Rising Federal Reserve rate-hike expectations, higher Treasury yields and renewed dollar strength are increasing downside pressure across markets.
The GBP/USD and Dow Jones charts are now testing defining support levels, while daily momentum indicators point to oversold conditions and potential reversal risks.
Source: CME FedWatch Tool
The probability of a 25-basis-point rate hike at the October meeting has risen above 70%, according to the CME FedWatch Tool. This has supported the U.S. Dollar Index and helped push it back toward its 2026 uptrend near 101.
Although the latest advance has been steep across currency and bond markets, momentum is becoming increasingly stretched. Important technical patterns are also emerging across major charts:
The dollar and euro are testing daily overbought and oversold conditions last seen in June and near yearly extremes, increasing reversal risks below 101 in the DXY and above 1.13 in EUR/USD.
GBP/USD is testing support extending from November 2025 near 1.32.
Gold and silver are testing the boundaries of the July–September advance while maintaining their bullish bias, although that structure is increasingly challenged by the resurgence in Treasury yields and the dollar.
U.S. indices are experiencing a pullback after the Nasdaq surged by more than 1,000 points this week toward its record highs, while the Dow has extended its decline to 4-month lows.
The broader cross-asset picture is becoming increasingly stretched, with the U.S. 10-year Treasury yield rising toward highs last seen in 2007 and overbought momentum conditions last seen in 2023.
Markets may now be one move away from confirming another wave of distress or reversing the current risk-off pressure.
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GBP/USD Price Outlook: Weekly Time Frame — Log Scale
Source: TradingView
The GBP/USD chart has been trading within a contracting sideways range since November 2025.
The latest dollar rally has pressured the pound toward the lower boundary of this range, near the yearly lows and the 1.32 area.
A close below 1.3200 would expose 1.3100 and the psychological level at 1.3000, increasing the risk of further downside.
However, oversold RSI readings on both the hourly and daily time frames, combined with year-long support, could help trigger a bullish rebound.
A close back above 1.3340 and 1.3400 would help reinstate the short-term bullish bias.
Dow Jones Price Outlook: Daily Time Frame — Log Scale
Source: TradingView
From a daily perspective, the Dow Jones is still holding below the uptrend support line that has been in place since the April 2026 lows.
The index is also holding above the 61.8% Fibonacci retracement of the May–August advance near 51,200.
Bearish scenario: A breakdown below 51,200 would target the 78.6% and 100% Fibonacci retracement levels near 50,300 and 49,000, respectively.
A sustained move below these levels would increase the risk of a broader bearish outlook for the year.
Bullish scenario: Reclaiming 51,900, 52,700 and 53,400 would support the continuation of the bullish bias toward 54,000 and the yearly high near 54,800.
These levels are defined using the Fibonacci extension tool applied to the May–August–September wave.
A move above 54,800 would reinforce the uptrend and expose the trendline connecting the higher highs since April 2026, near 57,000.
The Fed’s tone, U.S. Treasury yields and crude oil’s price direction will likely play a key role in shaping the next potential market trends.
EURUSD edged higher on Thursday morning as bears take a breather after the latest three-day bear leg which accelerated on Wednesday, resulting in 0.5% daily fall.
The Euro remains under increased pressure from growing expectations for more aggressive Fed’s stance on monetary policy, which was additionally boosted by much better than expected US flash PMI data for September.
Oversold daily studies likely prompted profit-taking, which so far showed very limited action and are unlikely to dent larger bears but rather to mark positioning for fresh push lower.
The pair rides on extended third wave of five-wave cycle from 1.1711 (Aug 28 top) that pressures its 200% Fibo expansion (1.1362) and nearby July 28 low (1.1353), guarding key support at 1.1324 (2026 low, posted on June 24).
Extended upticks should be capped under barriers at 1.1470/80 zone (broken Fibo 61.8% /daily cloud base / falling 10DMA) to keep bears intact and offer better levels to join larger downtrend.
The information contained in this document was obtained from sources believed to be reliable, but its accuracy or completeness cannot be guaranteed. Any opinions expressed herein are in good faith, but are subject to change without notice. No liability accepted whatsoever for any direct or consequential loss arising from the use of this document.
EUR/USD fell to 1.1378 on Thursday, with the US dollar holding near a two-month high. The dollar has been supported by strong macroeconomic data, which have heightened inflation concerns and expectations of further Federal Reserve tightening.
According to S&P Global, US private sector business activity expanded at its fastest pace in more than five years in September. Improvements were recorded in both the services and manufacturing sectors, although price pressures also intensified.
Several Fed officials also backed last week’s rate hike and again highlighted inflation risks. Against this backdrop, markets now estimate the probability of another rate hike in October at approximately 70%, up from 55% the previous day.
Elevated oil prices remain an additional factor. Uncertainty surrounding US-Iran negotiations is keeping oil prices high and continuing to fuel inflation expectations.
Technical Analysis
On the H4 EUR/USD chart, the market completed a downward move towards 1.1369, followed by a corrective rebound to 1.1392. A consolidation range is now effectively forming between these levels.
A further move higher towards 1.1396 is possible, followed by a decline towards 1.1360.
The MACD indicator supports the short-term bearish scenario. Its signal line remains below zero and is pointing firmly downwards.
On the H1 EUR/USD chart, the market completed another downward move towards 1.1369. A consolidation range is currently forming above this level.
Another move higher towards 1.1396 is expected today.
The Stochastic oscillator supports this short-term corrective scenario. Its signal line remains above 50 and is pointing firmly upwards towards 80.
Conclusion EUR/USD has fallen to a two-month low as the US dollar continues to benefit from strong US economic data and hawkish Fed signals. US private sector activity expanded at its fastest pace in more than five years in September, intensifying inflation concerns and pushing the estimated probability of an October rate hike to around 70%. Elevated oil prices, amid uncertainty surrounding US-Iran negotiations, are adding further pressure to the inflation outlook.
From a technical perspective, EUR/USD may see a short-term corrective move towards 1.1396. Once this move is complete, the H4 scenario envisages a renewed decline towards 1.1360. The near-term direction will depend on upcoming US data and Fed commentary, with the US dollar likely to remain supported in the current environment.
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Oil recovers above $90 amid a lack of progress in US-Iran diplomacy
Oil prices are holding onto yesterday's gains, having rebounded back above $90 a barrel and broken a five-day losing streak on Thursday. Oil had fallen 17% from cycle highs, but bears lacked the strength to hold the price below $90.
The recovery in oil was driven by a mix of geopolitical developments, including ongoing indirect talks between the U.S. and Iran on the sidelines of the United Nations General Assembly, as well as nerves over reports that the Trump administration could be preparing a 90-day ban on U.S. diesel exports to force domestic energy prices lower.
However, diplomatic talks between the U.S. and Iran have so far shown no concrete sign of progress, keeping oil prices supported. The two sides remain divided over how to bring an end to the war. While both sides agree that diplomacy should continue, Iran's president said that Tehran would never surrender to U.S. pressure.
Iran has also insisted that the Strait of Hormuz will not be reopened until its conditions are met.
Data yesterday showed U.S. crude inventories rose by 3 million barrels to 426.4 million barrels last week, defying expectations of a 641,000-barrel draw.
Attention will remain firmly focused on the Middle East, with any sense of progress towards a diplomatic solution likely to bring oil prices lower. However, in the absence of this, oil prices may continue to grind higher.
Oil forecast – technical analysis
WTI holds a constructive near-term bullish bias as the price remains above the 50 and 200 EMAs. The RSI is neutral after pulling back from overbought territory, suggesting consolidation rather than a decisive reversal.
On the upside, initial resistance is seen at $95, the 38.2% Fibonacci retracement of the move from the $55 low to the $120 high. A break above here brings $100 into focus, ahead of $105 and the September high. A rise above $105 would be needed to create a higher high and extend the bullish move.
On the downside, immediate support is seen at the 50 EMA, which is currently holding around $89, and below here at $88, the 50% Fibonacci retracement. Should sellers take out these supports, it exposes the 200 EMA around $82, followed by the 61.8% Fibonacci retracement at $80.
USD/JPY rises to 158 on widening Fed-BoJ policy outlook
USD/JPY has risen above 158, its highest level in three weeks and sharply higher from the 152 level seen earlier this month, driven by strong gains in the U.S. dollar and a widening Fed-BoJ rate differential.
Expectations for another Fed interest rate hike have jumped sharply as traders focus on persistent inflation and exceptionally strong U.S. economic activity. PMI data yesterday showed the S&P Composite PMI climbing to 58.4 in September, up from 56 in August, marking the fastest output growth rate in more than five years. This points to an economy that continues to build strong momentum.
Immediately following the data, expectations surrounding an October Fed rate hike jumped to 73% from 50% previously. U.S. yields also rose sharply, with the 10-year yield reaching a fresh 19-year high, improving the dollar's carry advantage over the yen.
Attention will now turn to more Fed speakers, U.S. jobless claims and housing starts, with the market looking for U.S. data to validate the repricing. Strong data and hawkish commentary could keep Treasury yields elevated and support the dollar, while softer data could unwind some of the move.
On the other side of the equation, the Bank of Japan raised rates by 25 basis points to 1.25% in September, its highest level in 31 years, but the decision was split by a 7-2 vote.
The BoJ offered limited guidance regarding the timing of future rate increases, failing to convince the market that it was serious about tightening monetary policy aggressively.
Japanese officials will remain alert to renewed yen weakness. With USD/JPY approaching 160, the risk of intervention could increase.
USD/JPY forecast – technical analysis
USD/JPY has extended its recovery from the 152.40 low, rising above the 200 EMA to 158.50 and testing the 50 EMA and falling trendline resistance. Buyers, supported by an RSI above 50, will look to extend gains above this area and bring attention back towards the 160 resistance zone.
On the downside, immediate support is at the 200 EMA around 157.70 and 157.20 horizontal support. A break below here opens the door towards the August low, before attention turns back towards 153, the September low.
Sellers would need to break below this level to create a lower low and extend the bearish move towards 152, the 2026 low.
Strong economic data bolstered expectations for another large rate hike next month. The latest CME Group data shows the odds for a 75 basis point hike in October are now at 66 percent. A 50 basis point hike was considered more likely earlier in the week.
Multiple Fed officials spoke yesterday and reiterated the need for further rate increases. Governor Barr said that rate increases would continue until inflation is more in line with the Fed’s 2 percent target. The other members of the Fed who spoke yesterday all gave similar remarks and said that the recent economic data justified the need for continued rate hikes to combat inflation.
The dollar has stronger nearby drivers of demand than the euro. The European Central Bank (ECB) hiked rates last month, but has signaled no strong preference to raise rates again. Bets against the euro could pay off if energy prices keep falling and further easing measures are put in place.
Sterling is more balanced. The Bank of England (BoE) held rates steady at 3.75% last week, but revised its outlook to more hawkish. The BoE and other hawkish central banks give the British currency some protection against falling energy prices. Barclays and UBS expect an interest rate hike by the BoE in November.
Ongoing Middle East diplomacy will also influence inflation. Falling energy prices should ease inflation across the U.S., Europe and Britain, which could impact rates set by the three central banks.
Overall, we have a DXY bullish bias, bearish EUR and GBP bias.
Resistance at $4,311 will require a trend change, and $4,332 will also provide resistance. Beyond that, resistance lies at $4,350.
The first support is at $4,274. A break below that will bring the next support at $4,257 and then $4,235.
Resistance is at $4,299, with support at $4,257. A break below $4,257 will bring the next support at $4,235. A move higher brings the next resistance at $4,319, then $4,346 and finally $4,370.
The RSI is in the lower half of its range. The absence of extreme conditions suggests that sellers are not in complete control of the market. The trendline and $4,299 resistance combined with the previous rising trendline makes $4,257 and $4,235 likely, next support levels. The $4,299 resistance may give way to a move higher, but I will maintain a Bearish bias. A closing above $4,319 will make the Bearish case less likely.
Silver Technical Analysis: XAG/USD Breaks Below $64.53 as $63.38 Support Comes Into Focus
The Pound-Dollar could remain under pressure if US-China tensions lift safe-haven demand, while dovish BoE remarks may add to Sterling’s losses. The Pound US Dollar (GBP/USD) exchange rate sank to its worst levels since late July on Wednesday as hawkish Federal Reserve rate bets continued to underpin USD demand.
At the time of writing, GBP/USD was trading at around $1.3290. Down roughly 0.4% from Wednesday’s opening levels.
Latest — Exchange Rates:
Pound to Dollar (GBP/USD): 1.324388 (-0.74%)
Euro to Dollar (EUR/USD): 1.138835 (-0.52%)
Dollar to Yen (USD/JPY): 158.22559 (+0.47%)
DAILY RECAP:
The US Dollar (USD) maintained a positive trajectory on Wednesday, with the currency continuing to draw support from expectations of further interest rate increases from the Federal Reserve.
The Fed’s hawkish shift following last week’s 25-basis-point rate hike has encouraged markets to price in another increase before the end of the year.
Recent comments from Fed policymakers have reinforced this outlook. Boston Fed President Susan Collins argued that a somewhat more restrictive policy stance is needed to bring inflation sustainably back to the central bank’s 2% target, while other officials have also warned that persistent inflationary pressures could warrant further tightening.
At the same time, lingering geopolitical uncertainty also continued to support USD demand, particularly after an, at times, inflammatory speech from US President Donald Trump at the United Nations General Assembly on Tuesday.
The Pound (GBP) lost ground on Wednesday after fresh survey data revealed a noticeable loss of momentum across the UK's dominant services industry.
September's flash PMI figures showed services activity sinking to a three-month low of 51.7, retreating further than the anticipated slip to 52 from August's 52.5 reading.
Although the sector managed to stay on the right side of the 50.0 expansion line, the drop in pace arrives alongside stubbornly sticky input costs.
Mounting cost pressures continue to make the case for near-term Bank of England (BoE) action, but flagging service activity throws a wrench into the works.
Walking the line between snuffing out persistent inflation and avoiding outright economic stagnation remains an increasingly fraught task for Threadneedle Street.
Near-Term GBP/USD Forecast: Trump-Xi Meeting in the Spotlight Looking ahead to Thursday's session, the next major catalyst of movement for the Pound to US Dollar (GBP/USD) exchange rate may be Trump's meeting with his Chinese counterpart XI Jinping.
Markets are unsure what to expect from the latest face-to-face between the leaders of the world's two superpowers, but any signs of tensions could rattle markets and underpin demand for safe-haven assets such as the 'Greenback'.
GBP investors, meanwhile, will be focused on Thursday's speech from Bank of England policymaker Swati Dhingra.
As one of the most dovish voices on the Monetary Policy Committee (MPC), any cautious remarks questioning the wisdom of higher borrowing costs could trigger another move lower for Sterling.
Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.
GBPUSD continues to unfold a short‑term decline from the August 21, 2026 high, developing as a five‑wave impulse. From that peak, wave ((i)) concluded at 1.3474, followed by a corrective rally in wave ((ii)) that ended at 1.3569. The pair then resumed lower in wave ((iii)), reaching 1.3335, before a modest rally in wave ((iv)) concluded at 1.34. Price action now suggests that wave ((v)) is nearing completion, which should finalize the cycle from the August 21 high. Once this impulse ends, the pair is expected to stage a three‑wave corrective rally to retrace the decline before resuming its broader bearish trend.
The technical picture becomes more compelling if GBPUSD breaks below the June 24, 2026 low at 1.314. Such a move would confirm five swings down from the August 21 high, reinforcing the view of a double three corrective structure labeled (W)‑(X)‑(Y). This development would favor further downside and open the path toward an extended target zone. The extreme area is defined by the 100% to 161.8% Fibonacci extension of wave (W), which projects into the 1.249 to 1.294 region. This zone represents the next critical support cluster and should attract significant market attention. The overall sequence highlights the persistence of bearish momentum. Corrective rallies likely to fail and give way to renewed weakness.
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TL;DR: October Fed hike odds have surged to 69.7% on a booming flash PMI, driving the 2-year and 10-year Treasury yields to fresh multi-year highs—and pushing EUR/USD toward a structural decision zone at 1.1323–1.1353.
Markets Pull the Next Fed Hike Forward A booming US economy is increasingly looking like a bond-market problem. Expectations for another Federal Reserve hike at the October 28 meeting have surged to 69.7%, according to the latest FedWatch snapshot, up from 55.4% a day earlier, 48.7% a week ago, and just 8.8% a month ago. The repricing comes only a week after the Fed delivered its first hike since 2023, lifting the target range by 25bp to 3.75–4.00%. Markets are no longer simply debating whether the tightening cycle has further to run; they’re increasingly pricing back-to-back hikes.
Treasuries have responded accordingly. The 2-year yield has surged to around 4.89%, its highest since May 2024, while the 10-year has climbed above 5.10% to its highest since 2007. Wednesday’s rise in the 10-year was the largest one-day move since April 2025. The front end is being driven predominantly by the repricing of near-term Fed policy, while longer maturities are absorbing the same growth and inflation signal alongside concerns over Treasury supply and investor demand.
Hot PMI Turns Strong Growth Into a Hawkish Signal The immediate macro catalyst was an exceptionally strong September flash PMI report. PMI Manufacturing rose from 53.9 to 57.0, PMI Services from 56.5 to 58.7, and PMI Composite from 56.0 to 58.4, the latter reaching a 62-month high. Manufacturing output also accelerated from 53.1 to 56.7. S&P Global Chief Business Economist Chris Williamson said US business is “clearly booming now in both manufacturing and services,” with the survey consistent with roughly 5% annualized growth at the latest pace and around 4% for the third quarter as a whole.
But it was the inflation side that turned strong growth into a bond-negative signal. Backlogs rose sharply, hiring accelerated, and capacity strains intensified, while overall input-cost inflation reached its highest since October 2022. Williamson said firms’ input costs jumped at the steepest rate in four years, with fuel and transport costs rising sharply as oil prices climbed. That connects Wednesday’s rebound in Brent—settling up 3.86% at $103.08—directly back into the inflation picture rather than treating oil as a separate market story.
The mechanism is increasingly difficult for bond bulls: strong domestic demand is tightening capacity at the same time as higher energy costs are adding another layer of price pressure. That leaves the Fed with less reason to tolerate inflation staying above target, especially while employment remains resilient.
Fed Hawkishness and Weak Auction Demand Add to the Selloff The PMI landed on top of an increasingly hawkish run of Fed communication. Federal Reserve Governor Michael Barr said this week that policymakers had been “out of position” before the September hike and that, in his base case, “further policy adjustments are likely to be needed to ensure inflation comes down to target in a timely fashion.” Alberto Musalem has described policy as being “on the accommodative side,” Susan Collins has backed another hike later this year, and Austan Goolsbee has warned that persistent supply shocks and excessive demand can’t simply be looked through.
The result is that incoming data and Fed rhetoric are now reinforcing each other rather than pulling in opposite directions. The September hike increasingly looks less like a one-off correction and more like the possible start of a renewed tightening sequence.
A weak $70bn 5-year Treasury auction then added another layer of pressure. The auction cleared at 5.033%, compared with a roughly 4.186% average across the previous six auctions, while indirect bidders took just 54%, versus an average around 65%. The 5-year sits in the belly of the curve rather than the long end, but the poor demand reinforced the broader message that investors require more compensation to absorb Treasury supply. The auction therefore amplified a selloff already fundamentally justified by stronger growth, higher inflation pressure, and rising Fed expectations.
ActionForex’s Technical View on the 2-Year Yield: Breaks Through 4.791% The technical breakout in the 2-year yield reflects how quickly markets have brought the next Fed move forward.
The yield has decisively cleared the 4.791% 100% projection of the rise from 3.679% to 4.370% projected from 4.100%. That was a key resistance level and had already been identified as the next major test after last week’s FOMC repricing.
Momentum remains strongly positive. Daily MACD continues to rise, while RSI near 79 is clearly overbought but hasn’t produced a topping signal.
The next target is the 138.2% projection at 5.055%, immediately above the psychological 5% level. Beyond there, the 161.8% projection stands at 5.218%.
The weekly structure raises an even larger question. The decline from the 5.259% 2023 high to 3.365% increasingly looks complete. Current momentum makes a retest of 5.259% increasingly plausible, but a break of that level would still be required before concluding the longer-term yield uptrend has resumed.
ActionForex’s Technical View on the 10-Year Yield: A Three-Way Resistance Cluster The 10-year yield is already at an even more immediate technical decision point.
At around 5.116%, it’s pressing directly beneath a tight resistance cluster:
5.122% — 100% projection of 3.926% to 4.687% from 4.361% The upper boundary of the medium-term rising channel 5.136% — 100% projection of 3.599% to 4.809% from 3.926% That 5.122–5.136% zone is therefore the key breakout area.
Daily RSI around 72 and weekly RSI around 76 show increasingly stretched momentum, so some consolidation would be normal. But overbought conditions aren’t themselves a reversal signal. As long as 4.920% support holds, the near-term structure remains bullish.
A decisive break through the 5.12–5.14% cluster would open the 138.2% projection at 5.413%.
The broader significance is already substantial. The 10-year has pushed above the 5.021% 2023 high, transforming the current move from another test of old resistance into a genuine multi-year breakout.
ActionForex’s Technical View on EUR/USD: Reaching a Structural Decision Zone The widening US yield advantage is now feeding directly into FX.
EUR/USD has accelerated lower toward the 1.1353 level, the 38.2% retracement of the rise from 1.0176 to 1.2081, with 1.1323 support immediately underneath. Together, the two levels create a compact 1.1323–1.1353 decision zone.
Daily momentum is deeply bearish. MACD has accelerated lower and RSI is already near 27, leaving the pair oversold enough for a short-term rebound but not yet providing evidence the decline is finished.
A decisive break through 1.1323 would first confirm resumption of the fall from 1.2081.
The more important implication lies on the weekly chart. The entire advance from the 0.9534 low in 2022 to 1.2081 can still be interpreted as a corrective three-wave rebound. EUR/USD failed around the 1.20–1.2081 resistance cluster, and a clear break through 1.1323 would materially increase the probability that 1.2081 completed that entire corrective rally.
Under that scenario, the next major medium-term downside objective would be the 61.8% retracement at 1.0904.
Payrolls and CPI Hold the Veto The cross-market chain is now unusually coherent: Brent back above $100 is feeding into fuel and transport costs; the PMI shows strong growth alongside renewed inflation pressure; Fed officials are arguing that more restraint may be necessary; October hike odds have climbed toward 70%; Treasury yields are breaking higher; and EUR/USD is approaching structural support.
The weak Treasury auction has intensified that move, but it didn’t create it.
The principal risk to the entire repricing is now incoming US data. A materially softer payrolls report or benign inflation print before the October FOMC could quickly pull hike probabilities lower and trigger consolidation in yields.
Absent that, the immediate technical tests are clear: 5.055% on the 2-year, 5.122–5.136% on the 10-year, and 1.1323–1.1353 on EUR/USD. A simultaneous break in yields and EUR/USD would turn this week’s repricing into something much more consequential.
Key Takeaways October Fed hike odds jumped from 8.8% a month ago to 69.7% now, driven by a 62-month-high flash PMI Composite reading of 58.4. Input-cost inflation hit its highest since October 2022, with Brent’s rebound to $103.08 feeding directly into fuel and transport costs, turning strong growth into a hawkish signal. A weak $70bn 5-year Treasury auction (5.033% clearing yield vs. 4.186% recent average) amplified, but didn’t create, a selloff already justified by growth and inflation data. The 2-year yield broke 4.791% resistance toward 5.055%, while the 10-year is testing a three-way 5.122-5.136% resistance cluster after clearing its 2023 high. EUR/USD faces a structural 1.1323-1.1353 decision zone; a break of 1.1323 would raise the odds the entire 2022-2026 advance from 0.9534 completed as a corrective rally, opening 1.0904 next.
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Gold struggled to regain traction and remained below $4,420. A bearish trend line is forming with resistance at $4,360 on the 4-hour chart. WTI Crude Oil dipped below $100.00 and might consolidate losses in the short term. EUR/USD gained bearish momentum and declined below 1.1450. Gold Price Technical Analysis Gold failed to surpass $4,450 and declined further against the US Dollar. The price dipped below $4,400 but remained above the $4,250 support zone.
The 4-hour chart of XAU/USD indicates that the price is struggling below $4,420, the 100 Simple Moving Average (red, 4 hours), and the 200 Simple Moving Average (green, 4 hours). On the upside, immediate resistance could be $4,350.
The first key resistance could be $4,360, the 100 Simple Moving Average (red, 4 hours), and a bearish trend line. A close above $4,360 could send the price toward the 61.8% Fib retracement level of the downward move from the $4,510 swing high to the $4,235 low at $4,405.
The 200 Simple Moving Average (green, 4 hours) is also near $4,415. Therefore, the bulls could face heavy resistance near the $4,405-$4,415 zone.
A clear move above $4,415 could open the door for more upside. In the stated case, the bulls could aim for a move toward $4,500. If there is a fresh decline, the price could test $4,250. The first major support sits at $4,220. The next support could be $4,200, below which the price might slide to $4,140. The main support sits at $4,000.
Looking at EUR/USD, the bears took control, pushed the pair below 1.1420, and might aim for more losses.
Economic Releases to Watch Today
Fed’s Hammack speech. Fed’s Paulson speech. US Initial Jobless Claims – Forecast 201K, versus 196K previous.
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USD/JPY has clawed back a significant chunk of the intervention-driven collapse seen at the start of this month, reclaiming 158 on Wednesday ahead of the return of Japanese markets following a five-day long weekend.
Over recent trading sessions, the Mexican peso has started to show signs of losing strength against the U.S. dollar. This can be seen in the performance of USD/MXN, which has gained more than 1.7% over the last three sessions, highlighting the dollar's renewed strength against the peso. Buying pressure has remained in place even as markets prepare for tomorrow's Banco de México policy decision, suggesting that expectations surrounding the event have not been sufficient to support a more consistent recovery in the Mexican currency. If this dynamic continues, buying pressure around USD/MXN could remain relevant in the sessions ahead.
What Is Expected from Banxico's Decision?
Tomorrow, Banco de México will announce its latest monetary policy decision. Despite maintaining one of the highest interest rates among major central banks, currently at 6.5%, markets are widely expecting policymakers to leave rates unchanged for a third consecutive meeting.
This expectation is largely driven by the recent evolution of inflation. Although price pressures remain present, inflation has slowed significantly over the past several months. After reaching a peak of 4.59% in March 2026, inflation has followed a consistent downward path, falling to 3.26% in August, a level that is now relatively close to Banxico's 3.00% target. This contrasts with the United States, where inflation continues to hold near 3.4%, still above the Federal Reserve's 2.00% objective. As a result, while markets expect Banxico to maintain a more stable stance, expectations for the Fed continue to point toward a more restrictive monetary policy.
Source: TradingEconomics
This divergence is becoming increasingly important because markets are now assigning more than a 70% probability to another Federal Reserve rate hike at the October meeting, potentially taking rates to the 4.25% area. Although Mexico continues to maintain a significantly higher policy rate than the United States, the discussion is no longer focused solely on current levels but rather on the direction each central bank may take in the months ahead.
This divergence is already beginning to show up in the bond market. Mexican 10-year government bonds continue to offer attractive yields around 9.3%, but those yields have started to moderate as investors increasingly expect Banxico to keep rates unchanged. By contrast, U.S. 10-year yields continue to move higher and remain slightly above 5.00%, supported by expectations of a more aggressive Federal Reserve.
Source: TradingEconomics
This development matters because a significant part of the peso's strength throughout much of 2026 was supported by the wide interest-rate differential with the United States. However, as markets continue to price in a more aggressive Fed and a more neutral Banxico, part of that relative advantage may gradually begin to shrink. While Mexican assets continue to offer higher yields, U.S. assets combine rising returns with a lower perceived level of risk, a combination that could continue to favor demand for U.S. dollars over the Mexican peso.
Under this backdrop, if Banxico once again confirms a stable policy stance tomorrow, the peso could continue to struggle to regain ground against the dollar. As a result, buying pressure around USD/MXN could remain a relevant market theme in the weeks ahead.
USD/MXN Technical Forecast
Source: StoneX, Tradingview
A new bullish move begins to take center stage: For most of the year, USD/MXN traded within a well-defined downtrend that served as the dominant technical structure on the chart. However, the recovery seen in recent sessions has produced a meaningful break above that trendline, with prices now challenging important resistance levels. If buying pressure remains in place, the pair could begin developing a new short-term uptrend in the weeks ahead.
MACD: The MACD histogram continues to develop above the 0 neutral line, a reading that suggests short-term moving-average momentum remains tilted to the upside. As long as this behavior persists, buying pressure could continue playing an important role in the market.
RSI: A similar picture can be observed in the RSI, which remains above the 50 neutral level, supporting the importance of the recent bullish momentum. However, the indicator has also moved above the 70 overbought threshold, suggesting that the pace of the recent advance has been significant and could leave room for short-term corrective pullbacks.
Key Levels:
17.65 – Major Resistance: A significant high from previous months that currently stands as the most important upside barrier on the chart. Sustained price action above this level could reinforce the dominance of buying pressure, support the formation of higher highs, and encourage the development of a more established bullish structure in the weeks ahead.
17.39 – Current Barrier: A level that coincides with the 200-period simple moving average and remains the nearest technical reference to monitor in the event of short-term bearish corrections.
17.15 – Key Support: An area that aligns with the 50-period simple moving average and the base of the former bearish structure. A move back toward this level could highlight a renewed lack of direction and favor the development of a broader trading range over the coming weeks.
Written by Julian Pineda, CFA, CMT – Market Analyst
Gold tests critical support near $4,270 after a deeper pullback, while the wedge breakout remains intact and a move above $4,400 could target $4,511.
Pullback Reaches Critical Support Gold continued to weaken into lower support levels on Wednesday, reaching a lower daily low of $4,275. The metal is set to end the session near the session lows, as it continues to trade in that area at the time of writing. Wednesday’s decline broke below the 50-day moving average, which was recently tested as support after being reclaimed last Thursday. This is short-term bearish behavior that came close to completing a 78.6% Fibonacci retracement of the prior short-term upswing at $4,270 and tested support near the downtrend line and a rising trendline.
Spot gold daily chart shows a deeper pullback. Source: TradingView $4,270 Becomes Key Near-Term Level Therefore, that Fibonacci level presents a key near-term level. A decisive decline below it will also trigger a break below the uptrend line and further confirm the failure of support at both the 50-day moving average and downtrend line. For now, the expectation for an eventual resolution to the upside remains unless support fails to hold at the 78.6% Fibonacci retracement zone.
Spot gold daily chart shows larger trend structure. Source: TradingView $4,369 Offers First Sign of Strength A decisive advance above Wednesday’s high of $4,369 would be the next sign of strength on the daily timeframe, especially since the 20-day moving average has confirmed resistance this week near the highs of each day. Consequently, a breakout above Wednesday’s high may quickly reclaim the 20-day moving average and add to the potential for the completion of the short-term pullback.
Falling-Wedge Breakout Keeps Bulls Engaged The larger pattern unfolding remains a bullish breakout from a falling wedge pattern that triggered on Friday with a rally above the top boundary line of the pattern. Strength was seen following the establishment of strong support at the confluence of several indicators. This suggested that the recent bearish correction may have completed with a higher swing low of $4,235 that was generated last week.
$4,400 Breakout Opens $4,511 Target If gold is able to rise above last week’s high of $4,400, a bullish continuation signal will be generated. The next upside target would then be the initial target derived from the wedge pattern at $4,511.
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With over 20 years of experience in financial markets, Bruce is a seasoned finance MBA and CMT® charter holder. Having worked as head of trading strategy at hedge funds and a corporate advisor for trading firms, Bruce shares his expertise in futures to retail investors, providing actionable insights through both technical and fundamental analyses.
The silver price retreat to $64.47 leaves UBS’s $80 target around 24% above spot, with gold and electrification underpinning its longer-term outlook. UBS sees silver benefiting from two sources of demand: investors responding to fiscal concerns and industries investing in electrification.
The silver price in US Dollars (XAG/USD) fell 4.33% to $64.47 on Wednesday, reversing Tuesday’s 1.14% gain.
UBS forecasts $70 an ounce for December 2026, $75 for both March and June 2027, then $80 for September.
These end-period targets maintain the recovery path UBS outlined earlier this month.
The latest price sits below the bank’s $66.50 reference level on 18 September, leaving the final target around 24% higher than today’s market.
UBS strategist Dominic Schnider favours a patient approach:
“From an investment perspective, we continue to favor accumulating silver during price pullbacks rather than chasing short-term rallies.”
Image: Silver price vs USD 48h chart Industrial demand adds support, but solar use is under pressure UBS describes silver as a more volatile counterpart to gold, sensitive to real interest rates, the Dollar and geopolitical risk.
“In the near term, a more hawkish Federal Reserve and the possibility of further rate hikes pose headwinds.”
Longer term, it expects fiscal concerns and risks to the Dollar’s purchasing power to support investment demand.
On industrial use, solar manufacturers are reducing silver consumption or finding substitutes, but UBS sees other sectors offsetting that pressure:
“Growth in data centers, AI infrastructure, grid investment, and electric vehicles should help offset this pressure.”
Supply cannot respond quickly because most silver emerges as a by-product of mining other metals.
The Silver Institute’s April outlook projected a sixth consecutive annual market deficit, even with industrial demand falling.
UBS’s recovery call remains vulnerable to tighter monetary policy, weaker global growth and a sharper-than-expected drop in industrial consumption.
Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.
Gold price falls towards $4,280, but UBS remains positive over the next 12 months as reserve diversification and debt concerns support demand. Gold's latest retreat has pushed the metal back towards last week's lows, testing UBS's view that tighter US monetary policy can coexist with a positive longer-term outlook.
The gold price in US Dollars (XAU/USD) fell 1.92% to around $4,280 an ounce on Wednesday, giving back most of its recovery since the Fed decision.
Image: Gold price chart in USD (48 hour) UBS acknowledges that the Federal Reserve's latest rate increase could keep inflation-adjusted US yields and the Dollar elevated, weighing on gold.
Higher yields increase the appeal of interest-bearing assets relative to bullion, which pays no income.
"However, we do not believe the strategic investment case has changed."
The bank's argument extends the reserve-diversification case it made earlier this month:
"Looking ahead, however, we believe central bank demand, continued diversification away from the US dollar, and global debt concerns will remain important structural supports."
The World Gold Council's June survey of reserve managers found that 89% expected global central-bank gold holdings to increase over the following year.
UBS favours a broader spread of commodity holdings Gold remains part of UBS's wider case for commodities as protection against geopolitical stress, supply shocks and inflation.
"We continue to view gold as a useful strategic diversifier, and we remain constructive on gold prices over the next 12 months."
Elsewhere, the bank sees opportunities from constrained supply, electrification and investment in AI infrastructure, particularly in copper.
For investors already holding substantial gold gains, UBS says higher prices may offer an opportunity to rebalance some exposure into other commodity sectors.
Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.
Euro Technical Outlook: EUR/USD Short-term Trade Levels
EUR/USD has fallen more than 2.9% from the August high after a decisive break of the September opening range.
Euro has declined in seven of the past nine sessions and is poised for a third consecutive weekly loss.
The selloff is approaching a major support zone near the yearly low-day close, where the risk of near-term exhaustion begins to rise.
A sustained break below support would strengthen the case for another leg lower, while a recovery through near-term resistance would suggest a more meaningful low may be forming.
U.S. Core PCE, Eurozone inflation and Non-Farm Payrolls highlight next week’s event risk.
Resistance 1.1419, 1.1472 (key), 1.1501- Support 1.1355/60 (key), 1.1325, 1.1275
EUR/USD remains under heavy pressure after the September range broke lower, extending the decline from the August highs toward the lowest levels since July. The broader technical picture remains bearish but increasingly stretched momentum and the approach of major support argue for caution in chasing the move at current levels. With several key macro releases on deck, the next reaction could prove critical in determining whether the selloff extends or begins to stabilize. Battle lines drawn on the Euro short-term technical charts.
Review my latest Weekly Strategy Webinar for an in-depth breakdown of this EUR/USD technical setup and more. Join live Monday’s at 8:30am EST.
Euro Price Chart – EUR/USD Daily
Chart Prepared by Michael Boutros, Sr. Technical Strategist; EUR/USD on TradingView
Technical Outlook: In last month’s Euro Short-term Technical Outlook we noted that EUR/USD had reversed off confluent uptrend resistance and that, “From a trading standpoint, look to reduce short-exposure / lower protective stops on a stretch towards 1.1564/78- rallies would need to be limited to the median-line IF price is heading lower on this stretch with a close below needed to fuel the next leg of the decline.” Euro dropped into support later that day with the September opening range taking shape just above pivotal support at 1.1564/78.
The range broke on September 14 with Euro plunging more than 2.9% off the August highs to trade at the lowest levels since July. The decline has taken momentum into oversold territory with the daily RSI trading at the lowest levels since June. Price has now fallen seven of the past nine-days with a third consecutive weekly decline now approaching pivotal support near the low-day close of the year. While the immediate decline may be a bit stretched, the outlook remains tilted to the downside while below the weekly high.
Euro Price Chart – EUR/USD 240min
Chart Prepared by Michael Boutros, Sr. Technical Strategist; EUR/USD on TradingView
Notes: A closer look at Euro price action shows EUR/USD trading within the confines of a descending pitchfork extending off the September high. The bears are approaching downtrend support here with major lateral support just lower at 1.1355/60- a region defined by the 38.2% retracement of the 2025 advance and the 2026 low-day close. Look for a larger reaction there IF reached with a break / weekly close below needed to fuel the next major leg of the decline. Subsequent support objective rest with the yearly swing low at 1.1325 and the 2023 swing high at 1.1276.
Initial resistance is now eyed back the 1.618% extension of the late-August decline at 1.1419 with near-term bearish invalidation now lowered to the 61.8% retracement of the June advance at 1.1472. This level converges on the upper parallel into the start of next week and a breach / daily close above this threshold would be needed to suggest a more significant low is in place, and a larger trend reversal is underway. Subsequent resistance objectives are eyed at the August swing low at 1.1501 with a breach above 1.1578 needed to put the bulls back in control.
Bottom line: Euro is approaching pivotal support near the low close of the year, and the focus is on a reaction at this key inflection zone. From a trading standpoint, rallies would need to be limited to 1.1419 IF price is heading lower on this stretch with a daily close below 1.1355 needed to fuel the next leg lower.
Event risk remains elevated for EUR/USD into the close of the week, with President Trump hosting Chinese President Xi Jinping for a state visit Thursday. Traders will be focused on any progress—or renewed friction—over trade, tariffs, rare-earth/critical-mineral supply and investment, all of which could have implications for the dollar and broader risk sentiment. Attention then shifts to next week’s key macro releases, with U.S. Core PCE on Wednesday followed by Eurozone inflation and Non-Farm Payrolls Friday. With inflation and labor-market trends central to the Fed and ECB policy outlooks, the releases could materially reshape rate expectations on both sides of the Atlantic. Any meaningful divergence in the inflation data—or signs of renewed strength or weakness in the U.S. labor market—could shift the relative policy outlook and fuel a larger directional move in EUR/USD. Stay nimble into the monthly cross and watch the weekly closes for guidance. Review my latest Euro Technical Forecast for a closer look at the longer-term EUR/USD trade levels.
Key EUR/USD Economic Data Releases
Economic Calendar - latest economic developments and upcoming event risk.
Active Short-term Technical Charts
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Gold Price Short-term Outlook: XAU/USD Bulls Fight to Stabilize at Pivotal Support
Japanese Yen Short-term Outlook: USD/JPY Breakdown Faces Major Test Ahead of Fed, BoJ
US Dollar Short-term Outlook: USD Selloff Accelerates Toward August Lows Ahead of NFP
Swiss Franc Short-term Outlook: USD/CHF Breakout Puts Yearly Highs Back in Play
--- Written by Michael Boutros, Senior Technical Strategist
The US dollar continued to press higher deep into the European session, supported by the slump in the bond markets as yields broke out across the curve. Following the recent hawkish Fed rate hike, yield spreads between the US and the rest of the world has continually increased, and that motion continued today, helped in part by some forecast-beating US macro data and hawkish Fed commentary. So, down went the major pairs like the EUR/USD and GBP/USD, gold and Bitcoin; up went the USD/JPY and USD/CHF as the greenback rallied across the board. The GBP/USD has been hurt further by the recent dovish Bank of England rate decision. As before, we maintain a short-term bearish GBP/USD forecast.
Dollar surges and bond markets implode with yields breaking out
The dollar continues to show resilience despite the recent softer energy prices and a more risk-friendly backdrop. Both of those factors have reversed today, with oil bouncing back and indices taking a dip. The Fed story remains the dominant force in FX, with hawkish policymakers doing enough to keep the dollar in demand. Economic data has also been supportive today as the S&P Global US composite PMI jumped to 58.4 from 56.0 in August, reaching it highest level since July 2021. Services led the advance and hiring strengthened, but businesses also reported higher input costs – pointing to more inflation and giving the Fed more reason to raise rates again.
Source: TradingView.com
The result of the hawkish FedSpeak and rising bets of policy tightening have sent the US 10-year yields above 5.0% and 30-year yields were testing 2007 highs.
BoE also applies pressure on sterling
The Bank of England was softer than markets had anticipated last week, and this has no doubt played a part in the GBP/USD exchange rate falling in recent days.
The bank acknowledged that rates could rise if the energy shock persists and starts generating second-round effects. But Governor Bailey offered little commitment to a November move, while policymakers noted that there is still “little evidence so far of material second-round effects”.
That may ultimately prove to be proven wrong. The more consequential announcement, however, was the overhaul of quantitative tightening. The BoE said it will halt gilt sales for six months and stop selling its long-dated holdings altogether.
Technical GBP/USD forecast and levels to watch
Source: TradingView.com
The GBP/USD has taken a dump along with other major pairs, but the technical damage could weigh on the pair for a while now given that it has broken a key level around 1.3270ish. The June low sits at 1.3140 and the November 2025 low is at 1.3010. Those are the next targets on the downside, and we could get there fairly quickly unless something changes fundamentally. On the upside. 1.3335 is now the most important resistance area to watch now. The 200-day average and next resistance comes in around 1.3450-70 area.
The trading week continues, and for now gold remains under notable pressure in the short term. This can be seen in the performance of XAU/USD over the last three trading sessions, where the metal has declined by more than 2.00%, bringing a bearish bias back into focus after it had lost momentum in recent weeks.
