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Pound Sterling Price News and Forecast: GBP/USD clings to 1.3300 as UK inflation test threatens recovery

Weekly Technical Trade Levels on USD Majors, Commodities & Stocks Technical trade setups we are tracking into the start of the week on the USD Majors, commodities, and equity indices. Next Weekly Strategy Webinar: Monday, October 26 at 8:30am ET Event risk this week: US, Eurozone & UK PMI data Review the latest Video Updates or Stream Live on my YouTube playlist In this webinar we take an in-depth look at the technical trade levels for the US Dollar (DXY), Euro (EUR/USD), British Pound (GBP/USD), Australian Dollar (AUD/USD), Canadian Dollar (USD/CAD), Japanese Yen (USD/JPY), Swiss Franc (USD/CHF), Gold (XAU/USD), Crude Oil (WTI), Bitcoin (BTC/USD), S&P 500 (SPX500), Nasdaq (NDX), and Dow Jones (DJI). These are the levels that matter on the technical charts into the weekly open. The assets are chaptered on the recording for your convenience.

British Pound Price Chart – GBP/USD 240min

Chart Prepared by Michael Boutros, Sr. Technical Strategist; GBP/USD on TradingView

Notes: Sterling broke the October opening range last week with the rally extending nearly 1.8% off the monthly lows. The bulls have now defended critical support for a seventh time this month at the 38.2% retracement of the 2025 advance and the 2026 low-week close at 1.3194. The breakout exhausted into the close last week near the 38.2% retracement of the August decline at 1.3343 – this level now defines the weekly opening range high.

Initial support rests with the May low at 1.3302 and is backed by near-term bullish invalidation at the 23.6% retracement / October open at 1.3264. Losses below this threshold would be needed to invalidate the recent breakout with key support unchanged at 1.3194.

A topside breach of the weekly range would be needed to mark resumption of the near-term uptrend. Subsequent resistance objectives are eyed at the 50% retracement at 1.3406 backed by the 200-day moving average (~1.3433), and the February low day close / yearly open at 1.3465/74.

Bottom line: A breakout of the monthly range keeps the focus on a possible exhaustion high into the close of the month. From a trading standpoint, losses should be limited to 1.3264 IF sterling is heading higher on this stretch with a breach / daily close above 1.3343 needed to fuel the next leg of the advance.

GBP/USD event risk centers on the U.K. labor-market report Tuesday and September CPI on Wednesday, with the inflation release carrying the greater weight as markets reassess expectations for the Bank of England’s November meeting. A firmer wage or inflation reading would reinforce the case for tighter policy and support sterling, while another downside surprise could revive rate-cut expectations and weigh on the pound. U.S. housing data and preliminary October PMIs are also due, but the Federal Reserve is now in its blackout period ahead of the October 27–28 decision, leaving incoming data to drive the dollar side of the pair.

Canadian Dollar Price Chart – USD/CAD 240min

Chart Prepared by Michael Boutros, Sr. Technical Strategist; USD/CAD on TradingView

Technical Outlook: USD/CAD broke below the October range lows last week with the decline extending 1.6% off the yearly / monthly high. Price is trading into support today at the 38.2% retracement of the August advance at 1.4083. A proposed descending pitchfork off the highs may be in play here but it’s too early to rely on just yet.

Initial resistance is eyed a the weekly open and November high at 1.4041 with key resistance steady at the June high week close / high day close (HWC/HDC) at 1.4194-1.4202. Note that this level converges on the 75% parallel over the next few days and a break / close above would be needed to invalidate this near-term downtrend. Critical resistance remains unchanged at the 61.8% retracement of the 2025 decline at 1.4292.

A break / close below Fibonacci support is needed to mark downtrend resumption towards the July low day close (LDC) and the 50% retracement at 1.4011/16- look for a larger reaction there IF reached.

Bottom line: USD/CAD has broken a multi-week range, and the outlook remains tilted to the downside into the close of the month. From a trading standpoint, rallies should be limited to the 1.42-handle IF price is heading lower on this stretch with a break / daily close below 1.4083 needed to fuel the next major leg of the decline.

USD/CAD event risk is front-loaded this week after Canada’s softer-than-expected September CPI report reduced expectations for a Bank of Canada hike at next week’s meeting. Although headline inflation edged up to 3.1%, the underlying measures cooled to a six-year low, suggesting that the increase was largely energy-driven rather than evidence of broadening price pressure. With no major Canadian releases remaining, the focus shifts to Friday’s preliminary October US PMIs. Firmer U.S. data could offer some support to USD/CAD by keeping Treasury yields elevated, while softer figures would reinforce the market’s dovish Fed expectations and leave the pair vulnerable to a deeper pullback. Watch the weekly close for guidance here.

Swiss Franc Price Chart – USD/CHF 240min

Chart Prepared by Michael Boutros, Sr. Technical Strategist; USD/CHF on TradingView

Technical Outlook: USD/CHF reversed off major resistance last week at the 2024 swing low and the 1.618% extension of the August advance near 8375/87. The decline has now broken below the late-August uptrend (red) and extended more than 2.1% off the monthly / yearly high with price turning just ahead of key support last week at 8200/14- a region defined by the 100% extension of the late-January rally, the July high, and the 38.2% retracement of the 2025 decline.

The focus is on this near-term recovery with initial resistance now in view at the 38.2% retracement of the recent decline near 8286. Near-term bearish invalidation is eyed at the upper parallel which converges on the 61.8% retracement at 8328.

A break below the 82-handle would be needed to suggest a more significant high is in place, and a larger reversal is underway. Subsequent support rests with the September opening range highs at 8157 backed by the August high close and the November high at 8125.

Bottom line: USD/CHF has rebounded just ahead of key support after breaking multi-week uptrend. From a trading standpoint, rallies would need to be limited to 8327 IF price is heading lower on this stretch with a close below 8200 needed to fuel the next leg lower in price. Event risk is limited out of Switzerland this week, so look for the US Dollar to drive price action this week.

Economic Calendar – Key Data Releases

Economic Calendar - latest economic developments and upcoming event risk.

--- Written by Michael Boutros, Senior Technical Strategist

Follow Michael on X @MBForex

The trading week is just getting underway, and one of the most notable developments in the currency market has been the renewed strength of the Canadian dollar. This can be seen in the recent performance of USD/CAD, which has now declined for three consecutive sessions and is down approximately 1.0% over the period, highlighting the CAD's growing strength against the U.S. dollar.

For now, selling pressure around the pair remains relevant even after the release of Canadian inflation data. This is largely because the Canadian bond market has maintained relatively stable yields, helping to support demand for Canadian dollar-denominated assets. At the same time, the relationship between oil prices and the CAD has begun to regain importance in recent sessions. As long as these factors remain in place and the U.S. dollar continues to move through a corrective phase, selling pressure on USD/CAD could remain an important theme in the days ahead.

Canada Inflation Day Arrives
Canada's latest inflation figures were released during today's session. Overall, the main core inflation measures came in slightly below market expectations. The Trimmed CPI y/y, which excludes more volatile components, was reported at 1.8% versus an expected 1.9%, while Median CPI y/y, a measure used to track underlying inflation trends, came in at 1.9% compared to the 2.0% forecast.

However, annual CPI remains near 3.1%, highlighting that inflation pressures are still relatively elevated. Although some indicators came in below expectations, the data does not yet point to a sufficiently consistent slowdown that would justify a significantly more dovish stance from the Bank of Canada in the coming months. Current inflation levels also remain well above the lows seen in February, when annual CPI was close to 1.8%.

Source: TradingEconomics

This remains important because, even after the inflation release, Canadian 10-year government bond yields have shown little sign of weakness. Instead, yields continue to develop near the 4.0% area, maintaining a relatively stable environment that continues to support the attractiveness of Canadian dollar-denominated investments.

At the same time, U.S. dollar strength has begun to moderate. The DXY, which measures the dollar against its main peers, continues to trade near the 102-point area without being able to establish a sustained bullish trend. As a result, CAD has found room to recover part of the ground lost in previous weeks.

Source: TradingEconomics

Taking all of this into account, it is important to note that while inflation data did not surprise to the upside, it also failed to show a meaningful slowdown in price pressures. This has helped preserve stability in Canada's bond market and, combined with the recent loss of momentum in the U.S. dollar, has allowed the Canadian dollar to regain relevance in the short term. As long as this dynamic remains in place, selling pressure around USD/CAD could continue to be a dominant theme.

Is the Relationship with Oil Becoming Relevant Again?

Another important factor to consider is the close relationship between the Canadian economy and the energy sector. Canada remains one of the world's largest oil producers and exporters, meaning that significant moves in crude oil prices often have an important impact on demand for the Canadian dollar. As oil prices rise, export revenues tend to increase, supporting stronger capital inflows and helping strengthen the CAD in the short term.

Over recent sessions, this relationship has begun to regain relevance. The CXY, an index that measures the strength of the Canadian dollar, continues to advance while WTI crude oil maintains a bullish trend that has pushed prices increasingly closer to the $100 per barrel area.

The most interesting element emerges when looking at the short-term correlation between both markets. The correlation coefficient currently stands near 0.56, reflecting a meaningful positive relationship between recent movements in oil and the Canadian dollar. This suggests that rising crude prices may be providing additional support to CAD’s recent recovery. It is important to remember that correlation can change over time.

Source: TVC, StoneX, Tradingview

This relationship is particularly important because it had weakened during previous months. However, the recent strength in oil prices appears to be bringing it back into focus and may help explain part of the resilience currently being displayed by the Canadian dollar against the USD. As long as oil remains in an upward trend and the positive correlation persists, this factor could continue supporting downside pressure on USD/CAD in the coming sessions.

USD/CAD Technical Forecast

Source: StoneX, Tradingview

The bearish bias is regaining relevance: Although USD/CAD attempted to develop a short-term bullish trendline in recent weeks, that structure gradually lost momentum as price approached highs not seen for several months. A renewed bearish bias is now beginning to emerge on the chart. However, it is important to remember that a lack of direction remains a key characteristic of the market and, unless important support levels are broken, a broader period of consolidation could still develop over the coming weeks.

 
MACD: The MACD histogram continues to fluctuate very close to the 0 neutral line, reflecting a relatively balanced dynamic in short-term moving-average momentum. This reading continues to support the possibility that a phase of indecision remains relevant on the chart.

 
RSI: A similar picture can be observed in the RSI, which continues to trade near the 50 neutral level. This behavior reflects a relatively balanced momentum environment and suggests that the recent lack of direction remains an important feature of price action.

 
Key Levels:

1.42321 – Key Resistance: A major high observed over recent months and the most important upside barrier on the chart. A move back toward this level could restore relevance to the bullish bias and support a more consistent bullish structure.

 
1.41606 – Near-Term Barrier: A level that aligns with significant retracement zones observed several weeks ago and could become the main area to monitor in the event of short-term bullish corrections.

 
1.39959 – Critical Support: The last major support barrier on the daily chart and a level that coincides with the 50-period simple moving average. Sustained moves below this area could reinforce the bearish bias and open the door to a more established downtrend in the weeks ahead.

 
Written by Julian Pineda, CFA, CMT – Market Analyst

Follow him on: @julianpineda25

Gold (XAU/USD) is struggling to capitalize on a weaker US Dollar (USD), after repeatedly failing to establish itself above the $4,200 level. The precious metal remains confined to a relatively narrow trading range despite a combination of developments that would normally support higher prices.

The US Dollar retreated last week, while United States (US) Treasury yields fell sharply from their recent highs as investors reassessed the Federal Reserve's (Fed) interest rate outlook and growing concerns surrounding Artificial Intelligence (AI) investments.

Under normal circumstances, this combination should provide meaningful support for Gold. A weaker US Dollar makes the metal more affordable for international buyers, while declining bond yields reduce the opportunity cost of holding an asset that pays no interest.

Yet Gold's recovery remains surprisingly restrained. The divergence suggests that investors are looking beyond the immediate retreat in the US Dollar and Treasury yields. Persistent inflation, expectations of further monetary tightening and uncertainty surrounding the sustainability of the recent bond rally are preventing buyers from committing to a more decisive advance.

The question is no longer simply whether the US Dollar can continue falling. It is whether the forces pushing it lower are strong enough to overcome the monetary policy risks still weighing on Gold.

The US Dollar weakened, but Gold missed its opportunityThe US Dollar Index (DXY), which measures the Greenback against six major currencies, ended last week lower after four consecutive weekly advances, retreating from a year-to-date high near 102.95. The decline occurred despite stronger-than-expected US inflation figures, which would typically reinforce expectations of higher interest rates and support the Greenback.

Meanwhile, the benchmark 10-year US Treasury yield fell on Friday, extending a sharp correction driven partly by concerns about the outlook for AI-related investment and economic growth.

Gold initially benefited from this adjustment, recovering from its post-inflation sell-off toward $4,200. However, the metal failed to extend its gains convincingly and continues to struggle below that psychological level. The limited reaction is particularly revealing because both major financial variables that traditionally influence Gold moved in its favor.

US Dollar Index (blue) vs XAU/USD (yellow). Source: FXStreetBut the relationship between Gold, the US Dollar and Treasury yields is not mechanical. The reasons behind changes in interest rates can matter as much as the direction of those changes.

In this case, falling yields partly reflect growing concerns about financial markets and future economic activity rather than clear evidence that inflation is returning toward the Fed's target. That distinction helps explain why investors remain reluctant to aggressively increase their exposure to the precious metal.

The Fed is still the problem Gold cannot ignoreThe latest US inflation figures provide an important explanation for Gold's hesitation. The September Consumer Price Index (CPI) rose 3.7% YoY, exceeding expectations of 3.6% and up from 3.4% in August. Meanwhile, the Producer Price Index (PPI) rose by 6.3% annually, significantly above the 5.3% consensus. These figures suggest that inflationary pressures remain persistent, complicating the Fed's efforts to restore price stability.

US Consumer Price Index. Source: CNBCAlthough investors have substantially reduced expectations of another interest rate hike at the October 27-28 meeting, they continue to anticipate additional tightening before year-end. According to the CME FedWatch Tool, markets assign approximately a 17% chance of an October rate hike, while the chance of a December increase remains close to 90%.

This creates an uncomfortable environment for Gold. Even if the US Dollar temporarily weakens, the prospect of higher interest rates limits the attractiveness of holding a non-yielding asset. Furthermore, any renewed increase in Treasury yields could quickly undermine the precious metal's recovery.

Nordea analysts maintain a particularly hawkish assessment of the monetary policy outlook, stating that they "still expect one more hike this year and another next year, with the risks tilted to the upside." The bank also argues that "monetary policy still does not look restrictive enough for an economy in this shape," emphasizing that inflation remains significantly above the Fed's objective.

For Gold investors, the implication is important. A temporary decline in the US Dollar does not necessarily signal the beginning of a sustained monetary easing cycle. As long as the Fed remains inclined toward further tightening, Gold may struggle to translate currency weakness into a durable rally.

Falling bond yields may be sending the wrong signalThe US Treasury market has become another source of uncertainty. Last week's decline in government bond yields initially appeared supportive of Gold, particularly after investors moved toward safer assets amid concerns about the sustainability of the AI investment boom.

According to Deutsche Bank, "the theme of the day was a big global rate rally, as the prospect of slower AI growth pushed yields lower across the board." The bank noted that the US 10-year Treasury yield declined by 12.7 basis points to 5.06%, even as economic data continued to point toward persistent inflation.

US 10-year bond yield. Source: TradingViewThis apparent contradiction matters for Gold. Lower nominal bond yields generally support the precious metal, but the effect also depends on inflation expectations and real yields, which represent the inflation-adjusted return available to investors. If Treasury yields decline because inflation expectations are falling faster than nominal yields, the resulting increase in real yields could limit Gold's attractiveness. Conversely, a sustained decline in real yields would provide stronger fundamental support for the metal.

Analysts at OCBC capture this distinction particularly well, describing the latest recovery as "another reminder that Gold is trading the bond market’s reaction to US data rather than the data itself." The bank also warns that "underlying inflation pressures remain elevated, and the recent decline in yields has been partly driven by risk aversion rather than improving inflation fundamentals."

This suggests that Gold's recent recovery may remain vulnerable if Treasury yields stabilize or resume their advance. The key question, therefore, is not simply whether yields are falling, but whether the decline reflects a lasting improvement in financial conditions for non-yielding assets.

Gold's resilience is real, but so is the lack of convictionDespite its inability to overcome $4,200, Gold is not experiencing a broad collapse in demand. The precious metal has recovered from its recent decline toward $4,073, suggesting that buyers remain willing to absorb selling pressure at lower prices.

This resilience is consistent with the investment flows highlighted by TD Securities. The bank notes that "macro discretionary positions remain elevated, while ETF inflows and central bank demand also remain strong." According to its analysts, these flows "have ultimately offered strong support for gold," and are expected to "remain robust, especially in the $4,000-4,100/oz region."

This creates an important distinction between a market lacking sufficient momentum to rally and one experiencing a structural deterioration in demand. Short-term investors remain sensitive to inflation surprises, changes in Treasury yields and shifting expectations for monetary policy. Meanwhile, longer-term investment demand appears more resilient.

As a result, Gold can remain supported without necessarily developing a sustained upward trend. The current price behavior may therefore reflect a confrontation between two groups of investors: those concerned about further monetary tightening and those willing to accumulate Gold as a longer-term portfolio asset. Neither side has established a decisive advantage.

Gold (XAU/USD) daily chart. Source: FXStreetThe next move depends on what happens after the Dollar's declineThe Fed's upcoming October 27-28 meeting will be an important test for Gold. With policymakers entering their blackout period, investors will have fewer opportunities to reassess the central bank's intentions through official speeches.

Attention will consequently shift toward Treasury yields, geopolitical developments and upcoming US economic indicators, particularly the preliminary Purchasing Managers’ Index (PMI) figures.

Three broad scenarios could emerge. If Treasury yields continue declining and markets further reduce expectations of monetary tightening, Gold could finally benefit more decisively from a weaker US Dollar.

If yields rebound as inflation concerns persist, the metal may remain under pressure even if the US Dollar struggles to recover.

A third possibility is that AI-related concerns deepen, weakening both US equities and the Greenback while encouraging additional Treasury purchases. In that environment, Gold's direction would depend heavily on whether falling real yields and safe-haven demand outweigh fears of persistent inflation.

The recent market reaction has already demonstrated that US Dollar weakness alone is not enough to guarantee higher Gold prices. The precious metal continues to attract underlying demand, but investors remain unwilling to disregard the prospect of additional Fed tightening.

Ultimately, the most revealing development is not the US Dollar’s fall. It is that Gold has struggled to capitalize on it. That hesitation suggests the market is still treating the recent decline in Treasury yields as potentially temporary, rather than as confirmation of a more favorable monetary environment.

Until that perception changes, Gold may continue finding buyers on declines without generating the sustained momentum needed for a stronger rally. The US Dollar has already offered Gold an opportunity. The bond market and the Fed will determine whether it can finally take it.

Nationwide protests in France over the high cost of living and declining public services turned violent over the weekend, with the interior ministry putting turnout at around 550,000 people. Ongoing riots and protests are weighing on the euro, and crucially, they are unfolding against a broader fiscal backdrop that is likely to remain a key storyline for the rest of the year.

Weekly forex forecast: EUR/USD, XAU/USD, GBP/USD, USD/JPY, Bitcoin and more [Video]

US 10-year real Treasury yields fell from 2.91% to 2.74% between October 9 and 16, a decline of 17 basis points. Nominal rates also ended Friday lower. The Treasury reported a 2-year par yield of 4.74% and a 10-year par yield of 5.09%. Both remain interest-bearing alternatives to a metal that obviously distributes no income. Lower yields can improve gold’s relative appeal, but positive real returns still represent competition for gold to consider. Currency fluctuations, liquidity needs, and portfolio flows can offset the influence of rates, so the relationship should be treated as conditional and just one input.

CPI The relevant comparison is also forward-looking. Subtracting the latest 12-month CPI rate from a nominal Treasury yield would mix different horizons and not reproduce the official real yield measure. For analyzing gold, keeping these concepts separate helps distinguish a change in the return investors can attain from an announcement about inflation that has already occurred.

Inflation evidence available on Monday is still last week’s September data. CPI released on the 14th increased 0.6% month-over-month on a seasonally adjusted basis and 3.7% over 12 months before adjustment. Excluding food and energy, the corresponding increases were 0.3% and 2.6%.

PPI PPI published on the 15th added a separate warning. Final demand prices increased 1.3% monthly on a seasonally adjusted basis and 6.3% annually before adjustment. The measurement excluding food, energy, and trade services rose 0.5% monthly. Producer prices cover a different basket of inputs from CPI, and their increases do not pass through to households one for one. Nevertheless, the breadth of evidence argues against the idea that inflation has disappeared from the United States economy.

The import price report on Friday broadened the picture, with September import prices increasing 1.1% from August, including a 0.7% rise excluding fuel, without seasonal adjustment. That release is relevant background for policy expectations, not an additional amount that we should be adding to the CPI for gold.

The Analytical Tension Is Straightforward Persistent price pressure can increase interest in protecting purchasing power, while a restrictive policy response can raise the return available elsewhere, causing conflicting momentum. Activity offers a reason now to avoid a simple, easy narrative. The Federal Reserve report on October 16th showed industrial production increased 0.7%, with manufacturing output up 0.3%. Those preliminary estimates also indicate expansion in the measured month rather than a collapse that would by itself justify assuming immediate policy relief is coming out of the Federal Reserve.

USD/JPY – Institutional accumulation? [Video]

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  Gold hit a rebound to close towards the resistance zone 4200-35 again. As we see over the chart, the market could continue  inside this zone.

Oil and Gold: Price review for the week ahead

The Pound-New Zealand Dollar could strengthen if UK inflation reinforces BoE hike bets, while softer New Zealand inflation may weigh on the Kiwi.
Trade in the Pound to New Zealand Dollar (GBP/NZD) exchange rate was uneven last week amid a fluctuating market mood.

At the time of writing, GBP/NZD was trading at around NZ$2.358. Almost unchanged from start of last week’s session.

Latest — Exchange Rates:

Pound to New Zealand Dollar (GBP/NZD): 2.358121 (-0.14%)

Euro to New Zealand Dollar (EUR/NZD): 1.988273 (-0.34%)

New Zealand Dollar to Dollar (NZD/USD): 0.565285 (+0.58%)

DAILY RECAP:

The New Zealand dollar (NZD) tracked shifting risk appetite throughout the week, experiencing notable swings as investors reacted to geopolitical uncertainty, rising energy prices and changing expectations for US interest rates

After initially struggling amid concerns over renewed tensions in the Middle East, the ‘Kiwi’ was catapulted higher as a sharp correction in the US Dollar (USD) triggered a notable risk rally in the latter half of the session.

The New Zealand Dollar also benefited from comments by Reserve Bank of New Zealand (RBNZ) Chief Economist Paul Conway, who signalled that further interest rate increases could be necessary to bring inflation under control.

The Pound (GBP) traded without strong conviction through the first half of last week’s session, as conflicting economic signals left investors hesitant.

Although the International Monetary Fund (IMF) raised its outlook for UK economic growth, gains were constrained by remarks from Bank of England (BoE) Chief Economist Huw Pill.

Pill, typically regarded as one of the more hawkish members of the Monetary Policy Committee, sought to rein in expectations for an aggressive tightening cycle, questioning market bets that the BoE would raise interest rates four times over the coming year.

The Pound found firmer footing later in the week, however, after the latest UK GDP figures revealed an unexpected expansion in August, overturning forecasts that the economy would contract.

Near-Term GBP/NZD Forecast: UK Inflation in the Spotlight
Looking ahead, the Pound to US Dollar exchange rate could gain ground this week as investors reacted to the latest UK consumer price index.

Forecasts point to inflation climbing to 3.4% in September. Such a reading could lend support to Sterling by reinforcing expectations that the BoE will start raising interest rates next month.

However, the latest UK labour market figures may limit the Pound’s advance. Unemployment is expected to have increased in August, potentially tempering optimism over the strength of the domestic economy.

Meanwhile, New Zealand’s own inflation figures will likely act as the primary catalyst for the ‘kiwi’ with NZD exchange rates likely to soften if an easing of price pressures in the third quarter dampens RBNZ rate hike expectations.

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

Gold (XAU/USD) struggles after opening the week higher. The US Dollar (USD) and US Treasury yields find some footing following last week’s pullback as traders assess the Federal Reserve’s (Fed) interest rate path and geopolitical developments. At the time of writing, XAU/USD trades around $4,170 after reaching an intraday high of $4,190.

The US Dollar and yields corrected sharply lower last week, driven by an AI-led equity sell-off that prompted traders to rotate into government bonds and safe-haven Gold. However, the metal’s gains were modest as expectations of additional interest rate hikes by the Federal Reserve (Fed) continued to weigh on the non-yielding metal while cushioning the downside in the US Dollar and Treasury yields.

The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, trades around 101.90, up 0.10% on the day. Weakness in the Euro (EUR) amid mounting fiscal concerns and political unrest in France provides additional support to the USD. Meanwhile, the benchmark 10-year US Treasury yield stands near 5.08%, holding close to recent lows.

Elevated energy prices linked to the war in the Middle East continue to feed into inflation, with both September’s Consumer Price Index (CPI) and Producer Price Index (PPI) reports coming in hotter than expected. This reinforces expectations of another rate hike by year-end as the Fed seeks to bring inflation back to its 2% target.

Analysts at Nordea say they are leaving their Federal Reserve outlook unchanged, stressing that “we keep our Fed forecast unchanged” and “still expect one more hike this year and another next year, with the risks tilted to the upside.” In their view, “monetary policy still does not look restrictive enough for an economy in this shape,” particularly as “inflation is still clearly above target, and the September CPI shows it moving up, not down.”

Against that backdrop, Nordea argues that “long-term yields above 5% are not particularly restrictive,” and concludes that “all in all, our view is unchanged. A strong economy and above-target inflation still call for tighter policy. Higher long-term yields do not change that call. They mostly reflect the same strong economy that keeps the Fed hiking.”

Recent remarks from Fed officials also suggest they remain open to further tightening, although they have not strongly signaled a hike at the October 27-28 meeting. Speaking in Bangkok on Friday, Fed Chair Kevin Warsh stuck to his stance of avoiding forward guidance, saying, “I don't prejudge meetings.” The CME FedWatch Tool shows traders pricing in a 15% chance of a rate hike this month and an 89% chance of a hike in December.

On the geopolitical front, Iran has renewed its offer to reopen the Strait of Hormuz within seven days if Washington accepts its conditions, although negotiations remain stalled over Tehran’s nuclear programme. Meanwhile, continued attacks on vessels in the Strait of Hormuz and fighting between Saudi Arabia and the Houthis keep supply risks elevated. However, US President Donald Trump’s decision to temporarily waive sanctions on Russia has raised expectations of increased energy supplies.

Technical analysis: Mixed technical signals keep bulls cautious below $4,200

On the daily chart, XAU/USD holds a mildly bearish near-term bias as price sits just under the 20-day simple moving average (SMA) embedded in the Bollinger Bands at $4,183. The failed recovery through this middle band hints that recent gains are losing traction, even as the Moving Average Convergence Divergence (MACD) indicator turns positive and extends higher, suggesting only tentative upside momentum, while the Relative Strength Index (RSI) near 45 keeps the broader tone slightly soft and the Average Directional Index (ADX) below 20 signals a weak underlying trend.

On the topside, the Bollinger middle band and 20-day SMA at $4,183 act as immediate resistance. A daily close above this pivot would be needed to ease the current downside pressure. On the downside, initial support is seen at the lower Bollinger Band near $4,053, where buyers may look to defend the recent range floor if the pullback accelerates.

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

Gold FAQs

Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.

Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.

Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.

The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.

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Summary:

The RBI's intervention & a 2% decline in Brent crude this Monday has pushed the USD/INR below the 95.00 price mark, but upside risks remain. Current Setup USD/INR is trading below the 95.00 mark and at 1-month highs, largely due to the RBI’s aggressive stabilization effort. As of writing, the pair is at 94.82, following last week’s 2% rupee gain. A modest decline in oil prices and increased dollar sales by foreign banks have reinforced the recovery.

The US dollar started the week on weak footing, giving the rupee a chance to resume trading vs the greenback from a position of strength. However, the unpredictable oil-price picture (which remains elevated) and foreign capital outflows mean the rupee remains at risk of returning to depreciation. The recent rupee strength is more of a relief rally at this point, not a full reversal, since the macro drivers that would reverse USD/INR’s uptrend are not yet in place. RBI intervention is not a substitute for stronger rupee-strengthening fundamentals.

USD/INR: Key Macro Drivers 1. RBI Defense A key driver of USD/INR is the introduction of a separate, dedicated dollar supply window for state-run oil refiners. Other measures introduced by the Reserve Bank of India include higher costs for certain FX transactions for banks and additional charges for importer-hedged transactions. These measures were introduced to curtail spot market dollar demand, which is putting additional pressure on the rupee. It is also meant to reduce speculation against the local currency. The measures have largely succeeded in the short term, pushing the pair down from above 97.00 to below 95.00. However, these measures are only short-term, and any sustained appreciation will require reversing the current macro drivers behind the ongoing rupee pressure.

2. Oil prices remain the principal risk Elevated oil prices remain the principal risk driver for USD/INR. Despite a 2% fall in Brent crude to $107.70 per barrel on 19 October, oil remains expensive for major importers such as India. As the world’s third-largest oil importer, India’s economy is particularly susceptible to elevated oil prices. The rupee benefits from lower oil prices, as they reduce the import bill and the need for additional dollars to cover higher import costs. However, any immediate rally in oil prices will lead to an increase in dollar demand to pay for the extra cost of the product, which is priced in U.S. dollars. This could reverse the rupee’s recent recovery and lead to a retest of recent price highs.

3. RBI policy and interest-rate expectations The RBI’s recent 25-basis-point rate hike sent the repo rate to 5.50% in September. However, inflation expectations remain elevated because of persistently high oil prices, and markets have begun to price in further tightening due to these pressures, as well as rising government bond yields. ​Higher interest rates will support the rupee by tightening domestic financial conditions. However, a high-interest-rate environment could also stifle growth and increase borrowing costs for businesses.

​Traders are still watching for the next policy signals and the Federal Reserve’s stance, which is due to release its next monetary decision on 28 October. This will be important for the currency pair’s outlook.

USD/INR Forecast Scenarios Bullish above 95.50 | Neutral 94.00–95.50 | Bearish below 94.70, with confirmation

Bull case for USD/INR — Consistently high crude oil prices and increased portfolio fund outflows from Indian markets put additional pressure on the rupee. In this scenario, a sustained recovery above 95.50 opens the door to the recent upside target at 96.00 or higher.

Base case — Consolidation: The pair is expected to trade between 94.00 and 95.50 if persistently elevated oil prices counteract the RBI’s rupee-strengthening measures.

Bear case for USD/INR — A confirmed break below 94.50 is possible if oil prices ease, adding to the RBI’s measures to curb excess dollar demand. In this scenario, downside targets at 94.50 or lower become available targets for the bears.

Technical outlook Bears are currently challenging the 94.91 support (7 July and 14 August lows). A breakdown of this support exposes the 94.30–94.04 support. If the breakdown move extends below this support zone, the next arrival point would be the 93.40 support formed by the neckline of the 8/17 April double bottom.

USD/INR daily chart showing key price levels and RBI intervention zone (snapshot: 19 October 2026) Conversely, a recovery above 95.24 exposes the 96.00 psychological resistance and the 12 October high. Above this level, upside targets reside at 96.50 and 96.96.

Eurozone annual inflation rose to 3.8% in September from 3.2% in August – the highest level in recent months. Energy prices increased by 18.9% year-on-year, while services inflation stood at 3.2%.

US CPI accelerated to 3.7% in September from 3.4% in August. The energy index rose by 5.2% over the month, with gasoline prices up 9.1%. Core CPI stood at 2.6%.

Budget negotiations have begun in the French parliament, but with no stable ruling majority and the political crisis dragging on, EUR/USD could fall to 1.05 in a worst-case scenario. UBS forecasts that EUR/USD will recover to 1.16 by year-end.

The 10-year US Treasury yield has climbed above 5.30%, giving the dollar a significant yield advantage. Dollar-denominated assets remain more attractive than European assets, supporting capital inflows to the US.

The Middle East conflict remains the largest source of uncertainty, supporting energy inflation and demand for the US dollar as a safe-haven currency.

EUR/USD is under triple pressure from a hawkish Fed, France’s fiscal crisis and geopolitical risks. The ECB appears more cautious than the Fed, widening the interest rate differential in favour of the dollar. This week’s key events are the Fed meeting on 27–28 October and the ECB meeting on 28–29 October.

Technical analysisOn the H4 chart, EUR/USD remains in a downtrend, within which the market completed another downward wave around 1.1112. The subsequent upward move allowed the pair to recover towards resistance at 1.1270. A consolidation range is currently forming below this level. The rise is viewed as a corrective wave within the main downtrend. The correction is expected to end, followed by another downward move towards 1.1178. A break below this support would open the way towards 1.1083 and then 1.0888. An alternative scenario envisages a break above resistance at 1.1270, with the correction continuing towards 1.1379. The MACD indicator is in positive territory, although the upward momentum could weaken.

On the H1 chart, a local corrective structure is developing following the completion of the upward move from 1.1112 towards resistance at 1.1270. The market is currently consolidating below 1.1236. During the upcoming trading session, the corrective rise is expected to end, followed by a decline towards 1.1178. A break below this level would open the way towards 1.1130 and then 1.1096. The Stochastic oscillator is in overbought territory, with its signal line turning downwards, indicating that the current correction may be nearing its end. The priority scenario for today remains a decline after a local high forms below resistance at 1.1236. Confirmation would come from a close below the nearest intraday support, followed by increased selling pressure towards the stated targets.

ConclusionEUR/USD remains under triple pressure from a hawkish Fed, France’s fiscal crisis and geopolitical risks, with the widening interest rate differential favouring the dollar. Eurozone inflation rose to 3.8% in September, while US CPI accelerated to 3.7%, but the ECB’s more cautious stance compared with the Fed continues to weigh on the euro. The 10-year US Treasury yield above 5.30% increases the dollar’s appeal and supports capital inflows to the US. The upcoming Fed and ECB meetings will be the key catalysts, with the pair vulnerable to further downside if the correction ends. Technically, the bearish structure remains intact, with a decline towards 1.1178, 1.1083 and potentially 1.0888 likely if support breaks. A break above 1.1270 would extend the correction towards 1.1379, but the broader trend remains downward.

USD/CAD pulls back ahead of Canada CPI: Wave four before more upside?

The Pound-Canadian Dollar rate could remain volatile as UK jobs and inflation data shape BoE expectations, while Canadian CPI may influence the Loonie. Trade in the Pound to Canadian Dollar (GBP/CAD) exchange rate was volatile last week, amid mixed domestic catalysts and fluctuating commodity prices.

At the time of writing, the GBP/CAD exchange rate traded at CA$1.8869. Almost unchanged from the start of last week’s session.

Latest — Exchange Rates:

Pound to Canadian Dollar (GBP/CAD): 1.884791 (+0.05%)

Euro to Canadian Dollar (EUR/CAD): 1.58918 (-0.15%)

Dollar to Canadian Dollar (USD/CAD): 1.41394 (-0.39%)

DAILY RECAP:

The Pound (GBP) traded unevenly during the first half of last week, with a mix of positive economic news and cautious comments from the Bank of England shaping market sentiment.

An upgrade to the UK’s growth outlook from the International Monetary Fund (IMF) provided some encouragement, with its forecast for 2026 raised from 1% to 1.3%.

However, the Pound faced headwinds after Bank of England (BoE) Chief Economist Huw Pill challenged expectations of an aggressive tightening cycle.

While acknowledging the need to contain inflation, Pill questioned whether the central bank would deliver four interest rate increases over the next year.

Momentum shifted in the Pound’s favour during the latter half of the week, when UK GDP figures unexpectedly showed the economy expanding in August.

The stronger-than-forecast reading reinforced expectations of a November rate hike from the BoE, while offering Chancellor John Healey some welcome relief ahead of his forthcoming Budget.

The Canadian dollar (CAD) remained closely tied to movements in global oil prices this week.

This saw the commodity-linked currency stage a notable mid-week rebound as crude prices climbed amid renewed concerns over disruptions to global energy supplies.

However, a subsequent pullback in oil prices, coupled with some cautious remarks from Bank of Canada (BoC) Governor Tiff Macklem, led the ‘Loonie’ to relinquish the bulk of these gains by the end of the session.

Near-Term GBP/CAD Forecast: Stream of UK Data to Drive Sterling A packed calendar of UK economic data could bring renewed volatility to the Pound to Canadian Dollar (GBP/CAD) exchange rate this week.

Investors will be paying particular attention to the latest employment and inflation figures, both of which will help shape expectations ahead of the BoE’s November interest rate decision.

In the meantime, Canada’s own consumer price index could lift the ‘Loonie’ if a rise in inflation is seen as placing more pressure on the Bank of Canada to tighten monetary policy.

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

ING’s Francesco Pesole says EUR/USD is modestly undervalued versus short-term fair value around 1.137–1.139, but ongoing French fiscal concerns and protests may limit gains. He sees risks as balanced, with downside from France and upside from further AI-related pressure on Fed expectations, and keeps a one-month EUR/USD target at 1.130.

French protests and AI keep risks balanced
"EUR/USD briefly dropped back below 1.120 overnight before inching higher again this morning. The move in short-term rate differentials has pushed our short-term fair value estimate for EUR/USD higher to around 1.137-1.139. The current undervaluation is therefore around 1.3-1.5%, broadly consistent with French fiscal risk remaining very much present, as reflected in the 10yr OAT-Bund spread hovering around 135-140bp."

"Markets have appeared tentatively more relaxed about the budget situation. Still, continued widespread protests in France over the weekend should weigh on domestic stocks and could spill over into the bond market. We doubt that is enough to drive further sustained widening per se, but it may limit EUR/USD's ability to return to Friday's levels."

"On the macro side, the highlight of the week is Friday's PMI release. Expectations are for a modest softening in the eurozone composite figure, while remaining well inside expansionary territory. Tomorrow, Germany's ZEW index will be in focus."

"The balance of risks for EUR/USD is fairly even at this stage. Downside risk continues to stem from France, although it has abated somewhat as of late, while the upside comes from further AI concerns hitting Fed rate expectations. Our month-ahead target remains 1.130."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

USD/CHF price forecast: US Dollar/Swiss Franc breaks above 0.5 arc

The British Pound (GBP) trades marginally lower at around 1.3314 against the US Dollar (USD) during the European trading session on Monday, but is wobbling inside Friday’s trading range. The GBP/USD pair is expected to remain sideways as investors await key United Kingdom (UK) employment data for quarter ending August and the Consumer Price Index (CPI) data for September, which are scheduled for Tuesday and Wednesday, respectively.

According to estimates, the ILO Unemployment Rate increased to 5% from 4.9% in three months ending July. Average Earnings Including Bonuses drops to 3.8% Year-on-Year (YoY) from the previous reading of 3.9%.

Economists at Deutsche Bank expect UK price pressures to re-accelerate into September, projecting that inflation will “push to its highest rate all year.” They look for headline CPI to rise to “3.49% y-o-y, with core CPI pushing to 2.74% y-o-y.” Within the basket, Deutsche Bank also anticipates a renewed pickup in services, with “Services CPI, we expect, will also rise, picking up pace to 3.71% y-o-y on stronger base effects.”

The UK data will likely have a significant impact on Bank of England’s (BoE) interest rate expectations.

Meanwhile, the US Dollar trades higher as social protests in France amid higher cost of living have boosted borrowing costs for government. 10-year French bond yields holds onto Friday’s gains at around 4.87%.

GBP/USD Technical Analysis

In the daily chart, GBP/USD trades at 1.3317, holding a mildly bullish near-term tone as spot remains above the 20-day exponential moving average (EMA) at 1.3285. The short-term trend bias is underpinned by this nearby dynamic support, while the Relative Strength Index (14) around 51 suggests neutral-to-positive momentum rather than overextension in either direction.

On the downside, initial support is located at the 20-day EMA near 1.3285, while the major support lies at 1.3140. On the upside, the Friday's high at 1.3372 seems the key hurdle for the pair.

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

Economic Indicator

Consumer Price Index (YoY)
The United Kingdom (UK) Consumer Price Index (CPI), released by the Office for National Statistics on a monthly basis, is a measure of consumer price inflation – the rate at which the prices of goods and services bought by households rise or fall – produced to international standards. It is the inflation measure used in the government’s target. The YoY reading compares prices in the reference month to a year earlier. Generally, a high reading is seen as bullish for the Pound Sterling (GBP), while a low reading is seen as bearish.

Read more.

The Bank of England is tasked with keeping inflation, as measured by the headline Consumer Price Index (CPI) at around 2%, giving the monthly release its importance. An increase in inflation implies a quicker and sooner increase of interest rates or the reduction of bond-buying by the BOE, which means squeezing the supply of pounds. Conversely, a drop in the pace of price rises indicates looser monetary policy. A higher-than-expected result tends to be GBP bullish.

US dollar price forecast: October hike odds drop to about 15% as DXY tests 102.18, EUR/USD slips on French fiscal risk, and GBP/USD faces 1.3353 resistance.

USDJPY moving lower The Yen (USDJPY) bounced back against the dollar as the pair looks to close the weekend gap. Resistance at 158.30 indicates renewed selling pressure and could lead to a bearish continuation.

Silver (XAG/USD) has entered the week with a moderately bullish tone, favoured by a soft US Dollar (USD), but the precious metal remains trading within previous ranges, with bulls, so far, capped below the 0.5800 area.  

The US Dollar Index (DXY), which measures the value of the Greenback against a basket of six majors, edges down less than 0.1% on Monday, with the market anticipating a pause at next week’s Federal Reserve (Fed) monetary policy meeting.

US inflation figures released last week confirmed that higher energy prices are boosting consumer prices to levels well above the central bank’s target for price stability. Fed officials, however, requested more time to assess the economic impact of September’s rate hike, and Chair Kevin Warsh refused to give any forward guidance.

Futures markets are pricing in only a 12% chance of a rate hike next week, down from nearly 60% one month ago, according to data by the CME’s FedWatch Tool. This is likely to pose a heavy weight for US Dollar rallies.

Technical Analysis: Bulls face a cluster of resistances above 0.5800

XAG/USD holds gains at $57.74 at the time of writing, after bouncing from three-month lows sub-$56.00. Momentum indicators in the four-hour chart, however, show a neutral stance, with the Relative Strength Index (14) still below the key 50 level and the Moving Average Convergence Divergence (MACD) marginally positive at 0.18, which suggests that the pair would need additional support to break overhead resistance.

Friday's high, at the $58.00 area, is keeping upside attempts limited so far, while the October 8 low, at $58.50, and the descending trendline from mid-September highs, now at $59.05, are likely to pose additional challenges for bulls. A clear break above those levels would confirm a trend shift and set the focus on the October 13 high, net $60,70.

Downside attempts, on the contrary, are likely to find support at the session lows near $56.80, ahead of last week's lows around 55.40.

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

Silver FAQs

Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.

Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.

Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.

Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.

XAU/USDGold reached quite strong trend line resistance at 4185/4190 and made a high for the day halfway to the next trend line resistance of 4210/4220.

The shorts worked on the slide to the first target of 4170/4165, with a low for the pullback at 4156.

Despite the volatility and initial heavy decline from Monday to Wednesday, Gold only closed down $20 on Friday, from Sunday's open.

Which means we've still barely moved in this erratic, random sideways consolidation since the 29th of September.

While I am waiting for a breakout and hopefully the start of a trend (even if it's only short term) we are still finding profitable trades.

We also know when to stay out of the market and be patient, when there are no opportunities, like we did on Thursday.

I have a more negative bias at the start of this week and so a break below 4150 can target 4130, perhaps as far as 4110.

We could even see 4100 and I would not rule out a retest of last week's low and the October low at 4075 /4065.

We do have strong support at 4075/4065 and longs need to stop below 4055.

The only sell level I have for you today is at resistance of 4210/4220.

Razan Hilal, StoneX Media Market Analyst, explains how falling yields, a softer dollar and critical support zones shape the setup on both metals. Bearish divergence on the 10-year U.S. Treasury yield and a U.S. dollar index retreat from an eight-month resistance line support gold and silver as Federal Reserve hold expectations build.