UBS expects the Pound to recover against the US Dollar, but Goldman Sachs sees renewed weakness as banks diverge over Sterling's prospects for 2027. UBS and Goldman Sachs are pointing in opposite directions for the Pound to Dollar exchange rate in 2027, with targets of $1.41 and $1.28 exposing a disagreement over Sterling's ability to recover.

GBP/USD ended Friday near $1.3233, after losing 2.1% in September.

UBS's 8 October forecasts put the pair at 1.38 in December 2026 and 1.41 in both June and September 2027.

Goldman's 7 October projections allow for little immediate progress, with 1.33 at three months, around January 2027, followed by 1.28 at 12 months, around October 2027.

The longer targets are approximately comparable rather than identical dates, but the disagreement is already evident near the turn of the year.

Crédit Agricole adds a different path: weakness to 1.31 in December 2026 before a recovery to 1.39 by December 2027.

Image: GBP to USD weekly exchange rate chart (5-9 October) UBS recovery depends on a weaker Dollar The latest UBS projections retain the path outlined in our September coverage of its Sterling recovery call.

Its currency table points to a broad retreat in the Dollar, with the Euro also appreciating against the US currency while the Pound makes little lasting progress against the Euro.

Our reading is that the $1.41 target requires a change in the Dollar's fortunes more than a broad reassessment of Sterling alone.

UBS also expects the Bank of England to raise rates to 4.25% by March 2027 and hold them there through September, when its projected Federal Reserve rate midpoint falls to 3.88%.

That would turn the present small US policy-rate advantage into a UK advantage, making Sterling's relative return more attractive.

The BoE's September decision left Bank Rate at 3.75%, although three of its nine policymakers already wanted an increase.

Goldman's lower currency target nevertheless sits alongside a fairly restrained Fed outlook, rather than an expectation of repeated US tightening.

Goldman says: "We expect the Fed to deliver one more 25bp hike in December to a peak policy rate range of 4.00-4.25%, though we see a strong chance that the Fed will ultimately conclude that additional rate hikes are unnecessary."

It also expects US activity to remain resilient: "In the US, we expect real GDP growth of 2.3% on a Q4/Q4 basis in 2026, largely reflecting the continued boost from the AI boom."

UBS and Goldman therefore share a similar near-term Fed peak despite opposite Sterling calls, showing how little the interest-rate forecast alone resolves their currency disagreement.

Crédit Agricole sees UK risks delaying the rebound Crédit Agricole's 9 October assessment is more explicit about why Sterling could struggle first.

"We maintain a cautious GBP/USD outlook from current levels that is consistent with our constructive USD outlook. The GBP could remain a pressure valve for anxious market participants fretting about the impact of persistent stagflation risks on the UK economic, monetary and fiscal outlook."

Weak growth alongside persistent inflation leaves the UK facing a difficult combination: tighter policy can support Sterling's interest-rate appeal while increasing pressure on borrowers and public finances.

The bank sees a near-term test in the coming week's UK output figures: "For starters, we believe that incoming UK data like next week's GDP data for August could highlight the fragility of the economy to tightening financial conditions and persistent stagflationary headwinds."

It nevertheless sees reasons that pessimism may eventually become excessive.

"We also believe that some negatives are already priced into the GBP, especially vs the EUR, however, given that the Eurozone would have to deal with the consequences from the negative energy supply shock in the wake of the Iran war as well. We further note that the GBP is already looking oversold while global investors seem underinvested in UK assets."

On the Dollar side, Crédit Agricole links continued support to investment demand, rather than interest rates alone.

"The USD should remain supported also by persistent portfolio flows linked to the US economic outperformance vs other major economies in Asia and Europe. Robust economic outlook & sticky inflation have already boosted Fed policy rate expectations and the USD's rate appeal, suggesting that positives are already in the price and this could limit the currency upside."

"US policy uncertainty could linger and fiscal dominance fears could resurface as well, but not before the US economy starts to cool down in 2027. Such risks are still more than offset by the AI boom & thus the US exceptionalism narrative and could keep the USD in demand in the next three to six months."

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Summary:

USD/INR trades near 96.75 on Friday, October 9, as the Indian rupee attempts to recover from record-low territory following a pullback in US Treasury yields. The Reserve Bank of India (RBI) is reportedly supporting the rupee, while its latest interest rate increase and expectations of higher Indian inflation keep monetary policy in focus. The USD/INR forecast remains bullish above 96.50, with resistance around 96.80 and the psychological 97.00 level as investors await India's September CPI inflation report. The USD/INR exchange rate climbed back toward 96.75 on Friday, October 9, as the Indian rupee struggled to hold gains made earlier in the session. The pair had retreated toward 96.55 after US Treasury yields eased and the Reserve Bank of India reportedly intervened to support the currency. However, the subsequent rebound suggests that dollar demand remains resilient, keeping the 97.00 level within reach.

USD/INR was trading at 96.7475 at 09:15 UTC, above its 20-period simple moving average of 96.7394 on the hourly timeframe. The recovery in the dollar-to-rupee pair comes despite a decline in the US 10-year Treasury yield toward 5.22%, following its recent surge to approximately 5.36%, a level not seen in more than two decades.

For investors monitoring the USD to INR rate today, the central question is whether the rupee can sustain a recovery as US yields retreat or whether persistent dollar demand will push the exchange rate toward fresh record highs.

Why Is USD/INR Rising Despite Falling US Treasury Yields? The latest USD/INR price movement highlights the difficulty facing emerging-market currencies when global interest rates remain elevated. The Indian rupee initially strengthened on Friday as US Treasury yields declined, reducing some of the pressure that had supported the dollar throughout the week.

The benchmark US 10-year yield eased toward 5.22% after failing to extend its rally beyond 5.36%. Lower Treasury yields can reduce the relative appeal of dollar-denominated investments, providing support for currencies such as the INR.

However, the improvement proved limited. USD/INR subsequently recovered toward 96.75, suggesting that investors remain cautious about the broader interest-rate outlook and the possibility of renewed dollar strength. The decline in US yields followed a pullback in crude oil prices after President Donald Trump expressed optimism about diplomatic discussions with Iran.

Oil prices are particularly important for the Indian rupee outlook because India depends heavily on imported crude. Higher oil prices can increase demand for US dollars among Indian importers, putting additional pressure on the domestic currency. While easing oil prices and Treasury yields have provided temporary relief, neither development has been sufficient to reverse the broader upward trend in USD/INR.

RBI Intervention and Interest Rate Hike Support the Indian Rupee The Reserve Bank of India has become an important source of support for the rupee as USD/INR approaches the 97.00 level. According to Reuters reporting referenced by FXStreet, the RBI was suspected of selling US dollars during Friday’s opening session to limit further depreciation in the Indian currency.

Dollar sales by the central bank can increase foreign currency supply in the domestic market, helping reduce immediate pressure on the rupee. However, intervention does not necessarily establish a lasting reversal, particularly when global investors continue favouring the US dollar.

The RBI also raised its benchmark policy rate by 25 basis points this week, shifting its monetary policy stance from neutral to calibrated tightening. The decision reflects growing concern about inflation and signals a more cautious approach to future monetary policy.

Higher domestic interest rates can make rupee-denominated investments more attractive, potentially supporting the currency. Nevertheless, the rupee remains vulnerable to developments in US monetary policy, global bond markets and crude oil prices.

US Bond Yields and Federal Reserve Outlook Remain Key USD/INR Drivers Although US Treasury yields have retreated from recent highs, analysts remain cautious about calling an end to the broader upward trend. Danske Bank analysts have highlighted the possibility of continued pressure on long-term US borrowing costs, partly because of substantial Treasury issuance and increased debt financing by large technology companies investing in artificial intelligence infrastructure.

The bank has warned that yields on 10-year and 30-year US Treasuries could potentially approach 6% if investors demand higher compensation for holding longer-term debt. Such a development would create additional challenges for emerging-market currencies.

Expectations of further Federal Reserve interest rate increases also remain relevant. Higher US policy rates can support the dollar by maintaining attractive returns on dollar-denominated assets.

For USD/INR traders, a renewed increase in US Treasury yields could weaken the rupee and bring the 97.00 resistance level back into focus. Conversely, a sustained decline in yields, accompanied by lower oil prices, could give the Indian currency more room to recover.

India CPI Inflation Data Could Determine the Next USD/INR Move India’s upcoming September Consumer Price Index (CPI) report, scheduled for Monday, October 12, is another important event for the USD/INR outlook. Societe Generale expects headline inflation to rise to 5.6% year-on-year, compared with approximately 4.8% in August.

The bank anticipates that food inflation could accelerate toward 7.5%, while core inflation may approach 4.5%. A stronger-than-expected inflation reading could reinforce expectations that the RBI will maintain its tighter monetary policy stance or consider additional interest rate increases.

However, persistent inflation also presents economic challenges. Higher consumer prices can weaken household purchasing power, increase business costs and complicate India’s growth outlook. For the Indian rupee, the market reaction will depend on whether investors interpret higher inflation primarily as a reason for additional RBI tightening or as a sign of increasing economic pressure.

USD/INR Technical Analysis: Can the Dollar Break Above 97? The USD/INR technical outlook remains broadly bullish, although the hourly chart suggests that upward momentum has weakened following the latest pullback. As of now, October 9, USD/INR is trading around 96.7475, slightly above its 20-period simple moving average at 96.7394.

The pair has maintained a series of higher trading levels since late September, advancing from below 96.00 toward the 96.80 region. Friday’s sharp decline toward 96.50 was followed by a recovery, indicating that buyers returned before the pair could establish a sustained move lower.

However, the Moving Average Convergence Divergence (MACD) indicator remains below its signal line, with a negative histogram reading. This suggests that short-term bullish momentum has moderated despite the recovery.

Why is the Indian rupee weakening against the US dollar?

The Indian rupee has faced pressure from elevated US Treasury yields, strong dollar demand, crude oil prices and uncertainty surrounding global monetary policy. RBI intervention and easing US yields have provided some support, but the broader pressure remains.

When is India’s next CPI inflation report?

India’s September CPI inflation report is scheduled for Monday, October 12, 2026. Societe Generale expects headline inflation to rise to 5.6% year-on-year, compared with approximately 4.8% in August.

How does the RBI interest rate hike affect USD/INR?

Higher RBI interest rates can support the Indian rupee by improving returns on rupee-denominated assets. However, USD/INR also responds to US interest rates, inflation expectations, oil prices and international capital flows.

GBP/USD rose to 1.3237 on Friday. Following a rapid decline, the pound has entered a consolidation phase, although the main external drivers remain a strong US dollar and a renewed rise in bond yields amid inflation risks.

The focus remains on Bank of England policy. Markets put the probability of a rate hike at the November meeting at over 80% and are effectively pricing in two 25-basis-point hikes by February. High energy prices and concerns that inflationary pressures in the UK could prove more persistent are reinforcing these expectations. MPC member Megan Greene also warned that the Bank of England should not rely solely on high bond yields as a means of curbing inflation.

During his speech in Istanbul, Andrew Bailey focused less on the next rate decision and more on financial stability and fiscal policy. He stressed the need for a credible and predictable fiscal strategy amid soaring borrowing costs. UK government bond yields are near multi-year highs, increasing pressure on the budget and making the pound more sensitive to any signs of deteriorating fiscal discipline.

As a result, the fundamental backdrop for sterling remains mixed. Expectations of further Bank of England tightening support the currency, but a strong US dollar, elevated global yields and rising UK fiscal risks are limiting GBP/USD’s upside. In the short term, the balance will depend on whether expectations of a BoE rate hike can outweigh pressure from the US dollar.

Technical Analysis

On the H4 chart, GBP/USD remains in the downtrend that developed after the upward correction ended. The pair attempted to recover towards resistance at 1.3250 but failed to establish a foothold above it. The current structure suggests that the corrective move may be nearing completion, with the main downward move poised to resume.

In today’s trading session, the pair is expected to decline towards the nearest support at 1.3185. A confirmed break below this level would set up a third Elliott wave, followed by a move towards 1.3118 and 1.3108. The MACD indicator provides further confirmation of the bearish scenario and remains in negative territory. Despite the local recovery in the histogram, the indicator’s position does not yet signal a full reversal of the medium-term trend.

On the H1 chart, GBP/USD appears to be in the final stage of its upward correction around 1.3250. This resistance coincides with the descending trend line, increasing the likelihood of renewed selling. The Stochastic oscillator has turned down from elevated levels, signalling weakening buying momentum.

The main scenario remains a decline towards 1.3180, followed by a further move towards 1.3104. Intermediate levels are 1.3201 and 1.3118. At the same time, a return above 1.3250 would weaken the current bearish scenario and open the way for a retest of resistance at 1.3303.

Conclusion GBP/USD has steadied after a sharp decline, although the outlook remains mixed as the pound contends with a strong US dollar, elevated bond yields and rising UK fiscal risks. Markets continue to price in further Bank of England tightening, with the probability of a November rate hike above 80% and two 25-basis-point hikes effectively priced in by February, supported by persistent inflation concerns. However, Andrew Bailey’s focus on fiscal sustainability and financial stability, rather than the next rate decision, highlights the broader challenges facing the UK economy. Technically, the pair remains bearish below 1.3250, with a decline towards 1.3185 and potentially 1.3104 if support breaks. A recovery above 1.3250 would ease pressure but would not alter the broader downtrend, with 1.3303 as the next key resistance level.

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The Pound-Dollar rate could rebound if US consumer confidence weakens, although persistent risk aversion may keep the safe-haven Dollar supported. The Pound US Dollar (GBP/USD) exchange rate slipped to a six-day low on Thursday before bouncing back as volatile bond markets impacted the pairing.

At the time of writing, GBP/USD was trading at $1.3226, up marginally on the day.

Latest — Exchange Rates:

Pound to Dollar (GBP/USD): 1.3229 (+0.12%)

Euro to Dollar (EUR/USD): 1.121178 (+0.10%)

Dollar to Yen (USD/JPY): 157.87288 (-0.14%)

DAILY RECAP:

The Pound (GBP) struggled to establish a clear direction on Thursday, with a quiet UK economic calendar leaving Sterling vulnerable to broader market movements.

The Pound moved erratically as UK gilt yields climbed to multi-year highs before easing back from their peaks. The initial jump in borrowing costs unsettled GBP, as higher government financing costs added to the challenges facing the Treasury ahead of the Autumn Budget.

However, the subsequent retreat in gilt yields helped calm some of those concerns, allowing the Pound to recover its earlier losses.

Meanwhile, the US Dollar (USD) was also mixed on Thursday as a shifting market mood left USD without a clear directional bias.

The currency initially firmed amid a deterioration in market sentiment. Risk appetite took a hit as oil prices climbed again following recent attacks on oil tankers in the Strait of Hormuz. At the same time, energy companies in the US shut down some offshore oil and gas platforms in the Gulf of Mexico as an approaching hurricane raised operational risks.

Expectations for higher interest rates around the world added to the pressure on sentiment, while reports that some major tech companies are seeking to raise billions of Dollars through debt also unsettled markets.

However, the market mood improved slightly as the session went on, prompting USD to relinquish its gains.

Near-Term GBP/USD Forecast: US Consumer Confidence in Focus Looking forward, the key data release on Friday will be the latest US consumer sentiment index from the University of Michigan.

Markets expect US household morale to have deteriorated to 47.6 in October, which would be its third consecutive decline and its weakest reading since May. If the data prints as forecast, the ‘Greenback’ may face headwinds.

Meanwhile, market risk appetite will likely continue to play a part in the safe-haven US Dollar’s direction. If investors remain risk averse, the ‘Greenback’ could attract support.

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

Pound-Canadian Dollar could rebound if BoE policymakers turn more hawkish, although firmer oil prices may continue to support the Loonie.
The Pound to Canadian Dollar (GBP/CAD) exchange rate drifted lower on Wednesday as a fresh rise in oil prices underpinned the 'Loonie'.

Latest — Exchange Rates:

Pound to Canadian Dollar (GBP/CAD): 1.882128 (-0.11%)

Euro to Canadian Dollar (EUR/CAD): 1.594999 (-0.13%)

Dollar to Canadian Dollar (USD/CAD): 1.42265 (-0.23%)

DAILY RECAP:

The Canadian Dollar (CAD) edged higher on Wednesday, with the commodity-linked currency drawing support from a fresh uptick in global oil prices.

Brent crude climbed back above $101 a barrel as concerns over potential storm-linked supply disruptions in the Gulf of Mexico and escalating tensions between Saudi Arabia and Yemen’s Iran-backed Houthis outweighed signs of improving Middle Eastern crude exports.

The rise in oil prices provided a welcome boost for the ‘Loonie’, which remains closely correlated with movements in the energy market given Canada’s position as a major oil producer and exporter.

CAD had already recovered some ground on Tuesday after data showed Canada’s trade surplus widened considerably more than expected in August, reaching C$4.2bn as exports to the US surged ahead of the latest round of tariffs.

The Pound (GBP) traded without a clear directional bias on Wednesday, with a relatively quiet UK economic calendar limiting liquidity in the currency.

Rising UK gilt yields did apply some modest pressure to Sterling, however, with the rise in borrowing costs raising fresh doubts about the fiscal headroom available to Chancellor John Healey in his upcoming Autumn Budget.

However, Sterling's losses were simultaneously tempered by growing expectations that the Bank of England (BoE) will deliver an interest rate hike in November.

Near-Term GBP/CAD Forecast: Hawkish BoE Commentary to Strengthen Sterling?
Turning to the second half of the week, the Pound to Canadian Dollar (CAD/USD) exchange rate will likely be influenced by scheduled speeches from several BoE policymakers.

These speakers include two of the three members of the Monetary Policy Committee - Megan Greene and Huw Pill - who voted for an immediate rate hike last month, as well as Governor Andrew Bailey.

If Bailey joins his more hawkish colleagues in talking about the need for tighter monetary policy, it's likely to reinforce expectations for a November rate hike and lift Sterling.

In the meantime, movement in the 'Loonie' is likely to remain firmly linked to oil price dynamics, with CAD likely to remain underpinned so long as oil prices continue to climb.

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

Despite the recovery attempt seen at the start of the week, a renewed phase of weakness has become increasingly evident around the Mexican peso in the short term. This can be observed in recent USD/MXN price action, with the pair gaining more than 1.2% during today's session, reflecting a stronger U.S. dollar and a renewed loss of ground for the peso.

For now, buying pressure remains relevant around the pair even after the release of Mexico's inflation figures. This reaction suggests that markets still do not see enough room for a significantly more aggressive Bank of Mexico in the near term. As long as expectations remain centered on a cautious central bank, part of the relative appeal that the peso has maintained through its interest-rate advantage over other currencies may continue to fade, a dynamic that could keep supporting USD/MXN strength in the sessions ahead.

What Happened with Mexico's Inflation Data?
Mexico released its latest inflation figures during today's session. Annual inflation came in at 3.45%, slightly below the 3.47% expected by the market. However, the reading increased from the 3.12% observed in July and the 3.26% reported in August, reflecting a moderate acceleration compared with previous months.

Even so, the most important point is that inflation remains within the Bank of Mexico's target range and continues to trade below the upper limit of 4.00%, meaning that the recent increase remains relatively contained.

In addition, much of the increase came from more volatile components, mainly food prices, while core inflation continued to moderate for an eighth consecutive month, reaching 3.75%, its lowest level since 2025. This is particularly important because it suggests that the rebound in headline inflation is being driven by isolated factors rather than a broad-based acceleration in inflationary pressures. As a result, the data does not currently appear to represent a significant threat to the cautious policy approach that the Bank of Mexico has maintained in recent months.

Source: TradingEconomics

This remains important because the latest inflation figures do not appear strong enough to alter current expectations regarding Mexican monetary policy. For now, markets continue to price in a benchmark rate close to 6.50% by the end of 2026, assuming inflationary pressures do not deteriorate more significantly over the coming months.

This outlook is also reflected in the bond market. Yields on 10-year Mexican government bonds had already been moderating before the inflation release and continue to trade around the 9.3% area, moving further away from the highs observed earlier this year. Meanwhile, U.S. Treasury yields continue to display a different dynamic, holding near 5.2% and reflecting far greater stability in recent market activity.

The difference is important because, while Mexican bonds have gradually begun to lose some of their appeal, U.S. Treasuries continue to offer relatively attractive yields, a situation that could keep supporting capital flows toward dollar-denominated assets.

Source: TradingEconomics

Taking all of this into account, expectations of a more cautious Bank of Mexico have begun to reduce part of the relative appeal of the Mexican fixed-income market, while U.S. yields continue to show greater stability. This environment could continue limiting the attractiveness of peso-denominated investments and support demand for dollar-denominated assets. As long as these conditions remain in place, the Mexican peso may continue to struggle to recover ground consistently, leaving room for continued buying pressure around USD/MXN in the sessions ahead.

USD/MXN Technical Forecast

Source: StoneX, Tradingview

The aggressive uptrend continues to gain relevance: Over recent weeks, USD/MXN has been developing a pattern of higher highs, allowing a relevant bullish trendline to emerge in the short term. This structure remains the dominant technical pattern on the chart and, as long as buying pressure remains intact, the trend could continue consolidating as the market's primary technical reference in the weeks ahead.

 
MACD: The MACD histogram continues to trade above the 0 neutral line, reflecting that short-term moving-average momentum continues to favor a relevant bullish bias. This reading supports the importance that buying pressure continues to have within the pair's recent price action.

 
RSI: A similar picture can be observed in the RSI, which remains above the 50 neutral level, supporting the strength of the recent bullish momentum. However, the indicator has also moved above the 70 overbought threshold, a development that highlights the speed of the recent rally and could leave room for short-term corrective pullbacks.

 
Key Levels:

18.50 – Major Resistance: A zone of significant highs observed in previous months that currently stands as the most important upside barrier on the chart. Price action that manages to consolidate above this level could reaffirm the dominance of buying pressure, reinforce the development of higher highs, and support a more established bullish structure over the coming weeks.

 
18.00 – Current Barrier: A level that aligns with recent retracement zones and an important psychological reference for the market. This area could become the primary level to watch in the event of short-term corrective declines.

 
17.70 – Key Support: A zone of important lows observed in previous weeks that remains the most relevant downside barrier on the chart. Price action returning toward this area could place the current bullish trendline at risk and begin to reflect a more evident loss of direction, potentially favoring a broader phase of neutrality in the short term.

 
Written by Julian Pineda, CFA, CMT – Market Analyst

Follow him on: @julianpineda25

EURCAD: ⬆️ Buy

– EURCAD reversed from support zone

– Likely to rise to resistance level 1.6010

EURCAD currency pair recently reversed up from the support zone between the support level 1.5925 (which has been reversing the price from March), lower daily Bollinger Band and the 50% Fibonacci correction of the upward impulse from March.

The upward reversal from this support zone completed the wave (C) of the long-term ABC correction 2 from the middle of June.

Given the strength of the support level 1.5925, EURCAD currency pair can be expected to rise further toward the next resistance level 1.6010 – former strong support from the middle of July to September.

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AUD/USD maintains strong relationships with global cyclical equities
VIX futures influential in recent Aussie price action
AUD/JPY tracking Australian–Japanese yield spreads more closely
Contrasting technical formations put both crosses on breakout watch
The Australian dollar finds itself trading within two technical structures that could have very different implications against the US dollar and Japanese yen, putting both pairs on the watch list for potential breakouts in the short to medium term.

While risk appetite appears to be exerting greater influence on AUD/USD, relative yields have seemingly become more influential for AUD/JPY. However, there are important considerations for both pairs that traders should be aware of before contemplating potential setups.

AUD/USD and AUD/JPY: Different drivers at work
Before looking at the technical picture for both pairs, it's noticeable that AUD/JPY, which has long been regarded as a risk proxy, has more recently been behaving like a relative yields play, with AUD/USD seemingly more closely tied to risk appetite, particularly in cyclical assets.

Source: LSEG

You can see that in the correlation matrix above, with a positive and strengthening relationship between AUD/USD and industrial equities, reinforced by the very strong inverse correlation with VIX futures. There's also evidence of linkages with industrial metals, although we haven't seen the consistent strengthening witnessed against industrial equities.

Even though a degree of caution is required given the relatively short time frames, the evidence suggests risk appetite, more than yields, likely explains much of the Aussie's struggles recently.

However, when it comes to AUD/JPY, the matrix shows strong positive relationships with Australian–Japanese yield spreads across the two-year, five-year and 10-year tenors, whereas there is no meaningful relationship with cyclical assets.

Again, it's a very short window, so the message needs to be treated with a degree of caution. But more recently, relative yield movements may have been more influential on the pair.

AUD/USD: Another bearish continuation pattern emerging?

Source: TradingView

AUD/USD has been in a pronounced downtrend since the high set on September 9. Within that broader trend, we've seen a number of consolidation phases that have eventually broken down, with the pair's performance often aligned with the technical patterns it was trading in.

The latest is a structure resembling a triangle on the four-hourly chart, although the limited number of touches on either side, particularly along the rising support line, still provides reason for caution.

A level of note near where the price currently trades is the 23.6% Fibonacci retracement of the move from the Liberation Day low in April 2025 to the May 2026 high. While the price continues to trade around this level, it's arguably more of a reference point than one that could be used for trade construction.

Given the direction of travel into the structure, should it play out as convention would suggest, traders should be alert to the risk of a downside break, potentially putting a retest of the October 1 low of 0.6907 into play, where the structure initially formed.

Beyond there, levels of note on the downside include the 0.6860–0.6865 support zone, reflecting two nearby swing lows, followed by 0.6835, another low established earlier this year.

The message from the oscillators is broadly neutral, with RSI (14) sitting just beneath the 50 level, while MACD is running parallel to the signal line, both just in negative territory. That places greater emphasis on the price action in the near term.

However, it's clear from the path of travel over the past month that selling into rallies remains the preferred play unless we see a sustained break of the downtrend.

Should the triangle be broken on the topside, accompanied by a break of the September downtrend, it would weaken the case for short setups, putting levels such as 0.7004 and 0.7040 into play.

AUD/JPY: Potential falling wedge takes shape

Source: TradingView

AUD/JPY is beginning to coil in what resembles a falling wedge on the four-hourly chart. While not shown, the structure has formed following the powerful rally from the lows set during the Liberation Day rout in April 2025, strengthening the case for a potential topside breakout given its characteristics as a bullish continuation pattern.

Right now, the price finds itself towards the upper side of the structure, having pulled back following a false break on Wednesday.

109.90 is a reference point just beneath where the price currently trades, having acted as both resistance and support over recent days. While only a minor level, it looms as one that could be used for setup construction by traders unwilling to wait for a potential breakout of the broader structure.

Should we see a sustained push through descending resistance extending from the highs set in early September, 110.65 is the first level of note, marking the high set earlier this week. Beyond that, 111.00, 111.58 and 112.62 are the next topside levels to watch.

Below 109.90, the lower boundary of the structure is currently found around 108.90, although the price also spent some time trading either side of 109.50 earlier this week, putting that level on the radar.

The lower boundary is also close to 108.78, a swing low set on April 1 this year from which a savage rally ensued, making the 108.78–108.90 region a support zone of note in the near term.

The message from the oscillators is again neutral, placing greater emphasis on the price action, particularly with very little on the macro calendar over the remainder of the week.

As such, risk appetite and sentiment, including developments in crude prices and their influence on global bond yields, loom as the fundamental factors to watch in the days ahead.

Canadian Dollar buying could fuel a rebound against the US Dollar, but JPMorgan's trading desk doubts the recovery has lasting economic support. JPMorgan's trading desk has spotted a shift towards Canadian Dollar buying, but remains unconvinced that a rebound would develop into sustained strength against the US Dollar.

Its 6 October commentary describes clients selling USD/CAD across all customer categories, a change from the persistent selling of the Canadian currency seen recently.

By Wednesday afternoon, however, USD/CAD had risen to 1.4259, reversing most of Tuesday's decline and leaving the Loonie's recovery looking fragile.

The desk writes: "While positioning has become increasingly stretched and leaves room for a squeeze lower in USDCAD, I still struggle to find a compelling fundamental catalyst for sustained CAD outperformance."

When investors have accumulated bets against the Canadian Dollar, even a modest improvement in sentiment can prompt them to buy it back to close those positions.

That buying can push USD/CAD lower without a corresponding improvement in Canada's growth prospects or expected investment returns.

The breadth of the change across JPMorgan's clients makes it worth watching, although these are the desk's own flows rather than evidence that the whole market has changed direction.

Oil price support is beginning to fade JPMorgan writes: "With oil gradually pulling back from its highs and traffic through the Middle East normalising somewhat, some of the recent support for the loonie is starting to fade."

For an energy exporter such as Canada, higher oil prices can improve export revenues and support the currency.

An easing of the supply disruption can therefore have mixed consequences for the Loonie, helping global confidence while reducing the energy-price advantage enjoyed by Canadian producers.

The desk consequently still sees USD/CAD risks tilted upwards, even while allowing for a temporary fall as crowded positions unwind.

That caution offers a nearer-term counterpoint to the sustained recovery envisaged in our coverage of Crédit Agricole's Canadian Dollar outlook, where eventual relief from US rates supports the currency further ahead.

Canada's recovery still needs to withstand trade pressures In its September policy decision, the Bank of Canada described a broadening economic recovery, with stronger consumption and gains in exports and business investment.

But it also warned that new US tariffs and threats of further action put the sustainability of that recovery at risk, while subdued labour demand pointed to spare capacity in the economy.

The central bank held its policy rate at 2.25%, balancing a more uncertain growth outlook against the danger that elevated energy costs would spread into other prices.

For the currency, stronger Canadian activity would offer a firmer basis for fresh investment than the closing of existing bearish bets.

The Bank of Canada's next decision and updated economic projections on 28 October will assess whether the rebound is holding up as those trade risks feed through.

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

EUR/USD Talking Points:
The US Dollar is overbought and EUR/USD is oversold, and while those markers don’t demand definite reversal, it does raise the stakes for continuation.
So far, buyers have only been able to pose a minor bounce and as looked at in the webinar yesterday, there’s not yet evidence that there’s enough motivation to produce a reversal move.
I looked into this coming into the week, highlighting EUR/USD in the top five charts for the week ahead, and that theme remains of interest as the pair has pushed down to a fresh yearly low.

In yesterday’s webinar, there was a bounce in-play but as I said then, there wasn’t yet enough evidence to substantiate whether that bounce was just an oversold pullback or the start of something larger. At this stage, it seems it was more of the former than the latter, but there’s still potential given that price hasn’t yet taken out the Monday low.

For that to work and for a bounce to set up in the back-half of the week, bulls will need to show up and hold the low above 1.1161, which, so far, they have by 3.4 pips.

EUR/USD 30-Minute Chart
Chart prepared by James Stanley; data derived from Tradingview

EUR/USD Most Oversold in a Decade
As I often say in webinars, RSI isn’t a great timing indicator as a market can often get more oversold or overbought. And any oscillator, RSI included, is a lagging indicator on an already lagging variable (price), so it’s a bit like looking at the world through rose-colored glasses.

This isn’t to say that the indicator is completely worthless, however, as it can provide some good information. And perhaps more important than using it to get into trades is using it to stay out of markets in an extreme state of stress.

At a close below 20 last week, EUR/USD was more oversold than it had been since 2015. That prior instance was an extreme period of stress, but the sub-20 RSI read showed around a significant low, after which the pair was rangebound for much of the next two years.

EUR/USD Daily Chart
Chart prepared by James Stanley; data derived from Tradingview

EUR/USD with Perspective
The daily chart highlights the theme well and RSI remains in oversold territory. But, given the prior element of divergence with the Monday low in price producing a higher-low via RSI, it illustrates just how stretched the move has become.

This is a deduction, however, and not quite a thesis that builds into a bullish backdrop: It simply sets the stage for which buyers can make a move and, at this point it’s still quite early to forecast a trend change.

There is, however, the possibility for reversal strategies if (and it’s a big ‘if’) that low can hold on the above shorter-term chart.

EUR/USD Daily Chart
Chart prepared by James Stanley; data derived from Tradingview

--- written by James Stanley, Senior Market Analyst, Global Macro

GBP/USD technical analysis shows the British pound holding a sideways range since November 2025 as the U.S. dollar index hits fresh 2026 highs.

Razan Hilal, StoneX Media Market Analyst, walks through the weekly and daily GBP/USD charts and the scenarios a range exit opens. Daily RSI readings on GBP/USD and EUR/USD are rebounding from oversold levels last seen in November 2025 and 2015 respectively, as the U.S. dollar index sits at overbought daily conditions last seen in 2023.

Fibonacci extensions map staged resistance up to the top of the British pound's consolidation, while a sustained breakdown below support opens a path toward the November 2025 lows.

This content was created by an affiliate of FOREX.com and represents the views and opinions of the author/speakers, not the views and opinions of Forex.com, StoneX Group Inc., or its subsidiaries. The content has not been independently reviewed by Forex.com.

I cover this chart every week in my Markets in Focus webinar

Register here for the next session

 Follow on X: @Rh_waves

The dollar was back on the front foot after a brief pause, with EUR/USD, gold and silver all slipping as bond yields and crude oil both pushed higher. There is not much on the calendar today until the release of the September FOMC meeting minutes. At that meeting, the Fed’s dot plot and Chairman Kevin Warsh’s press conference already tilted hawkish, so the minutes are unlikely to deliver much of a dovish surprise. At the same time, recent US data have been soft. So, the bar for another meaningful leg higher in reaction to the FOMC minutes for the dollar is high. The greenback is more likely to find continued support if oil prices push further higher after yesterday’s impressive recovery from a 3% decline earlier in the day. This means that the EUR/USD forecast remains titled to the downside for now.

Keep an eye on oil prices
Oil remains the key swing factor. Brent is back above $100 a barrel as concerns over the Strait of Hormuz persist, keeping pressure on bond markets and limiting the scope for a sustained dollar pullback.

Source: TradingView.com
Until something changes drastically, I can’t see oil prices falling back meaningfully any time soon, despite reports that the flows through the Strait have improved in recent weeks. So much oil has been lost that it will take a significant amount of time to return to pre-war levels. Let’s not forget that those depleted global oil inventories will need to be filled and soon. This will keep demand for oil high at the time when supply is restricted. Crude oil, therefore, have to rise to a new equilibrium price soon, if there is no meaningful shift in the supply curve. At the very least, expect oil prices to remain elevated for a while yet and this should keep inflation and stagflation concerns high. While oil flows may have improved, the risk of further disruption has not gone away. With little evidence of an imminent deal, elevated energy prices remain a constraint on any meaningful recovery in bonds and, by extension, on a sustained decline in the dollar. This should keep the EUR/USD forecast tilted to the downside until something changes.

Dollar will need to find something new from the FOMC minutes 
Tonight’s release of the September FOMC minutes will be watched closely by the FX markets. Investors will be looking for clues on the Fed’s reaction function, particularly what kind of inflation outcome would be enough to justify another rate hike this year. Any discussion around the dovish dissent will also attract attention. 

But the minutes may struggle to deliver the dovish surprise some dollar bears are hoping for. Reall that the dot plot showed four policymakers expecting two further hikes this year, compared with just two expecting no additional tightening. 

At the same time, the data since the September meeting have been relatively soft and markets already have pushed their expectations to a December hike from October.  That means the bar for the minutes to generate another significant dollar rally is also high. 

EUR/USD forecast: France is not out of the woods 
French sovereign spreads may have narrowed a bit in recent days, helped mainly by the broader improvement in global bond sentiment, although Marine Le Pen’s pledge to bring France’s budget deficit down sharply to 3.7% of GDP next year also provided some support. But don’t expect that to be the end of it. For indeed, it is too early to call this a meaningful turning point for French assets.

Le Pen is clearly trying to position herself as a more market-friendly candidate, but the credibility of the fiscal adjustment remains the sticking point. The proposed €140 billion of savings look ambitious to say the least and it will be seen how it will be delivered.

That makes it difficult to see yesterday’s narrowing in spreads as the beginning of a sustained French bond recovery. 

Technical EUR/USD forecast and key levels to watch 
From a technical analysis point of view, the EUR/USD had broken key weekly support around the 1.1360 area, so the bias remains tilted to the downside. The pair found some support around the 127.2% extension of the last upswing at 1.1220 earlier this week, but the selling has now resumed after the pair was unable to break above 1.1260 short-term resistance.

Source: TradingView.com
The next major downside area on the EURUSD chart I am watching comes in around 1.1085, the 161.8% Fibonacci extension. Below that, the 1.1000 handle could be the next stop.

Watch: EUR/USD and gold analysis

Frequently asked questions 
Could tonight’s FOMC minutes change the dollar outlook? 
The key is whether the minutes add something new about the Federal Reserve’s reaction to inflation. The hawkish dot plot limits the scope for a dovish surprise, but softer subsequent data also raise the bar for another significant dollar rally. 

Does narrower French debt pricing mark a turning point for the euro? 
I think it is too early to call a sustained recovery. Better global bond sentiment has helped, but the credibility of France’s proposed fiscal adjustment remains the sticking point. 

Are the deeper EUR/USD downside objectives a forecast for today? 
Not necessarily. However, the direction of travel seems to be southbound. So I wouldn’t be surprised if we got there as early as today – especially if oil prices spike. 

EUR/USD stabilised at 1.1234 on Wednesday. Investors are awaiting the release of the minutes from the Federal Reserve’s latest meeting, hoping for fresh signals on the future path of monetary policy.

Comments from Fed officials also remain in focus. Following weaker-than-expected PCE inflation and labour market data, the Fed’s rhetoric has become less hawkish. Markets now put the probability of rates remaining unchanged in October at almost 80%.

Meanwhile, investors continue to monitor the bond market following the recent sell-off. Pressure on Treasuries is being compounded by concerns over persistent inflation, growing fiscal risks and significant debt issuance linked to funding AI projects.

Oil, meanwhile, is rising amid increased Iranian attacks on tankers in the Strait of Hormuz and clashes between Saudi and Houthi forces. This is adding to inflation risks and sustaining concerns that the Fed may maintain a hawkish policy stance for longer.

Technical Analysis

On the H4 chart, EUR/USD remains in a steady downtrend. Earlier, the pair staged a corrective recovery to 1.1275, after which a new downward move developed, taking the price back to the 1.1244 area. The price remains below the descending resistance line, keeping the bearish scenario intact. Local consolidation is currently forming below 1.1244. The nearest downside target is 1.1210. A close below this level would open the way for a further decline towards 1.1173 and, within the broader structure, towards 1.1129. The MACD indicator remains in negative territory: the histogram is below zero despite the local weakening of downward momentum.

On the H1 chart, the corrective move ended around 1.1275, where buyers could not push the price above local resistance. The subsequent decline took the pair back to 1.1230, confirming continued selling pressure. The Stochastic oscillator is in the oversold zone below 20, so a short-term correction is possible before the decline resumes. As long as the price remains below 1.1244–1.1275, the main scenario today is a move towards 1.1210. A break below this support would strengthen downward momentum and open the way towards 1.1173. A return above 1.1275 would temporarily invalidate this short-term scenario. Selling remains the priority while the price holds below the descending resistance line.

Conclusion EUR/USD is holding steady as markets await the Fed’s meeting minutes for further policy clues. Recent weak PCE inflation and labour market data have softened the Fed’s tone, with the probability of rates remaining unchanged in October now at nearly 80%. However, persistent inflation concerns, fiscal risks and heavy debt issuance tied to AI funding continue to pressure Treasuries, while rising oil prices amid Middle East tensions add to inflation risks. Technically, the pair remains bearish below 1.1244–1.1275, with the next downside targets at 1.1210, 1.1173 and potentially 1.1129. A short-term correction is possible given oversold conditions, but the broader trend remains downward as long as the price holds below the descending resistance line.

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