EUR/AUD’s down trend resumed by breaking through 1.5951 last week. Initial bias stays on the downside this week for 100% projection of 1.6334 to 1.5951 from 1.6264 at 1.5881. Firm break there will target 161.8% projection at 1.5644. On the upside, above 1.6004 minor resistance will turn intraday bias neutral again first.
In the bigger picture, down trend from 1.8554 (2025 high) is in progress. Firm break of 1.5963 (2024 low). Should confirm that it’s already reversing whole up trend from 1.4281 (2022 low) and pave the way to this support. However, decisive break of 1.6264 resistance will indicate medium term bottoming, and bring stronger rebound back to 1.6842 resistance, even as a corrective bounce.
In the longer term picture, fall from 1.8554 is seen as the third leg of the pattern from 1.9799 (2020 high), which is part of the pattern from 2.1127 (2008 high). Deeper fall should be seen to 1.4281 and possibly below. This will now remain the favored case as long as 55 M EMA (now at 1.6523) holds.
ActionForex
ActionForex.com was set up back in 2004 with the aim to provide insightful analysis to forex traders, serving the trading community for two decades. We started providing only a daily and a mid-day report, now known as Action Insights. Gradually, we added a lot more in-house contents to the site. Technical Outlook section was expanded to cover more pairs. In addition to that, Top Movers, Heat Map, Pivot Point Charts and Pivot Meters, Action Bias and Volatility Charts, are tools used by traders from all over the world.
EUR/GBP’s decline continued last week and outlook is unchanged. Initial bias remains on the downside this week for 100% projection of 0.8728 to 0.8453 from 0.8611 at 0.8336. Firm break there will target 138.2% projection at 0.8231. On the upside, above 0.8393 minor resistance will turn intraday bias neutral and bring consolidations first, before staging another fall.
In the bigger picture, rise from 0.8221 (2024 low) should have completed at 0.8863, just ahead of 38.2% retracement of 0.9267 (2025 high) to 0.8221 at 0.8867. Deeper fall would be seen back to 0.8221. For now, outlook will be stay bearish as long as 0.8611 resistance hold.
In the long term picture, price action from 0.9499 (2020 high) is seen as part of the long term range pattern from 0.9799 (2008 high). Range trading should continue between 0.8201 and 0.9499, until there is clear signal of imminent breakout.
ActionForex
ActionForex.com was set up back in 2004 with the aim to provide insightful analysis to forex traders, serving the trading community for two decades. We started providing only a daily and a mid-day report, now known as Action Insights. Gradually, we added a lot more in-house contents to the site. Technical Outlook section was expanded to cover more pairs. In addition to that, Top Movers, Heat Map, Pivot Point Charts and Pivot Meters, Action Bias and Volatility Charts, are tools used by traders from all over the world.
EUR/JPY resumed by breaking through 176.19 last week. Initial bias stays on the downside this week with focus on 175.26/41 support zone. Strong rebound from there, followed by firm break of 177.95 resistance will indicate short term bottoming. However, sustained break of 175.26/41 will carry larger bearish implications. Next target is 100% projection of 186.00 to 177.82 from 181.53 at 173.35.
In the bigger picture, price action from 187.93 is seen as a corrective pattern to up trend from 154.77 (2025 low). Strong support should be seen from 175.41 cluster support (2025 high) and 38.2% retracement of 154.77 to 187.93 at 175.26 to contain downside. However, decisive break will raise the chance of larger bearish reversal and target 61.8% retracement at 167.43.
In the long term picture, as long as 175.41 resistance turned support holds, up trend from 94.11 (2021 low) is still expected to resume through 187.93 at a later stage. However, considering bearish divergence condition in M MACD, firm break of 175.41 will argue that a major top is already in place, and target 55 M EMA (now at 163.51).
ActionForex
ActionForex.com was set up back in 2004 with the aim to provide insightful analysis to forex traders, serving the trading community for two decades. We started providing only a daily and a mid-day report, now known as Action Insights. Gradually, we added a lot more in-house contents to the site. Technical Outlook section was expanded to cover more pairs. In addition to that, Top Movers, Heat Map, Pivot Point Charts and Pivot Meters, Action Bias and Volatility Charts, are tools used by traders from all over the world.
GBP/JPY po dosažení 211,96 minulý týden ustoupil. Průraz pod podporu na úrovni 208,34 by mohl prohloubit pokles k 206,10, zatímco překonání maxima 211,96 by obnovilo růst.
GBP/JPY rose to 211.96 last week but retreated since then. Initial bias remains neutral this week first. On the downside, break of 208.34 support will extend the larger decline through 206.85 to 206.10 key fibonacci level. On the upside, above 211.96 will resume the rebound from 206.85.
In the bigger picture, price action from 219.56 is seen as correcting the up trend from 184.35 (2025 low). Deeper fall could be seen to 38.2% retracement of 184.35 to 219.56 at 206.10. Strong support is expected from there to bring rebound. However, decisive break will raise the chance of larger trend reversal, and target 61.8% retracement at 197.80.
In the long term picture, up trend from 116.83 (2011 low) is in progress. Next target is 251.09 (2007 high). This will remain the favored case as long as 55 M EMA (now at 191.13) holds.
ActionForex
ActionForex.com was set up back in 2004 with the aim to provide insightful analysis to forex traders, serving the trading community for two decades. We started providing only a daily and a mid-day report, now known as Action Insights. Gradually, we added a lot more in-house contents to the site. Technical Outlook section was expanded to cover more pairs. In addition to that, Top Movers, Heat Map, Pivot Point Charts and Pivot Meters, Action Bias and Volatility Charts, are tools used by traders from all over the world.
USD/CHF’s fall from 0.8394 extended to 0.8190 last week but recovered. Initial bias is turned neutral this week first. Below 0.8190 will target 38.2% retracement of 0.7603 to 0.8394 at 0.8092. On the upside, above 0.8629 minor resistance will turn intraday bias back to the upside for stronger rebound.
In the bigger picture, rise from 0.7603 should at least be reversing the medium term trend. Focus is on 0.8332 support turned resistance (2023 low) for confirmation. Firm break there will target 61.8% retracement of 0.9200 (2025 high) to 0.7603 at 0.8590. For now, this will remain the favored case as long as 0.7948 support holds.
In the long term picture, price action from 0.7065 (2011 low) are seen as a corrective pattern to the multi-decade down trend from 1.8305 (2000 high). It’s uncertain if the fall from 1.0342 is the second leg of the pattern, or resumption of the downtrend. But in either case, outlook will stay bearish as long as 55 M EMA (now at 0.8571) holds.
ActionForex
ActionForex.com was set up back in 2004 with the aim to provide insightful analysis to forex traders, serving the trading community for two decades. We started providing only a daily and a mid-day report, now known as Action Insights. Gradually, we added a lot more in-house contents to the site. Technical Outlook section was expanded to cover more pairs. In addition to that, Top Movers, Heat Map, Pivot Point Charts and Pivot Meters, Action Bias and Volatility Charts, are tools used by traders from all over the world.
EUR/USD stayed in sideway consolidations last week and outlook is unchanged. Initial bias remains neutral this week first, and further decline is expected with 1.1276 resistance intact. . Below 1.1111 will extend larger fall from 1.2081 to 1.0904 fibonacci level. However, firm break of 1.1276 will indicate short term bottoming, and bring stronger rebound to 55 D EMA (now at 1.1373).
In the bigger picture, current development suggests that fall from 1.2081 medium term top could be reversing the rise from 1.0176 (2025 low), and probably even that from 0.9534 (2022 low). Deeper fall should be seen to 61.8% retracement of 1.0176 to 1.2081 at 1.0904 next. For now, risk will stay on the downside as long as 1.1710 resistance holds, in case of rebound.
In the long term picture, immediate focus is now on 55 M EMA (now at 1.1246). Sustained break there will argue that rise from 0.9534 (2022 low) has completed as a three wave corrective move at 1.2081, after rejection at 38.2% retracement of 1.6039 to 0.9534 at 1.2019, which is close to 1.2000 psychological level. That will keep the long term down trend from 1.6039 (2008 high) intact.
ActionForex
ActionForex.com was set up back in 2004 with the aim to provide insightful analysis to forex traders, serving the trading community for two decades. We started providing only a daily and a mid-day report, now known as Action Insights. Gradually, we added a lot more in-house contents to the site. Technical Outlook section was expanded to cover more pairs. In addition to that, Top Movers, Heat Map, Pivot Point Charts and Pivot Meters, Action Bias and Volatility Charts, are tools used by traders from all over the world.
Pár USD/JPY během posledních dvou obchodních seancí klesl téměř o 1 %; jen podporuje inflace v Japonsku ve výši 2,1 % a očekávání přísnější měnové politiky Bank of Japan.
As the trading week comes to an end, one of the most relevant developments in the FX market has been the renewed strength of the Japanese yen. This can be seen in the recent performance of USD/JPY, which has fallen nearly 1.0% over the last two trading sessions, highlighting a meaningful recovery in the Japanese currency against the U.S. dollar.
For now, the selling pressure observed around the pair is being driven primarily by the loss of momentum in U.S. Treasury yields. This has been reinforced by Japan's latest inflation data, released toward the end of the week, which has started to strengthen expectations of a potentially more aggressive Bank of Japan in the coming months. As a result, the yen has managed to recover part of the ground lost in previous months and, as long as these catalysts continue to support the Japanese currency, selling pressure around USD/JPY could remain relevant in the sessions ahead.
Is the Dollar Beginning to Lose Strength?
A loss of momentum around the U.S. dollar became increasingly evident throughout the week. Part of this dynamic has been driven by the moderation observed in 10-year U.S. Treasury yields, which temporarily moved below the 5.0% area.
This development is important because lower yields reduce part of the relative attractiveness of dollar-denominated investments. As a result, demand for the U.S. currency may also begin to soften in the short term.
The impact has already started to become visible in the behavior of the DXY, the index that measures the strength of the dollar against its main peers. In recent sessions, the index has retreated consistently, moving away from its yearly highs and currently trading near the 102-point area. This decline suggests that demand for the dollar has begun to moderate after several weeks of relatively solid strength, a dynamic that appears closely linked to the loss of momentum in the U.S. bond market.
Source: TradingEconomics
This behavior is particularly relevant because, as part of the relative advantage of holding dollar-denominated assets begins to fade, other currencies such as the yen have started to recover ground. In fact, the recent strength observed in the Japanese currency appears closely tied to this loss of relative attractiveness within U.S. financial markets.
As long as Treasury yields continue moving within a moderation phase, the yen could continue recovering part of the ground lost throughout much of 2026. Under this scenario, selling pressure around USD/JPY may remain an important factor influencing the pair in the short term.
Do Japan's Inflation Data Matter?
In addition to the weakness observed in the dollar, investors have also been paying close attention to Japan's latest inflation release. Annual inflation rose to 2.1%, reaching its highest level of 2026 and maintaining a relatively consistent upward trend over recent months.
This remains important because inflation is now developing slightly above the 2.0% target established by the Bank of Japan, a situation that could start generating greater concerns about inflationary pressures within the Japanese economy.
Source: TradingEconomics
The data have also started to influence monetary policy expectations. Only a few weeks ago, markets were pricing more than a 90% probability that the Bank of Japan would leave its policy rate unchanged at 1.25% during the October 28 meeting. However, by the end of the week that probability had fallen toward 80% area.
At the same time, expectations for the December meeting now imply close to a 60% probability that interest rates could rise to 1.50%.
Source: Centralbankwatch
This suggests markets are increasingly positioning for a more aggressive Bank of Japan over the coming months. Although Japanese rates remain relatively low compared to the current 4.0% reference rate in the United States, it is important to remember that Japan has maintained exceptionally low rates for decades.
For this reason, any gradual shift toward a more restrictive monetary policy stance could begin to alter investor perceptions regarding yen-denominated assets. If this process continues, the interest-rate differential between Japan and other major economies could gradually narrow, eventually becoming a meaningful catalyst for demand for the Japanese currency.
As a result, if the Bank of Japan continues moving toward a more aggressive stance than markets have been accustomed to over recent years, selling pressure around USD/JPY could remain an important theme even beyond the short term.
USD/JPY Technical Forecast
Source: StoneX, Tradingview
The bearish bias is becoming relevant once again: Although USD/JPY had recently entered a phase of short-term neutrality after partially breaking the bearish trendline developed over previous months, recent price action has once again given prominence to selling pressure. As a result, the broader bearish structure is regaining relevance within the daily chart. As long as price continues approaching key support zones, the long-standing bearish trendline could once again become the dominant technical structure during the weeks ahead.
MACD: The MACD histogram continues to trade slightly below the 0 neutral line, a reading that reflects weakening momentum within short-term moving averages. If this dynamic remains intact, it could continue supporting a more established bearish bias in the sessions ahead.
RSI: A similar picture can be observed in the RSI, whose line remains below the 50 neutral level. This suggests that selling momentum has started to regain traction and supports the possibility that the bearish bias could remain relevant in the short term.
Key Levels:
158.86 – Key Resistance: A level that aligns with the 200-period simple moving average and represents the most important upside barrier in the short term. A sustained move above this reference could significantly alter the current technical structure and open the door to a more consistent bullish trend over the coming weeks.
157.38 – Near-Term Barrier: A level that coincides with the base of the recent consolidation range and also develops near the 50-period simple moving average. This could become the main level to monitor in the event of short-term bullish corrections.
155.30 – Key Support: A support zone established during previous weeks that remains one of the most important downside barriers on the chart. Price action returning toward this level could restore the dominance of selling pressure and reinforce the relevance of the broader bearish trendline as the market's primary technical structure over the coming weeks.
Written by Julian Pineda, CFA, CMT – Market Analyst
EUR/USD za poslední měsíc klesl o 1,45 %, přesto jsou spekulativní krátké pozice v EUR na nejmedvědnějších úrovních za pětileté referenční období. Případný odraz k 1,1260 však může být jen krátkodobý.
The single currency alternated gains and losses against the US Dollar (USD) this week, prompting EUR/USD to stabilise around the 1.1200 neighbourhood on Friday, while remaining unable to sustain its earlier bull run toward the 1.1260 zone. On the monthly chart, the second drop in a row appears almost unavoidable.
Furthermore, spot has given away around six big figures since its peak past 1.1700 in the summer, coming under increasing selling pressure since then in tandem with the strong bounce in the Greenback.
On the latter, the US Dollar has traded on the back foot this week, as the ongoing bullish move appears to have taken a breather alongside alternating moods regarding developments from the Middle East crisis.
Next week could be critical for the pair in light of both the European Central Bank (ECB) and Federal Reserve (Fed) meetings, where both central banks are expected to keep a steady hand this month.
No news is hardly good newsGeopolitical tensions remain stubbornly elevated. The familiar US-Iran standoff over the Strait of Hormuz shows little sign of resolution, while the ongoing Russia-Ukraine conflict adds another layer of uncertainty, keeping risk aversion alive and safe-haven demand supported.
Energy prices put the ECB back on the defensiveThe geopolitical fallout is increasingly visible in energy markets. Crude Oil prices continue to climb, European fuel costs are rising, and gas price forecasts face repeated upward revisions. For the energy-dependent Eurozone, this represents more than another squeeze on household budgets: it threatens to turn an external price shock into a more persistent inflation problem.
That is precisely where the European Central Bank faces its biggest challenge. Policymakers can look through a temporary jump in energy prices, but not if higher costs spread into wages, services and inflation expectations. With growth already vulnerable to expensive energy imports, the ECB risks having to tighten policy into a weakening economy simply to prevent inflation from becoming entrenched. The longer the energy shock persists, the stronger the case for additional tightening becomes. Markets are already pricing in around 18 basis points of further rate hikes by year-end.
Now, about inflation…According to Friday’s ECB survey, Eurozone consumers’ inflation expectations rose slightly over the 12-month horizon in September, while longer-term expectations remained unchanged. The survey points to persistent upside risks for the ECB, although it does not yet suggest a fresh deterioration in medium-term expectations.
Inflation expectations for the next year increased to 3.1% from 3.0% in August. Expectations three years ahead held at 2.9%, while the five-year measure remained unchanged at 2.5%.
The latest survey is mildly hawkish for monetary policy.
Near-term expectations remain elevated and above the bank’s 2% target, but the stability of the three- and five-year measures suggests that longer-term expectations have not materially de-anchored. The ECB will nevertheless remain alert to the risk that persistent energy and supply pressures may begin to influence broader price-setting behaviour.
Crowded shorts meet a surprising options divergenceEUR bearish positioning intensified in the week ending October 13, according to Commodity Futures Trading Commission (CFTC) data.
That said, non-commercial net shorts increased to around 137.6K contracts, while the weekly change deteriorated to -38,241 contracts from -36,076. The four-week change tumbled to around -110.6K contracts, confirming that bearish speculative positioning continues to deepen.
Also, open interest rose to around 874.6K contracts. The deeper net shorts, combined with a slightly higher participation, suggest a continued bearish positioning, though the modest increase in open interest implies the latest move was not accompanied by a significant expansion in overall market activity.
The speculative exposure plummeted to -15.73% (previously -11.41%), and its percentile dropped to 0 (from 0.7). The Net Position Percentile also remained at 0. Both measures are now at the most bearish levels in the five-year reference period, showing that EUR positioning is historically extreme both in absolute terms and relative to open interest.
However, the options market presents a contrasting picture. The one-month 25-delta Risk Reversal was -0.531 volatility points on October 22, implying that EUR puts are still priced higher than equivalent calls. But the reading is at the 30.7th percentile of its five-year distribution, indicating that the downside skew is quite moderate compared with the extremely bearish positioning in futures markets.
More importantly, option pricing has now become decidedly less bearish compared to EUR/USD spot performance. The pair has dropped 1.45% over the last month, but Risk Reversals were higher by 0.114 volatility points. Historically, a decline of such magnitude would have implied a deterioration of about 0.223 volatility points based on their history.
Instead, the positive deviation of 0.337 volatility points is at the 89.5th percentile of the out-of-sample distribution. This implies that options have repriced the EUR much more positively than spot moves would imply in isolation, creating a large divergence between speculative futures positioning and options sentiment.
That said, the latest weekly Risk Reversal change of -0.082 volatility points suggests that some demand on the downside has returned, meaning the improvement in options sentiment is not yet firmly established across all time horizons.
Overall, the positioning on the EUR remains decisively bearish, but the divergence between futures and options is something to watch. Speculative shorts are exceptionally extended, while options markets are displaying considerably less downside concern than the EUR’s recent weakness would normally suggest. This combination raises the risk of a short-covering rebound if bearish momentum begins to fade, although the continued deterioration in weekly futures positioning means that a sustained reversal remains unconfirmed.
What’s in store for EUR/USD?The coming week may be key for EUR/USD: preliminary inflation figures from Germany and the Euroland will provide fresh clues on whether the recent energy-induced price pressures are beginning to feed through to inflation expectations.
In addition, the ECB is widely anticipated to leave its policy rates unchanged at its meeting on Thursday, while the usual press conference by President Christine Lagarde is expected to highlight persistent energy-driven inflation.
Across the Atlantic, the focus will be on the FOMC gathering on Wednesday, with the Federal Reserve (Fed) also seen leaving its Fed Funds Target Range (FFTR) at 3.75%-4.00%. Data-wise, investors are also expected to keep their focus on inflation measured by the Personal Consumption Expenditure (PCE) and another estimate of the Q3 GDP Growth Rate.
Too bearish to fall, too weak to rally?While the Euro may be near a level where selling is becoming more difficult, that doesn’t necessarily mean the overall bearish trend is losing momentum. The pair stays close to 1.1200 after giving up some six big figures from summer highs. The short-term outlook is fragile, with the Greenback holding a bid amid relatively solid US fundamentals, higher Treasury yields and ongoing geopolitical uncertainty.
Still, positioning suggests the next move may not be entirely smooth. Speculative EUR shorts are at 5-year extremes, and options markets are showing much less conviction in the bearish theme than the recent decline in spot would imply. That divergence makes spot more and more susceptible to a short-covering rally if next week's Fed meeting turns out to be less hawkish than what investors are currently expecting.
However, a recovery driven primarily by position adjustment would hardly qualify as a genuine change in trend. The Eurozone remains particularly exposed to elevated energy prices, and while those pressures could keep the ECB leaning towards further tightening, they also threaten to undermine growth. That uncomfortable combination limits the extent to which a hawkish ECB can provide lasting support for the single currency.
Looking beyond next week's central bank meetings, the balance of risks therefore remains tilted to the downside. A sustained recovery would likely require a meaningful retreat in US yields, a broader improvement in risk appetite and convincing evidence that the Fed's tightening cycle is approaching its end. Without those catalysts, any rebound towards the 1.1260 area could struggle to attract sustained buying interest, leaving the 1.1000 psychological threshold as a plausible medium-term destination.
For now, the Euro may be due for a bounce, but the burden of proof remains firmly on the bulls.
Inflation FAQs
Inflation measures the rise in the price of a representative basket of goods and services. Headline inflation is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core inflation excludes more volatile elements such as food and fuel which can fluctuate because of geopolitical and seasonal factors. Core inflation is the figure economists focus on and is the level targeted by central banks, which are mandated to keep inflation at a manageable level, usually around 2%.
The Consumer Price Index (CPI) measures the change in prices of a basket of goods and services over a period of time. It is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core CPI is the figure targeted by central banks as it excludes volatile food and fuel inputs. When Core CPI rises above 2% it usually results in higher interest rates and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually results in a stronger currency. The opposite is true when inflation falls.
Although it may seem counter-intuitive, high inflation in a country pushes up the value of its currency and vice versa for lower inflation. This is because the central bank will normally raise interest rates to combat the higher inflation, which attract more global capital inflows from investors looking for a lucrative place to park their money.
Formerly, Gold was the asset investors turned to in times of high inflation because it preserved its value, and whilst investors will often still buy Gold for its safe-haven properties in times of extreme market turmoil, this is not the case most of the time. This is because when inflation is high, central banks will put up interest rates to combat it.
Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold vis-a-vis an interest-bearing asset or placing the money in a cash deposit account. On the flipside, lower inflation tends to be positive for Gold as it brings interest rates down, making the bright metal a more viable investment alternative.
British Pound falters near 1.3400 as US business strength lifts DollarThe Pound Sterling retreats by some 0.16% versus the US Dollar on Friday as US business activity expands, while consumer sentiment worsens, with households complaining about high prices. The GBP/USD trades at 1.3366.
Tensions in the Middle East remain high. US President Trump said that “we could end the war with Iran very quickly”, adding that “do we want to finish it or let it within is the question.” He reassured that the US controls the Strait of Hormuz. Read more...
British Pound: BoE tightening expectations questioned – BBHElias Haddad at Brown Brothers Harriman notes GBP/USD is weaker on broad Dollar strength, even as UK PMI beats and supports expectations for a 25 bps BOE hike to 4.00% in November. He argues the swaps market is overpricing future tightening, citing below-capacity growth, weak real wages, a near-neutral policy rate and likely fiscal restraint as headwinds for the Pound.
"GBP/USD is down on broad USD strength while EUR/GBP dropped to its lowest level since May 2025. UK October PMI beat expectations, cementing bets on a 25bps BOE policy rate hike to 4.00% on November 5." Read more...
British Pound underperforms despite upbeat UK flash PMI reportThe British Pound (GBP) is down against its major currency peers on Friday, trading 0.1% lower at around 1.3380 against the US Dollar (USD) during the European trade. The British currency faces pressure even as United Kingdom (UK) flash S&P Global Purchasing Managers’ Index (PMI) data for October has come in surprisingly stronger.
The PMI report showed that the overall business activity remained robust due to a significant growth in both manufacturing and the service sector output. The Composite PMI arrives at 53.1, significantly higher than final reading of 52.0 in September. The data was expected to come in lower at 51.8. Read more...
AUD/USD tento týden po odrazu od klíčového supportu vzrostl z říjnových minim o více než 2 %. Pro pokračování oživení je nutné týdenní uzavření nad 0,7025.
Australian Technical Forecast: AUD/USD Weekly Trade Levels AUD/USD has rebounded more than 2% from the October lows after defending major support at the lower boundary of a multi-month consolidation pattern. The breakout above the October opening range shifts the near-term focus higher with weekly momentum now approaching a critical threshold The advance is testing initial Fibonacci resistance, with a weekly close above this barrier needed to reinforce the case for a more significant low. Australian CPI and the Federal Reserve rate decision headline next week's event risk, with month-end positioning adding to volatility risks. Resistance 7025, 7107/16, 7208/14 (key) - Support 6938/48, 6876 (key), 6717/57 The Australian Dollar has mounted a sharp recovery from critical technical support, with the latest advance marking a meaningful shift in the near-term outlook. AUD/USD is now challenging an important Fibonacci threshold as weekly momentum approaches a potential bullish shift, raising the stakes for today's close. The broader consolidation remains intact, however, and buyers still have work to do before a more sustained advance can be confirmed. Attention now shifts to next week's Australian inflation report and Federal Reserve rate decision, with the reaction in interest-rate expectations likely to play a key role in shaping price action into month-end. Battle lines drawn on the AUD/USD weekly technical chart.
Review my latest Weekly Strategy Webinar for an in-depth breakdown of this Aussie setup and more. Join live on Monday’s at 8:30am EST.
Australian Dollar Price Chart – AUD/USD Weekly
Chart Prepared by Michael Boutros, Sr. Technical Strategist; AUD/USD on TradingView
Technical Outlook: In last month’s Australian Dollar Forecast we noted that, AUD/USD was approaching key support and that, “From a trading standpoint, look to reduce portions of short-exposure / lower protective stops on a stretch towards 6945- rallies would need be limited to 7116 IF Aussie is heading for a break lower with a close below 6876 needed to fuel the next major leg of the decline.” Price registered an intraweek low at 6894 two-weeks later before rebounding with a breakout of the October opening range extending more than 2% off the monthly lows this week.
The bulls are attempting to mount resistance today at the 38.2% retracement of the September decline at 7025. Note that weekly RSI is attempting to breach the 50-level. A weekly close above this threshold, alongside a break of Fibonacci resistance, would strengthen the case for a more significant near-term low and keep the bulls in control heading into next week. Watch today’s close.
Subsequent topside objectives are eyed at the 61.8% retracement and the February high close at 7107/16 with key resistance steady at 7208/14. This region is defined by the 61.8% retracement of broader the 2021 decline and the 100% extension of the 2025 rally and converges on the upper bounds of the March consolidation pattern over the next few weeks. Strength surpassing this slope would expose the 2026 & 2019 yearly highs at 7278/95.
Weekly support rests with the June low week close (LWC) which converges on the 52-week moving average near 6938/48. Ultimately, the bears would need to break below the March close low at the 6876 to validate a breakout of this massive consolidation structure with the next major technical consideration seen at the 2025 close high and the 38.2% retracement of the 2025 advance at 6717/57.
Bottom line: AUD/USD has rebounded off confluent support near the lower bounds of a multi-month consolidation pattern. From a trading standpoint, losses would need to be limited to 6938 IF price is heading higher on this stretch with a close above 7025 needed to keep the immediate recovery viable heading into the close of the month.
AUD/USD event risk intensifies next week with Australia’s quarterly CPI release and the Federal Reserve decision both due Wednesday. Markets have already lifted expectations for an RBA hike at the November meeting after Deputy Governor Andrew Hauser warned that the inflation outlook had deteriorated, making the CPI report particularly important for the Australian dollar. U.S. GDP and PCE inflation follow Thursday, while month-end positioning and the monthly close on Friday could amplify volatility if the data trigger a broader shift in rate expectations. Stay nimble into the releases and watch the weekly / monthly closes for guidance. Review my latest Australian Dollar Short-term Outlook for a closer look at the near-term AUD/USD technical trade levels.
Australia / US Economic Calendar
Economic Calendar - latest economic developments and upcoming event risk.
Active Weekly Technical Charts British Pound (GBP/USD) Euro (EUR/USD) Swiss Franc (USD/CHF) Gold (XAU/USD) US Dollar Index (DXY) Canadian Dollar (USD/CAD) S&P 500, Nasdaq, Dow Japanese Yen (USD/JPY) Bitcoin (BTC/USD) --- Written by Michael Boutros, Senior Technical Strategist
The aggressive reversal has taken USD/CAD much lower than we initially expected, but we have to respect the price action. On the daily chart, the market is turning lower from the 61.8% Fibonacci retracement level. However, the current decline could still unfold as another three-wave move from the recent high, potentially representing wave B within a seven-swing recovery. This means the higher-degree recovery from the February lows may not be complete yet.
USDCAD Daily ChartIn the short term, the strong decline on the 4-hour chart suggests that more weakness could follow towards the lower boundary of the bullish channel visible on the daily chart. We could still see some corrective rallies, ideally towards the 1.4150 resistance area, before another sell-off. However, if the current decline is unfolding in only three waves, USD/CAD could be approaching important support around 1.4000, where a reversal higher may eventually follow.
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USD/CAD se pohyboval poblíž 1,40, zatímco trh do zasedání BoC 28. října započítával zvýšení sazeb o 21 bazických bodů. CIBC však varuje, že slabá poptávka může brzdit promítání výrobních cen do inflace.
Canadian Dollar Forecast: Producer Prices Test October Rate Expectations
The Canadian Dollar's rally faces a test as CIBC questions how far factory-price increases will reach consumers, despite rising Bank of Canada hike risk.
The US Dollar to Canadian Dollar exchange rate was trading at 1.4017 on Friday, close to the 1.40 level after a week of gains for the Canadian currency.
Higher expectations for Canadian interest rates have helped that advance, but CIBC questions whether the producer-price shock warrants the policy response investors increasingly anticipate.
Its mechanical inflation model points to 3.2% CPI inflation in the first quarter of 2027, above its 2.9% house forecast.
The bank has not adopted that model result as its new baseline, even as it acknowledges a growing chance of an October rate rise.
A fresh producer-price increase sharpens the debate
Statistics Canada's September release put annual industrial product inflation at 14.5%, with prices rising 2.0% on the month.
Yet excluding energy and petroleum products, the monthly increase was a much smaller 0.3%.
Economists Helen Lao and Avery Shenfeld find that most of the consumer basket has little statistical connection with producer prices:
"But we find that only a third of the weight of the CPI basket, mainly in energy, food and some household goods as well as some services components such as homeowners' replacement cost and restaurants, show a statistically significant link to producer prices."
Energy can move both measures at the same time, which makes the relationship less useful as an early warning of future inflation.
CIBC cautions: "We don't, of course have the PPI data from here to the end of the year, and energy futures markets are dealing with considerable uncertainty over the prospects for a resolution of the Persian Gulf situation."
The analysis used August producer-price data, so the subsequent September release does not constitute an update to CIBC's model or forecasts.
Weak demand could limit the pass-through to shoppers
CIBC says: "This supply-side approach also could miss much of the downside pressure on inflation coming from the demand side of the Canadian economy."
"Canada has much less labour market tightness, and slower wage growth, than was the case when the Russia-Ukraine war led to an IPPI increase centered on energy and grains. The correlations from that period could therefore overstate the ability of the business sector to pass on cost increases in the current environment."
The bank's house forecast also allows for some easing in energy-supply disruption, an assumption that could lower inflation without requiring an immediate Canadian rate rise.
Lao and Shenfeld argue that the BoC still has time to assess the interaction between oil supply and US trade tensions:
"If a deal to resolve trade tensions is forthcoming, and no resolution is reached on oil supply issues, hiking in December, or even in January, would not represent a significant delay. But if oil prices abate and trade tensions escalate, hiking now would be a step that the central bank would likely regret."
That caution differs from Goldman's decision to bring its expected BoC hike forward to October, following the business and consumer surveys.
CIBC says the BoC's forthcoming Prima forecasting model emphasises firms' pricing decisions and cost pressures, potentially helping to explain Governor Tiff Macklem's greater concern:
"As a result, we see rising odds of a rate hike this month, even with recent core CPI and employment data leaning the other way, based on the impression that the Governor's remarks last weekend were designed to have markets pricing in that outcome."
How much rate support is already in the Canadian Dollar?
Scotiabank's Thursday assessment linked Canadian Dollar strength to a narrowing gap between US and Canadian yields, with markets then pricing 21 basis points of tightening at the 28 October meeting.
That was already close to a full quarter-point rise.
Spectra Markets' Brent Donnelly had warned earlier in the week that the rapid shift towards tighter policy could leave expectations too aggressive, particularly with headline and underlying inflation giving different signals.
Scotiabank's short-term technical view remained bearish for USD/CAD, meaning favourable for the Canadian Dollar, but identified potential congestion around 1.40.
Its strategists wrote: "We look to a near-term range bound between 1.3980 and 1.4080."
Those boundaries describe a technical trading range, not a year-end forecast.
What This Means for USD/CAD
A quarter-point BoC hike alone may offer limited fresh support if investors have already anticipated most of it. A stronger case for further increases could help USD/CAD break below the lower end of Scotiabank's range.
CIBC's doubts become more consequential if policymakers emphasise subdued underlying inflation and weak demand. A hold, or a hike accompanied by cautious guidance, could prompt investors to reassess the interest-rate support behind the Canadian Dollar's recovery.
Investors will need to judge whether the BoC expects the producer-price shock to spread, and how convincing that assessment is when much of the consumer basket follows other influences.
USD to TRY Forecast: ING Targets 51.50 at End-2026 After Turkey Cuts Rates Foreign exchange analysts at ING expect the Turkish Lira to weaken against the US Dollar, but see demand for its high yields surviving Turkey's renewed interest-rate cuts. Turkey's central bank cut its policy rate by 100 basis points to 36% on Thursday, matching ING's pre-decision call.
The US Dollar to Lira exchange rate was trading at 49.7372 on Friday, compared with ING's forecast of 51.50 at end-2026.
That implies roughly a 3.5% rise in USD/TRY, or a 3.4% decline in the Lira's Dollar value.
ING had linked its forecast to easing price pressures: "Inflation sentiment has improved after benign September data and expectations of weaker demand. We expect 100bp cuts in October and December, taking the policy rate to 35% by year-end, versus our 29.0% inflation forecast for year-end."
High interest income can coexist with a weaker Lira Frantisek Taborsky, ING's EMEA FX and fixed-income strategist, expects demand for Lira investments to survive the narrowing interest-rate advantage:
"Although crowded long TRY positions offer less and less carry, they remain popular in emerging markets, and we expect this demand to persist in the coming months despite renewed rate cuts."
"The recent weekly adjustment in USD/TRY does not alter the overall FX setup, and the carry trade continues. We expect a level of 51.50 USD/TRY by the end of the year."
Investors in a carry trade seek to earn more in interest than they lose through currency depreciation and funding costs.
Their willingness to hold Lira assets therefore need not imply an expectation that the exchange rate itself will strengthen.
A gradual decline was also central to MUFG's earlier assessment of the Lira's vulnerability to energy costs and weaker reserves, although ING places greater emphasis here on the durability of investment demand.
The fund shock creates room for cuts, but also risk Turkey's investment-fund disruption complicates the outlook: damage to household wealth and confidence can restrain spending and inflation, while financial losses could spread between institutions.
Taborsky's assessment before the decision was that the authorities had prevented the initial shock from becoming a wider flight from the currency:
"The authorities' swift response appears to have contained the fund shock, with no signs of systemic risk or a sharp rise in dollarisation, while foreign inflows have resumed."
Taborsky adds: "However, it may further weaken domestic demand through tighter liquidity, wealth losses and lower confidence. Repayments to smaller investors could cushion consumption, but counterparty exposures remain the main spillover risk."
Here, counterparty exposure means the possibility that trouble at one institution creates losses for others with financial claims on it.
The central bank's decision acknowledged weak domestic demand and slowing underlying inflation, while warning that elevated energy prices remained an upside risk.
It also retained the option of additional measures if unexpected developments in credit and deposit markets impaired the transmission of monetary policy.
What This Means for USD/TRY ING's 51.50 forecast allows for further depreciation while investors continue to earn interest on Lira holdings. Faster cuts or renewed financial stress could upset that balance by reducing the return investors receive for accepting currency risk.
The next decision is 10 December. ING's remaining 100-basis-point cut depends on inflation giving policymakers room to proceed; Thursday's reduction does not commit them to that outcome.
The central bank expressly retained the option to reverse course: "In case of a significant and persistent deterioration in the inflation outlook, monetary policy stance will be tightened."
EUR/USD krátce klesl pod 1,12, protože sentiment vůči euru zhoršilo rozšíření spreadů francouzských CDS. Spotřebitelská důvěra v eurozóně v říjnu klesla na −17,9, nejnižší úroveň od května.
Danske Bank highlights weaker Euro sentiment amid rising French CDS spreads, with EUR/CHF declining and EUR/USD briefly falling below 1.12. US and German bond yields also dropped across the curve, while Eurozone consumer confidence weakened more than expected in October. Attention turns to the upcoming flash PMIs, with the composite index expected to ease to 52.7 from 53.1, signalling continued moderate economic growth.
Bearish Euro and softer Treasury yields"EUR/CHF also dropped as the bearish EUR sentiment grew together with a new rise in the French CDS. EUR/USD also briefly fell below 1.12. Yields dropped across the curve both in US and Germany. Notably, the 10Y US Treasury yield fell below 5% for the first time in a month."
"In the euro area, consumer confidence fell more than expected in October to -17.9 (cons: -17.0, prior: -16.8), which is the lowest level since May."
"Weak confidence should weigh on consumption in the fourth quarter of the year. However, we saw decent consumption growth in Q2 despite plunging confidence, so the indicator is not the most reliable for spending at the moment. "
"In the euro area, the flash PMIs for October are released, which are set to be important for markets. Following a positive trend in the latest months, the PMIs are expected to show stabilisation with small declines. "
"The composite PMI is expected to fall to 52.7 from 53.1 which is still a strong level that indicates moderate growth in the economy, despite a small decline. We pay particular attention to the price components, which started to rise again last month due to higher energy prices."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
United Overseas Bank strategists (UOB) Quek Ser Leang and Lee Sue Ann report that EUR/USD outperformed modestly as the US Dollar (USD) softened, but price action remains choppy and largely directionless. In the near term, they expect intraday ranges around 1.1185–1.1250, while over the next 1–3 weeks the Euro (EUR) is seen consolidating in a narrower 1.1170–1.1270 band, with a corrective recovery potentially extending above the 21-day EMA.
Euro seen consolidating in tighter band"24-HOUR VIEW: Following Wednesday’s price action, we highlighted yesterday that “momentum indicators are mostly flat and today,” and we expected EUR “to range-trade between 1.1210 and 1.1250.” EUR subsequently rose to 1.1256, declined to 1.1188 and then rebounded to close at 1.1214 (-0.16%). We are not able to derive much from the price action. Today, EUR could trade between 1.1185 and 1.1250."
"1-3 WEEKS VIEW: We have been expecting EUR to trade in a range since late last week. Yesterday (22 Oct, spot at 1.1230), we stated that “the price movements since then still appear to be part of a range-trading phase, but a narrower 1.1170/1.1270 range is likely sufficient to contain EUR for now.” We continue to hold the same view."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
GBP/NZD ve čtvrtek rostl poté, co inflace na Novém Zélandu ve třetím čtvrtletí zpomalila ze 4,1 % na 3,7 %, tedy pod tržní očekávání ve výši 3,8 %, což oslabilo sázky na zvýšení úrokových sazeb ze strany RBNZ.
The Pound-New Zealand Dollar could remain supported if weak UK data is limited, while softer New Zealand inflation may keep RBNZ hike bets under pressure.
The Pound New Zealand Dollar (GBP/NZD) exchange rate rose on Thursday as softer New Zealand inflation dented the ‘Kiwi’.
At the time of writing, GBP/NZD traded at NZ$2.3560, up 0.3% on the day.
Latest — Exchange Rates:
Pound to New Zealand Dollar (GBP/NZD): 2.356379 (+0.34%)
Euro to New Zealand Dollar (EUR/NZD): 1.974324 (+0.24%)
New Zealand Dollar to Dollar (NZD/USD): 0.567929 (-0.43%)
DAILY RECAP:
The New Zealand Dollar (NZD) fell during Thursday’s Asian trading session as markets digested the latest New Zealand inflation figures.
Price pressures cooled more than forecast in the third quarter. Inflation eased from 4.1% to 3.7%, below market expectations for 3.8%.
The data dampened bets that the Reserve Bank of New Zealand (RBNZ) would raise interest rates at its policy decision next week, which put pressure on the ‘Kiwi’.
Additionally, a souring market mood dented demand for the risk-sensitive New Zealand Dollar.
Meanwhile, the Pound (GBP) attracted limited support on Thursday, with Sterling seemingly enjoying the afterglow of high-impact data published earlier in the week.
Tuesday’s jobs report showed an unexpected decline in unemployment, while Wednesday’s consumer price index revealed a sharper-than-forecast rise in inflation.
Taken together, these releases fuelled bets that the Bank of England (BoE) could shift to a more hawkish approach to monetary policy over the coming months, which continued providing the Pound with support into Thursday’s session.
Near-Term GBP/NZD Forecast: Downbeat UK Data to Dent Sterling?
Looking ahead, Sterling could face headwinds through the final session of the week as markets react to new economic data.
The UK’s latest retail sales figures are forecast to show a 0.1% contraction in sales growth in September, which could raise concerns about the country’s economic resilience.
Later in the morning, the preliminary PMI results for October are expected to show that activity in the UK services and manufacturing sectors slowed. This could increase pressure on the Pound.
Elsewhere, market risk appetite may impact GBP/NZD. If a risk-off mood prevails, the risk-sensitive New Zealand Dollar may face resistance.
Exchange Rates UK Research
Our currency coverage draws on live market data, official economic releases and published bank research.
EUR/USD Forecast: October ECB Pause Expected Before Further Hikes MUFG expects the Euro to recover against the US Dollar next year, but its French fiscal scenarios underline the risks before the ECB's October meeting. The Euro-to-Dollar exchange rate slipped to $1.1215 on Thursday, down 0.17%, leaving it close to MUFG's end-2026 projection.
The bank retains its forecast of 1.12 for the final quarter of this year, followed by a gradual recovery to 1.18 by September 2027.
That would put the Euro roughly 5.2% above Thursday's level, calculated by Exchange Rates UK.
But MUFG's assessment of France is less reassuring than that medium-term path might suggest.
Its most likely French fiscal scenario places EUR/USD in a lower range, making budget delivery an important test of the recovery outlook ahead of the ECB's 29 October decision.
Image: EUR/USD 5-day chart France's budget problem extends beyond passing legislation MUFG assigns a 45% probability to continued fiscal drift as France approaches its presidential election.
In that scenario, MUFG envisages EUR/USD at 1.08-1.14, while the extra yield investors demand to hold French rather than German ten-year government debt widens to around 170 basis points.
These are conditional market outcomes, separate from the bank's retained quarterly forecasts, rather than a replacement September target.
MUFG's economists and strategists write: "The government may force through some measures, offering temporary relief, but the bigger question is whether upcoming elections can clear the path for sustained fiscal repair."
Their scenario describes how that risk could unfold:
"As the presidential election approaches, political incentives increasingly outweigh fiscal considerations. The government is forced to make concessions and relies on procedural mechanisms to advance key legislation, while some measures are diluted or delayed."
"The government survives, but implementation falls short of ambition and markets become increasingly sceptical. The deficit remains elevated at 5.6-6.0% of GDP."
French bond tensions were already limiting the Euro's ability to benefit from a weaker Dollar earlier this week, when Scotiabank highlighted weak momentum despite an improving weekly chart.
MUFG nevertheless judges contagion across Eurozone bond markets to be relatively contained so far.
Its concern is the damage that persistent French borrowing pressure could do to confidence and financial conditions, rather than an assumption that a wider crisis has already begun.
Higher bond yields complicate the ECB's inflation response Rising borrowing costs can restrain demand before the ECB raises its own policy rate, reducing the need for immediate tightening.
For the Euro, that can mean less support from expected interest rates even while French government yields climb.
MUFG says: "The bond sell off and French fiscal risks have taken an October rate hike off the table, with ECB officials starting to highlight the impact of tighter financial conditions on the outlook. Underlying inflation pressures also remain contained."
The bank still expects quarter-point increases in December and the first quarter of 2027.
MUFG says: "However, resilient activity and higher gas prices since September still support a degree of tightening into slightly restrictive territory, on a risk-management basis."
Eurostat's final September figures put annual inflation at 3.8%, up from 3.2% in August, with energy making the largest contribution.
Crédit Agricole separately expects an October pause, followed by a deposit rate of 2.75% in December and 3.00% in March 2027.
Louis Harreau, its head of developed markets macro and strategy, argues against accelerating the pace:
"Several ECB members have highlighted the need to be gradual in the monetary tightening. Besides, changing the pace of hikes (one per quarter since June) could convey a sense of urgency and trigger a market overreaction."
He also expects the ECB to avoid promising those subsequent increases, leaving investors to judge the outlook from incoming data and Christine Lagarde's comments.
France could make that press conference particularly sensitive.
Harreau says: "In our view, the key risk for the ECB is to trigger worries regarding the ECB's ability (or willingness) to step in."
"Currently, the ambiguity of a possible intervention is probably beneficial to limit extreme volatility on the market. If the ECB is too clear about the terms of its interventions or if, in contrast, it commits too explicitly about a potential intervention, it could trigger unwarranted market volatility."
What This Means for EUR/USD MUFG's 1.18 projection points to a recovery over several quarters, with little change envisaged before end-2026. An October pause would fit both banks' expectations and would not, by itself, overturn that outlook.
The more immediate risk is a loss of confidence in French fiscal delivery that keeps borrowing costs elevated and encourages investors to scale back expected ECB tightening.
On 29 October, reassurance about the bond market alongside a continued willingness to tackle inflation could help the Euro. A recovery will be harder to sustain if investors doubt either France's ability to deliver its budget or the ECB's capacity to contain the resulting financial strains.
Indian Rupee Forecast: Crédit Agricole Retains 92 Outlook for September 2027
The Indian Rupee slips against the US Dollar, while Crédit Agricole retains a 2027 recovery view that needs more than higher domestic interest rates.
The US Dollar-to-Indian Rupee exchange rate climbed 0.41% to 94.6994 on Thursday, reversing most of Wednesday's decline as the Rupee's recent recovery faltered.
Crédit Agricole retains a forecast of further weakness before the end of the year, with USD/INR at 96 in December 2026.
It then expects a Rupee recovery to 92 by September 2027, with that level maintained at the end of next year.
That would mean the Rupee gaining 2.9% against the Dollar from Thursday's rate, by our calculation.
Higher Indian rates are already part of the forecast
Crédit Agricole expects the RBI's repo rate to reach 5.75% at end-2026 and 6% by March 2027, remaining there through the rest of next year.
That represents two further quarter-point increases from the current 5.50%.
In an earlier assessment following October's RBI decision, senior FX strategist David Forrester wrote:
"We expect another two 25bp rate hikes by RBI, taking the Repurchase rate to 6.00% and modestly into restrictive territory. This outlook is about in line with the market pricing following the RBI meeting outcome and so would not move the INR much if realised."
The newly published RBI minutes reveal differing views on sustained tightening, despite unanimous support for this month's increase.
Governor Sanjay Malhotra left subsequent action dependent on growth and inflation, while external member Ram Singh resisted a shift away from a neutral stance.
"I do not favour shifting the stance from neutral to tightening mode, as it may signal an extended cycle of rate hikes," Singh said, according to the Financial Express.
Official figures show September inflation accelerated to 5.54% from 4.83% in August.
The recovery case also depends on conditions abroad
Crédit Agricole's earlier India analysis, published before the latest US inflation figures, explained why domestic policy alone might struggle to deliver a lasting recovery.
Forrester wrote:
"The INR's problems are primarily structural rather than speculative and include rising oil prices, Fed rate hikes and the sharp sell-off in USTs eroding Indian government bonds' rate advantage and investor portfolio outflows as foreign investors remain bearish on Indian equity markets, despite 7-8% real GDP growth."
Higher Indian rates can improve the income available on Rupee assets, but that advantage diminishes if US yields rise too.
The RBI's measures can ease immediate Dollar demand without removing the wider pressures on the Rupee.
The bank's latest assessment acknowledges that stronger US inflation has made the Federal Reserve decision harder to call:
"we still lean towards a skip in October followed by a hike in December, though the upside surprise in September inflation data makes this a closer call".
Further US tightening could prolong the pressure on India's relative yields that Forrester identified.
Lower oil costs would reduce India's import bill and demand for Dollars.
Forrester's earlier assessment said: "Our oil analyst forecasts Brent to average USD95/bl in the coming six months as the US and Iran continue their "cold war" via economic blockades. Such an outcome would be modestly positive for the INR."
Forrester added: "We will be reassessing these longer-term forecasts for the exchange rate after the US midterm elections."
What This Means for USD/INR
Dollar holders would receive more Rupees at Crédit Agricole's December forecast than at Thursday's rate. The projected recovery next year would reverse that benefit, making Dollar purchases cheaper for Rupee holders.
Further RBI increases would be consistent with that outlook, but would not establish that the exchange rate is heading towards 92. The bank's own analysis places substantial weight on overseas yields and energy costs.
The Fed's 28 October decision provides the next test of the US interest-rate assumption.
British Pound Technical Outlook: GBP/USD Short-Term Trade Levels
GBP/USD has rallied more than 2% from the October low, reaching its highest levels in over five weeks.
A bullish outside-week reversal fueled a break above the monthly opening range, strengthening the near-term recovery.
The advance is now confronting a major technical resistance confluence, with the 200-day moving average posing the next significant hurdle.
Failure to clear resistance would leave Sterling vulnerable, with the October lows remaining critical to the broader outlook.
U.K. and U.S. PMI releases headline near-term event risk ahead of next week's highly anticipated Fed decision.
Resistance 1.3406, ~1.3433, 1.3465/74 (key) - Support 1.3353, 1.3302 (key), 1.3245
Sterling has regained its footing following last month's sharp decline, with the latest advance marking a meaningful shift in the near-term technical picture. GBP/USD has rallied in five of the past six sessions, with bulls now confronting a pivotal resistance hurdle that could determine whether the recovery has further to run. Attention turns to Friday's preliminary U.K. and U.S. PMI releases before next week's Federal Reserve decision, with the reaction in Treasury yields and the dollar likely to play an important role in shaping GBP/USD direction into month-end. Battle lines drawn on the GBP/USD short-term technical charts.
Review my latest Weekly Strategy Webinar for an in-depth breakdown of this Sterling technical setup and more. Join live on Monday’s at 8:30am EST.
British Pound Price Chart – GBP/USD Daily
Chart Prepared by Michael Boutros, Sr. Technical Strategist; GBP/USD on TradingView
Technical Outlook: In last month’s British Pound Short-term Outlook we noted that GBP/USD had, “declined in four of the past five weeks, with the latest selloff driving Sterling below the 200-day moving average for the first time since July... From a trading standpoint, rallies would need to be limited to 1.3408 IF price is heading lower on this stretch with a close below 1.3302 needed to fuel the next major leg of the decline.” Sterling broke lower the following day, extending its decline to nearly 3.2% from the September high before rebounding last week from key support at 1.3140—a level defined by the May and August 2025 lows and the June 2026 low.
An outside weekly reversal last week has broken through the monthly opening range highs with the advance extended more than 2.1% off the yearly low. The rally is now testing resistance for a third consecutive day at the 50% retracement of the August decline near 1.3406 and the focus is on possible inflection off this level into the close of the week.
British Pound Price Chart – GBP/USD 240min
Chart Prepared by Michael Boutros, Sr. Technical Strategist; GBP/USD on TradingView
Notes: A closer look at Sterling price action shows GBP/USD trading within the confines of an ascending pitchfork extending off the October lows. Initial support rests at the 23.6% retracement of the monthly advance at 1.3353 which converges on the median line today. Subsequent support rests at the May low at 1.3302 with a break / daily close below the 61.8% retracement at 1.3245 needed to put the bears back in control.
The 200-day moving average now converges on the 75% parallel near ~1.3433 and a break / close above this slope is needed to fuel the next leg of the rally towards a key pivot zone at the February low-day close (LDC) and the 2026 yearly open at 1.3465/73- look for a larger reaction there IF reached. Subsequent resistance is eyed at the July high at 1.3558.
Bottom line: GBP/USD has rebounded sharply off major technical support with the rally now extending to the highest levels in more than five-weeks. From a trading standpoint, losses should be limited to 1.3353 IF price is heading higher on this stretch with a close above the 200-day moving average needed to fuel the next leg of the uptrend.
GBP/USD event risk into the weekly close centers on Friday’s preliminary U.K. and U.S. PMIs, but attention will increasingly shift toward next Wednesday’s Federal Reserve decision. A November Bank of England hike is already largely priced following this week’s stronger employment and inflation data, leaving limited room for further sterling gains from BoE expectations alone. The U.K. Budget is also due next Wednesday, but the Fed will likely remain the primary catalyst, with markets focused on whether Kevin Warsh signals that persistent inflation warrants further tightening or endorses a pause. Stay nimble into the release and watch the weekly closes for guidance. Review my latest British Pound Weekly Forecast for a closer look at the longer-term GBP/USD technical trade levels.
Key GBP/USD Economic Data Releases
Active Short-term Technical Charts
Euro Short-term Outlook: EUR/USD Rebound Faces Critical Test After Trend Break
Gold Price Short-term Outlook: XAU/USD Holds Critical Support as Breakout Nears
Canadian Dollar Short-term Outlook: USD/CAD Five-Week Rally Hits a Wall at Major Resistance
Japanese Yen Short-term Outlook: USD/JPY Breakout Risk Builds Below 200-Day Average
Australian Dollar Short-term Outlook: AUD/USD Rebound Challenges September Downtrend
US Dollar Short-term Outlook: USD Four-Week Rally Stalls Below Key Resistance
Swiss Franc Short-term Outlook: USD/CHF Rebound Tests Broken Uptrend
--- Written by Michael Boutros, Senior Technical Strategist
USD/JPY ve čtvrtek klesl o 0,8 % a pokusil se prolomit spodní hranici čtyřtýdenního pásma na úrovni 157,50. Další klíčový support se nachází na úrovni 156,68.
USDJPY fell sharply during late Asian/early European trading on Thursday (down 0.8%) and attempts to break below multi-day range, after the action was repeatedly capped by daily cloud top / 200DMA.
Fresh drop weakens the structure on daily chart, as the price moves deeper into thick daily cloud and breaks below daily Kijun-sen (157.16), pressuring next significant support at 156.68 (Fibo 38.2% of 152.88/159.03 upleg).
Falling 14-d momentum broke into negative territory, contributing to negative near-term outlook, with daily close below 157.50 (range floor) seen as minimum requirement to keep fresh bears in play.
In addition, break and close below 156.68 Fibo support would confirm negative signal and open way for deeper drop, which may challenge daily cloud base (155.65).
Alternatively, return and close within existing range would signal false break lower and keep the price in prolonged sideways mode.
Only sustained break above 200DMA / cloud top would be a game changer.
Res: 157.16; 157.58; 157.88; 158.53
Sup: 156.68; 156.37; 155.96; 155.65
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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.
Výnosy francouzských desetiletých státních dluhopisů testují úrovně nad 5 %, naposledy zaznamenané v roce 2002, což spolu s politickou a dluhovou nejistotou tlačí na euro.
French bond yields are testing levels last seen in 2002, while momentum approaches overbought conditions last seen in 2022. French political and debt uncertainty are contributing to the move. However, as with German and US Treasury yields, a pullback may be on the horizon, with bearish-divergence signals and three-month overbought momentum risks emerging across the 2022–2026 period.
US 10-year Treasury yields are also showing a bearish momentum divergence after reaching overbought levels last seen in 2022 and 1980. The yield remains below 5.34% but is holding above 5%, supported by persistent US inflation near 3.7% and geopolitical uncertainty.
The Israeli election on October 27 and US midterm elections on November 3 may influence the geopolitical outlook and add to pressure on global economies. Against a backdrop of extreme fear sentiment and stretched bond-yield momentum, a pullback in yields could allow the euro to extend its recovery from the 1.11 support level and daily oversold conditions last seen in 2015.
US 10-Year Treasury Yield Outlook: Three-Month Time Frame – Log Scale
Source: TradingView
The latest pullback in US 10-year Treasury yields comes as the yield tests a historically significant resistance barrier dating back to the 1920s. Bearish-divergence risks have also emerged as momentum retreats from overbought levels last seen in 2022 and 1980. Together, these signals raise the possibility of a longer-term decline in yields, which could help set the stage for a sustained market uptrend.
The yield is currently testing support near 5%, while US inflation remains a concern at 3.7%. A break below this level could support risk appetite. By contrast, a move above 5.34% could support the dollar’s advance toward new 2026 highs and put pressure on markets, potentially exposing charts to fresh 2026 lows.
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French 10-Year Bond Yield Outlook: Three-Month Time Frame – Log Scale
Source: TradingView
Like US bond yields, surging crude oil prices and geopolitical tensions are also contributing to the rise in French yields besides political and debt uncertainty in France, adding pressure to the euro and the broader European outlook.
French 10-year yields are testing elevated resistance levels above 5%, last seen in 2002. At the same time, bearish-divergence risks are emerging as momentum reaches overbought levels last seen between 2022 and 2026, keeping near term reversal risks in the picture.
German 10-Year Bond Yield Outlook: Three-Month Time Frame – Log Scale
Source: TradingView
The spread between French and German yields is widening, with 10Y German yields near 3.37%, adding further pressure to the European outlook. However, German 10-year yields are also showing a four-year bearish divergence between 2022 and 2026, with three-month momentum retreating from historically overbought levels. This also increases the potential for a near-term correlated pullback, possibly in line with upcoming elections and geopolitical negotiations. If not, the recent highs may turn into supports, allowing yields to climb higher and economic conditions to drop further.
DXY Outlook: Daily Time Frame – Log Scale
Source: TradingView
The DXY retains a neutral-to-bullish outlook after pulling back from 103, an eight-month up trending resistance level that had capped the index since March. The retreat followed overbought conditions last seen in 2023 and is now testing the 2026 uptrend near 101, facing the psychological 100 level as a key invalidation point. Daily RSI is also retesting the neutral 50 level from above.
A break below 100 would confirm selling pressure beneath the boundaries of the year-long contracting consolidation. This could ease pressure across currency markets, including on the euro.
Expectations of a Fed rate hold at next week’s October meeting, alongside weaker-than-expected labor-market data, are helping underpin the current outlook. However, escalating geopolitical tensions, higher crude oil prices and renewed inflation pressure could support a dollar rebound toward resistance at 102.60 and 103, raising the possibility of a bullish breakout.
EUR/USD Outlook: Weekly Time Frame – Log Scale
Source: TradingView
On the weekly chart, EUR/USD is still struggling to climb back above 1.1260, near the former descending trendline drawn through lower lows since August 2025. A daily or weekly close above 1.1260, followed by a break through the 1.1380–1.1400 zone, would likely reassert the bullish-reversal bias and reinforce the pair’s longer-term neutral-to-bullish outlook within the broadening formation that has been developing since July 2025.
On the downside, the rebound from psychological support at 1.11 aligns with the 78.6% extension of the January–June–August 2026 wave. A break below 1.11 would expose the 100% extension near 1.0950 before another potential dip-buying opportunity given the steep oversold momentum conditions.
Kurz GBP/EUR v říjnu posílil téměř o 2 %, k čemuž přispěl pokles nezaměstnanosti ve Spojeném království na 4,7 % a stabilní meziroční růst pravidelných mezd o 3,7 %.
The Federal Reserve and the European Central Bank are both expected to hold rates in October, cushioning the pound against new onslaught.
Concerns about stagflation in the UK and high energy prices are an existential threat to the GBP
Upcoming UK budget announcement will reveal the level of success of fiscal management and could impact the pound
The British pound’s been on a strong run. On Wednesday, sterling traded near $1.339, almost hitting a one-month high. So far this October, it’s gained almost 2% against the euro and close to 1% against the US dollar.
The pound’s now trading above 1.3400 against the dollar and testing multi-month highs near 1.1850 against the euro. This climb largely comes from changing expectations around central bank interest rates. The GBP/EUR performance against the this month is the best since May 2023. But can this upward trend last?
Where Is GBP Getting Its Strength From?
The pound’s gains stem from solid economic data and high expectations for Bank of England (BoE) interest rate hikes.
UK unemployment fell to 4.7%, and annual regular wage growth held steady at a healthy 3.7%. Strong wage growth like this supports continued consumer spending, which makes the central bank’s job of controlling inflation harder.
Economic growth played a part too. An unexpectedly strong UK GDP report helped pull sterling up from its year-to-date low of 1.3137 against the dollar. The economy grew 0.1% in August, according to data from the Office for National Statistics, exceeding the consensus forecast 0.1%
Will the Pound Hold After Fed and ECB Decisions?
Upcoming central bank meetings could bring some volatility. Most economists expect the Federal Reserve to keep interest rates steady, likely between 3.75% and 4.00%, at its late October meeting, though another hike in December is not out of the question.
The Fed’s decision comes on October 28th. Since an October rate hike now seems improbable, the commentary released with it will matter more than the rate decision itself. A hawkish statement from them could really boost the dollar and pressure GBP/USD.
Similarly, the European Central Bank is also expected to keep rates steady on October 29th. They’ll likely wait to review more economic data before making any policy changes in December.
The pound might hold its ground better against the euro, especially if worries about Eurozone fiscal policy persist. But technical signals hint the currency could be overbought after its strong run in September and October, possibly setting up a short-term correction.
Just a pause in rate hikes from both the Fed and ECB shouldn’t slow sterling’s upward climb much. Still, if there’s any strong sign of more tightening in December, that could shrink the interest rate gap that has helped the pound.
Potential Risks for Sterling
Even with recent gains, big risks remain. The upcoming UK Budget announcement will be a significant focus. If it hints at poor fiscal management or more government borrowing than expected, that could hurt the gilt market and push the currency down. Investors are still wary about debt sustainability given the recent volatility in bond yields.
Concerns about stagflation also persist. Inflation is now outpacing the BoE’s forecasts, and a slowdown in UK economic activity could cap any more gains for the pound.
Persistent geopolitical tensions keep impacting energy prices and complicating the inflation outlook. A big jump in oil or gas costs might force the BoE to hike rates more aggressively, which could then slow economic growth. Conversely, if the BoE holds back, it might erode trust in its inflation-fighting capabilities.
Additionally, the Chancellor’s upcoming budget also brings policy risks. Big tax increases or surprisingly low government borrowing could slow down domestic economic activity. That might prompt the BoE to hit pause on its monetary tightening cycle sooner than expected.
What recent UK data has most supported the pound?
Lower-than-expected unemployment at 4.7% and stronger wage growth of 3.7% recently made a Bank of England rate hike next month feel more likely.
What are markets expecting for the upcoming Fed and ECB meetings?
Markets largely expect both the Fed and ECB to keep rates steady in late October. Any further action will probably wait until December, depending on new data.
Why does the UK Budget pose a risk to sterling?
If the UK Budget signals weaker fiscal discipline or bigger borrowing, it could rattle gilt markets. This might undo recent currency gains, especially because debt sensitivity is still high.
EUR/CAD extends its losing streak for the third successive day, trading around 1.5750 during European hours on Thursday. The currency cross has depreciated as the commodity-linked Canadian Dollar (CAD) gained strength, driven by a sharp rally in crude oil prices. Energy markets surged following a drone attack on Saudi Aramco’s Shaybah oil field that left two dead, sharpening geopolitical tensions in the Middle East and renewing fears over global supply disruptions.
Compounding geopolitical strains in the region, Iranian Foreign Minister Abbas Araghchi stated that the United States must dismantle its naval blockade and demonstrate a genuine commitment to a diplomatic resolution. Araghchi affirmed Tehran's readiness to re-engage in negotiations provided Washington offers concrete evidence of a sincere effort to secure a permanent and equitable end to the conflict.
Meanwhile, Eastern European tensions have intensified as Ukraine launched a series of large-scale drone strikes against critical Russian oil infrastructure. The military campaign signals Kyiv's clear intent to disrupt Moscow's planned expansion of diesel exports, which had been arranged under a recent agreement between Presidents Trump and Putin.
Strategists at Danske Bank observe that the latest move lower in the Euro has been primarily a sentiment-driven story, stressing that “the decline in the single currency is driven by the combination of high energy prices and EUR-pessimism on the back of French debt worries.” They note that these factors have reinforced existing caution toward the single currency, keeping investors wary of adding Euro exposure despite the absence of a clear directional catalyst from broader markets.
Eurozone tightening shifts to markets as ECB weighs three-pronged responseEconomists at ING argue that, with markets effectively tightening financial conditions amid the French fiscal-driven sell-off in Eurozone bonds, the onus is shifting back to policymakers. According to the bank, “given the challenges of justifying the activation of TPI at present, we expect the ECB to adopt a three-pronged approach to address the French crisis,” combining a more dovish communication on rates, adjustments to its balance sheet plans and, if needed, targeted use of its existing backstop tools.
Euro Price Today The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the weakest against the Japanese Yen.
USDEURGBPJPYCADAUDNZDCHFUSD-0.08%-0.15%-0.69%-0.20%0.10%0.12%-0.48%EUR0.08%-0.08%-0.62%-0.16%0.21%0.22%-0.42%GBP0.15%0.08%-0.53%-0.08%0.27%0.29%-0.33%JPY0.69%0.62%0.53%0.47%0.78%0.77%0.20%CAD0.20%0.16%0.08%-0.47%0.32%0.34%-0.26%AUD-0.10%-0.21%-0.27%-0.78%-0.32%-0.00%-0.58%NZD-0.12%-0.22%-0.29%-0.77%-0.34%0.00%-0.56%CHF0.48%0.42%0.33%-0.20%0.26%0.58%0.56% The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).
GBP/EUR dosáhl 17měsíčního maxima na úrovni 1,1940 poté, co britská inflace v září zrychlila na 3,5 % a posílila očekávání zvýšení úrokových sazeb BoE.
The Pound-Euro could remain supported if BoE Governor Andrew Bailey reinforces rate hike expectations, while weaker Eurozone confidence may pressure the Euro.
The Pound Euro (GBP/EUR) exchange rate rose to a fresh 17-month high on Thursday following the UK’s latest inflation figures.
At the time of writing, GBP/EUR was trading at €1.1940, up 0.3% on the day and at its highest level since May 2025.
Latest — Exchange Rates:
Pound to Euro (GBP/EUR): 1.192398 (+0.10%)
Pound to Dollar (GBP/USD): 1.3395 (+0.17%)
Euro to Dollar (EUR/USD): 1.123367 (+0.06%)
DAILY RECAP:
The Pound (GBP) attracted fresh support on Wednesday after the UK’s latest consumer price index fuelled Bank of England (BoE) interest rate hike bets.
September’s CPI figures showed headline inflation accelerating from 3.1% to 3.5%, above forecasts for 3.4%. Meanwhile, core inflation rose from 2.6% to 2.8%, also above expectations.
Paired with Tuesday’s unexpected drop in UK unemployment, the CPI figures boosted expectations that the BoE will raise interest rates four times over the next year, which supported Sterling.
However, GBP’s upside was capped by above-forecast government borrowing in September, which stoked fiscal concerns ahead of next week’s Autumn Budget.
Meanwhile, the Euro (EUR) continued to face pressure as protests and rioting in France and Italy, alongside unrest elsewhere in Europe, fuelled concerns about political and social stability across the region.
These tensions added to existing worries about France’s debt crisis, with mounting concerns over the country’s fiscal outlook and bond market pressures threatening to spill over into the wider Eurozone. Fears of contagion continued to weigh on the single currency, as investors remained wary that France’s financial difficulties could spread to other heavily indebted member states.
Near-Term GBP/EUR Forecast: BoE Comments to Prop Up the Pound?
Looking forward, new data from the Confederation of British Industry (CBI) could impact the Pound on Thursday. A deepening contraction in industrial orders and a decline in business confidence could put pressure on the Pound.
Sterling may attract support later in the session amid a speech from BoE Governor Andrew Bailey. If the Bank of England chief signals that interest rate hikes are on the horizon, demand for GBP could increase.
As for the Euro, the Eurozone’s preliminary consumer confidence index for October is out in the afternoon. EUR may stumble if the release shows a deterioration in morale this month, as expected.
Exchange Rates UK Research
Our currency coverage draws on live market data, official economic releases and published bank research.
The Pound-Canadian Dollar rate could strengthen if Andrew Bailey reinforces BoE hike expectations, while softer Canadian producer prices may weigh on the Loonie. The Pound to Canadian Dollar (GBP/CAD) exchange rate was rangebound on Wednesday, following the publication of the UK's latest consumer price index.
At the time of writing, the GBP/CAD exchange rate was trading at CA$1.8809. Almost unchanged from the start of Wednesday’s session.
Latest — Exchange Rates:
Pound to Canadian Dollar (GBP/CAD): 1.881279 (+0.01%)
Euro to Canadian Dollar (EUR/CAD): 1.577669 (-0.10%)
Dollar to Canadian Dollar (USD/CAD): 1.40436 (-0.16%)
DAILY RECAP:
The Pound (GBP) traded with modest support on Wednesday as the UK's latest CPI figures printed above forecast.
According to data published by the Office for National Statistics (ONS), UK inflation accelerated from 3.1% to 3.5% in September, outpacing forecasts that it would only rise to 3.4%, while also reaching an 11-month high.
The rise in inflation was primarily linked to surging energy prices, although hotter-than-expected core inflation suggests price pressures are becoming more broad-based.
September data further reinforces bets the Bank of England (BoE) will kick-start a new hiking cycle at its next meeting in November.
Likely capping Sterling's upside potential was the UK's accompanying borrowing data, with a larger-than-expected increase in the public deficit last month, further limiting the fiscal headroom available to Chancellor John Healey in his upcoming budget.
The Canadian Dollar (CAD) edged higher on Wednesday as a fresh rally in global oil prices provided a welcome boost for the commodity-linked currency.
Brent crude climbed to a new five-month high this week amid concerns over a potential escalation of tensions in the Middle East.
While diplomatic efforts to contain the conflict triggered a pullback in prices late on Tuesday, Brent subsequently moved higher again on Wednesday as supply concerns persisted.
Near-Term GBP/CAD Forecast: BoE Bailey Remarks to Lift Sterling? Turning to the second half of the week, the next catalyst of movement for the Pound to Canadian Dollar (CAD/USD) exchange rate will be scheduled remarks from BoE Governor Andrew Bailey.
If Bailey concedes that rising inflationary pressures will push the BoE to tighten monetary policy in the coming months, Sterling is likely to firm.
Meanwhile, Canada's latest producer price index could weigh on the 'Loonie' if a slowdown in factory gate prices last month, dampens Bank of Canada (BoC) rate hike bets.
Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.
The AUD/JPY cross trades in negative territory around 110.60 during the early European trading hours on Thursday. Hawkish remarks from Japanese authorities provide some support to the Japanese Yen (JPY) against the Australian Dollar (AUD).
Bank of Japan (BoJ) Deputy Governor Ryozo Himino said on Wednesday that underlying inflation is moving securely toward the central bank’s 2% target. Earlier on Monday, BoJ Governor Kazuo Ueda stated that underlying inflation is near the 2% target. He further stated that if the bank raises the short-term policy rate, long-term interest rates are likely to rise steadily with policy.
Reserve Bank of Australia (RBA) monetary policy board member Andrew Hauser said on Wednesday that the inflation outlook is materially worse than the bank had forecast. The odds of an interest rate increase in the November policy meeting climbed from 30% before Hauser’s comments to 45%, according to the Guardian.
Japan export momentum extends despite softer-than-expected gainsAnalysts at Deutsche Bank note that early data for September showed a further solid performance from Japan’s external sector, with exports rising by “+16.7% in September compared to the same month last year,” supported by “robust demand for semiconductors and AI-related products that continued to support growth.” They highlight that this “marked the 13th consecutive month of gains following a 9.3% rise in August,” even though the latest print fell short of “expectation of a +21.3% increase.” On the import side, Deutsche Bank points out that “imports rose by +18.9% y/y, falling short of the forecast of a +20.4% increase,” and that this softer outcome helped narrow the external shortfall, with “a decrease in imports” contributing to a reduction in Japan’s trade deficit “to -536.6 billion yen in September from -1.11 trillion yen in the previous month.”
Technical Analysis: AUD/JPY holds a modestly bearish outlook below the 100-day SMAIn the daily chart, AUD/JPY keeps a modestly bearish bias, holding below the longer-term 100-day simple moving average (SMA) while trading above the 20-day Bollinger SMA, suggesting a capped recovery within a broader corrective context. The Relative Strength Index (RSI) hovers around 50, hinting at neutral momentum and reinforcing the view of consolidation rather than a decisive bullish reversal as long as overhead resistance remains intact.
On the topside, initial resistance level emerges at the upper Bollinger band around 111.15, en route to a stronger barrier at the 100-day SMA near 112.10. A desicive break above this level could see a rally to the June 16 high of 113.55 and then the July 27 high of 114.67.
On the downside, immediate support level is seen at the 20-day Bollinger midline around 110.20, followed by the 110.00 psychological level. Further south, the next contention level to watch is the lower limit of Bollinger band near 109.20, where a break lower would reopen the door to deeper losses.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Japanese Yen FAQs The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.
One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.
Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.
The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.
USD/CAD extends its losing streak for the sixth consecutive day, trading around 1.4040 during Asian hours on Thursday. The currency pair experienced downward pressure as the commodity-linked Canadian Dollar (CAD) gained strength from a rally in crude oil prices. Oil prices advanced following a drone attack on Saudi Aramco’s Shaybah oil field that resulted in two casualties, intensifying geopolitical friction in the Middle East and raising concerns over potential energy supply disruptions.
Adding to the regional geopolitical complexity, Iranian Foreign Minister Abbas Araghchi stated on Wednesday that the United States must lift its naval blockade and demonstrate a genuine commitment to a diplomatic resolution. Araghchi emphasized Tehran's readiness to resume negotiations if there is concrete evidence of a sincere American effort toward a just and permanent end to the conflict.
In tandem, Ukraine executed large-scale drone strikes against critical Russian oil infrastructure this week, signaling Kyiv's intent to impede Moscow's planned expansion of diesel exports under a recent agreement between Presidents Trump and Putin.
Meanwhile, market participants are carefully evaluating the trajectory of the Federal Reserve’s (Fed) monetary policy leading into next week’s meeting. Uncertainty persists after Fed Chair Kevin Warsh refrained last week from offering guidance on the timing or necessity of future interest rate hikes.
USD/CAD under pressure as IMF highlights widening North American growth gapStrategists at Societe Generale flag that the latest IMF projections underscore a deteriorating relative backdrop for Canada, noting that “with the IMF’s US growth forecast revised up to 2.5% this year (while remaining at 2.1% in 2027), the North American growth gap is widening.” They point out that “the chart on the right shows relative Bloomberg consensus growth forecasts for 2027, but the IMF’s assessment (1.2% growth in Canada next year versus 2.1% in the US) is even less favourable for Canada,” reinforcing the idea of weaker Canadian momentum. At the same time, Societe Generale highlight the policy and market-rate dimension, observing that “the chart on the left shows the two-year rate differential plotted against USD/CAD,” underlining how relative front-end yields continue to frame the Canadian Dollar’s performance against the US Dollar.
The key factors driving the Canadian Dollar (CAD) are the level of interest rates set by the Bank of Canada (BoC), the price of Oil, Canada’s largest export, the health of its economy, inflation and the Trade Balance, which is the difference between the value of Canada’s exports versus its imports. Other factors include market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – with risk-on being CAD-positive. As its largest trading partner, the health of the US economy is also a key factor influencing the Canadian Dollar.
The Bank of Canada (BoC) has a significant influence on the Canadian Dollar by setting the level of interest rates that banks can lend to one another. This influences the level of interest rates for everyone. The main goal of the BoC is to maintain inflation at 1-3% by adjusting interest rates up or down. Relatively higher interest rates tend to be positive for the CAD. The Bank of Canada can also use quantitative easing and tightening to influence credit conditions, with the former CAD-negative and the latter CAD-positive.
The price of Oil is a key factor impacting the value of the Canadian Dollar. Petroleum is Canada’s biggest export, so Oil price tends to have an immediate impact on the CAD value. Generally, if Oil price rises CAD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Oil falls. Higher Oil prices also tend to result in a greater likelihood of a positive Trade Balance, which is also supportive of the CAD.
While inflation had always traditionally been thought of as a negative factor for a currency since it lowers the value of money, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Higher inflation tends to lead central banks to put up interest rates which attracts more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in Canada’s case is the Canadian Dollar.
Macroeconomic data releases gauge the health of the economy and can have an impact on the Canadian Dollar. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the CAD. A strong economy is good for the Canadian Dollar. Not only does it attract more foreign investment but it may encourage the Bank of Canada to put up interest rates, leading to a stronger currency. If economic data is weak, however, the CAD is likely to fall.
The AUD/JPY surges for the fourth straight day and approaches key resistance levels as bulls gather momentum, hitting a new monthly high above the October 14 daily high of 111.13. The cross-pair trades at 111.04, up 0.24%.
Price action shows that a ‘double bottom’ chart pattern has formed, with AUD/JPY poised for a breakout above 111.50, slightly below the 50-day Simple Moving Average (SMA) of 111.57.
A decisive break opens the door for a move towards the 200-day SMA at 111.76 ahead of 112.00. Up next is the 100-day SMA at 112.12. Once those key resistance levels are taken out, bulls' next target is the ‘double bottom’ measured target objective of 227 pips, from around 111.13 to 113.40.
On the downside, the most difficult part is that the AUD/JPY must drop below 110.00 for sellers to retest the monthly lows reached on October 15 at 108.64.
Australian Dollar FAQs One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD.
The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive.
China is Australia’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs.
Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD.
The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.
Goldman Sachs nyní očekává, že kanadská centrální banka (Bank of Canada) 28. října zvýší základní úrokovou sazbu o 25 bazických bodů na 2,50 % v důsledku vyšších inflačních očekávání.
Canadian Dollar Forecast: Goldman Brings October Hike Into Focus After Alberta Vote The Canadian Dollar has gained against the US Dollar as Goldman brings forward its rate call, but Sterling has a tightening story of its own. Goldman Sachs now expects the Bank of Canada to raise interest rates on 28 October, bringing forward its call as rising inflation expectations add to the case for tightening despite weak employment.
The revision comes as the US Dollar to Canadian Dollar exchange rate extends its decline, trading at 1.4054 at 10:41 BST on Wednesday, down 0.09% on the day after a 0.28% fall on Tuesday.
Goldman forecasts a 25-basis-point increase to 2.50% next week.
MUFG also sees an October move becoming more likely, although its argument depends on policymakers prioritising future inflation risks and markets continuing to anticipate a hike.
The political backdrop has also improved following Alberta's vote to remain part of Canada.
Preliminary results showed roughly three-quarters of voters rejecting the proposal to begin a process towards a binding separation referendum.
For currency investors, that reduces an immediate source of uncertainty surrounding the oil-producing province, giving the Canadian Dollar a more favourable backdrop alongside rising interest-rate expectations.
The result does not resolve Canada's trade difficulties, however, and should not be confused with the inflation evidence behind Goldman's revised BoC forecast.
Image: USD/CAD exchange rate 48-hr chart Goldman Changes Its Call After the Surveys The business and consumer surveys have shifted attention towards the risk that higher costs become embedded in pricing decisions.
Goldman economists Megan Peters and Joseph Briggs wrote: "The message from today's surveys was more hawkish than we anticipated, with greater emphasis on improvements in activity, continued resilience, and price pressures than the potential headwinds from rising trade tensions with the US."
The economists also pointed to Governor Tiff Macklem's recent public remarks: "Combined with Governor Macklem's hawkish comments at this past weekend's IMF meetings, we now expect that the BoC will deliver a 25bp hike at next week's October meeting."
Consumers' five-year inflation expectations rose to 3.9% from 3.4%, while roughly half the businesses surveyed intended to pass some or all of their higher energy and tariff costs to customers.
That combination gives the BoC reason to worry about inflation persisting even without a strong jobs recovery.
But the Bank of Canada's survey findings carry an important timing qualification: around three-quarters of business interviews preceded the breakdown in US-Canada trade talks.
Responses collected after the breakdown showed weaker confidence and investment intentions alongside higher inflation expectations, leaving policymakers facing both growth and price risks.
The caution in the earlier ING and CIBC assessment of Canada's outlook therefore remains relevant, even as Goldman puts greater weight on the surveys' inflation warning.
An October Hike Would Leave December Open Goldman has also accelerated its expected second increase, but stops short of forecasting consecutive hikes.
Peters and Briggs wrote: "We are also pulling forward our forecast for a final 25bp hike to 2.75% (the center of the BoC's neutral rate range) to January 2027."
"Although a final hike in December remains a possibility, we believe that a still benign inflation backdrop and more visible headwinds from US trade tensions support a more gradual pace of policy normalization."
MUFG identifies a route to a faster repricing, rather than making the same firm forecast.
Senior currency analyst Lee Hardman cautioned: "However, it is not a done deal given the recent softer economic data flow from Canada including the second consecutive month of heavy job losses in September."
"A decision to raise rates this month would then encourage speculation that they could follow that up quickly with a second hike before the end of this year in December providing more support for the Canadian dollar."
Much of the initial adjustment has already happened.
Hardman recorded the shift on Tuesday: "There are currently around 21bps of hikes priced in compared to only 9bps at the end of last week."
Higher expected Canadian rates can support the currency by improving its prospective yield, but delivering an increase that investors largely anticipate may offer less additional support than signalling another soon afterwards.
Why GBP/CAD Faces a Different Test The Pound-to-Canadian Dollar exchange rate was up 0.05% at 1.8821 at the same time on Wednesday, illustrating Sterling's relative resilience despite the Canadian currency's gains against the US Dollar.
Wednesday's UK inflation release showed annual CPI rising to 3.5% from 3.1%, adding pressure on the Bank of England after stronger labour-market figures.
Before that release, Hardman wrote: "We continue to expect the BoE to hike rates next month and deliver a second hike early next year."
"A view that is already well priced into the UK rate market which is anticipating even more tightening and has almost three hikes priced in by March of next year."
MUFG's support for Sterling also depends on the forthcoming UK Budget preserving confidence in fiscal consolidation.
Image: Pound to Canadian Dollar rate chart for last 2 days. What This Means for USD/CAD and GBP/CAD USD/CAD's decline leaves the Canadian Dollar approaching next week's decision with substantial tightening already anticipated. A hike accompanied by encouragement for a December follow-up could extend that strength, whereas an emphasis on trade damage and patience would fit Goldman's slower January timetable.
For GBP/CAD, Canadian tightening alone may struggle to dislodge Sterling while a November BoE increase remains expected. A more urgent Canadian policy message, or UK Budget measures that undermine confidence, would give the Canadian Dollar a clearer advantage.
A BoC hold would challenge the rate expectations supporting the recent Canadian Dollar recovery and could lift both pairs. The employment weakness highlighted by MUFG keeps that risk alive ahead of 28 October.
USD/MXN za poslední tři obchodní seance vzrostl o více než 1,1 %, protože očekávání uvolnění měnové politiky Banco de México a klesající výnosy dluhopisů oslabují peso.
The Mexican peso continues to face a difficult environment in the short term. This can be seen in the recent performance of USD/MXN, which has gained more than 1.1% over the last three trading sessions, highlighting increasingly persistent weakness in the Mexican currency.
Buying pressure around the pair continues to be driven primarily by expectations of a more flexible Bank of Mexico over the coming months, along with the recent decline in Mexican bond yields. This dynamic remains relevant ahead of tomorrow's inflation release and, as long as markets continue to perceive a more cautious central bank, buying pressure around USD/MXN could remain a dominant theme in the sessions ahead.
What Is Expected From Mexico's Inflation Data?
Tomorrow's session will bring the release of inflation figures for the first half of October in Mexico. For now, markets expect a reading of 0.37%, slightly above the 0.33% recorded in the previous report.
These expectations remain important because they continue to point toward a relatively controlled inflation environment, with no clear signs of a significant acceleration in the short term. Forecasts have also remained fairly accurate in recent months. Since March, there have been no major deviations between market expectations and the final inflation readings, reinforcing expectations of a relatively stable inflation backdrop.
This continues to support the view that inflation does not currently represent a major threat to Mexican monetary policy, leaving room for the Bank of Mexico to adopt a more flexible stance over the coming months without the need to maintain exceptionally high interest rates.
Source: FXstreet
This remains particularly relevant because several members of the central bank's board have recently suggested there is less urgency to maintain an aggressive monetary policy stance. In fact, recent developments show that three of the five board members have expressed openness to discussing potential rate cuts, highlighting an increasingly cautious approach and a reduced level of concern over short-term inflation risks.
Most importantly, expectations of a more flexible central bank have already begun to affect Mexico's bond market. Over recent sessions, 10-year government bond yields have continued to decline, moving closer to the 9.2% area and pulling away from the highs observed several weeks ago.
This is significant because lower yields tend to reduce the attractiveness of peso-denominated investments while also weakening the appeal of the currency for international investors seeking high interest-rate differentials. As a result, demand for the Mexican peso could continue to soften in the short term.
Source: TradingEconomics
Taking all of this into account, expectations of a more cautious Bank of Mexico appear to be reducing the relative attractiveness of Mexico's fixed-income market and remain an important factor behind the peso's recent weakness. If tomorrow's inflation figures come in close to expectations and continue to show limited inflationary pressures, the perception of a more flexible central bank could gain even more relevance. Under that scenario, the peso may continue to struggle to recover ground, allowing buying pressure around USD/MXN to remain an important feature of the market.
USD/MXN Technical Forecast
Source: StoneX, Tradingview
The bullish trend is becoming the dominant structure:: Over recent weeks, USD/MXN has developed an increasingly aggressive bullish structure. The formation of higher highs and higher lows has reinforced a short-term uptrend, while a recent golden cross has emerged as the 50-period moving average moved above the 200-period moving average. This reading supports an increasingly constructive outlook for buyers and, as long as price continues breaking through key resistance levels, the current bullish trend could gain further strength in the weeks ahead.
MACD: The MACD histogram continues to trade very close to the 0 neutral line, reflecting a relatively balanced dynamic in short-term moving-average momentum. This reading suggests that despite the broader bullish structure, a degree of market indecision remains present.
RSI: The RSI remains particularly relevant as the indicator continues to trade close to the 70 overbought threshold. While this supports the strong bullish momentum seen in recent sessions, it also warns that buying pressure may be becoming stretched, potentially creating room for short-term technical pullbacks.
Key Levels:
18.70 – Key Resistance: A major resistance zone observed during previous months that remains the most important upside barrier on the chart. A sustained move above this level could reinforce bullish control, strengthen the sequence of higher highs, and support a more established uptrend over the coming weeks.
18.40 – Current Barrier: A level that aligns with important recent retracements and remains the main reference to monitor in the event of short-term bearish corrections.
18.00 – Key Support: A significant support zone observed during previous weeks that also coincides with an important psychological level for the market. A move back toward this area could place the current bullish trendline at risk and favor a more evident phase of consolidation in the short term.
Written by Julian Pineda, CFA, CMT – Market Analyst
Měnový pár EURGBP klesl na nejnižší úroveň od konce května 2025, když euro zatížily rostoucí výnosy francouzských desetiletých státních dluhopisů a vyšší britská inflace podpořila libru.
EURGBP continues to trend lower and falls to the lowest since late May 2025 on Wednesday.
The Euro was pressured by rise of French 10-y bond yields to the highest in over four years and further stretch of French German yield spread, while hotter than expected UK inflation lifted pound.
Firmly bearish daily studies contribute to negative outlook, although strongly oversold RSI suggests that bears may take a breather after finding footstep at 0.8373 Fibo support (76.4% retracement of 0.8222/0.8865 Dec2025/Nov2025 ascend).
Near term action bounced from new low at 0.8371 but still holds below initial barrier at 0.8400 (round figure), with extended upticks to be ideally capped by falling 10DMA (0.8436) former low of July 15 (0.8454) to mark healthy correction before larger bears regain control.
Res: 0.8400; 0.8436; 0.8454; 0.8465
Sup: 0.8373; 0.8355; 0.8315; 0.8300
Windsor Brokers Ltdhttp://www.windsorbrokers.com/
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.
USD/TRY se před rozhodnutím turecké centrální banky (CBRT) obchoduje na úrovni 49,57; trh zvažuje snížení sazeb o 100 bazických bodů, zatímco Goldman Sachs žádnou změnu neočekává.
Ahead of the 22 October 2026 CBRT interest rate decision, the USD/TRY continues to trade within the managed depreciation environment.
Current setup
USD/TRY is currently trading at 49.57 as of writing on 21 October 2026, thereby continuing on the path of a managed depreciation of the Liranear record highses to endure structural depreciation pressurich has sent the USD/TRY to, record highs. The continued upside move is a reflection of the market response to persistently high inflation, pressure from rising oil prices and foreign currency demands by the local populace looking to hedge the value of their holdings that are gradually being eroded with each passng day. The continued decline of the Lira is also calling into question the effectiveness of the CBRT’s monetary tightening policies.
The pair is also underpinned by USD fundamentals, and any conditions which weaken the USD across the board tend to produce short relief rallies in the Lira that so far, have only served to create dip-buying opportunities.
The next CBRT decision comes up on Thursday 22 October 2026. Goldman Sachs does not expect any policy change, even as majority of analysts including Bank of America are projecting a 100 bps rate cut as headline inflation moderates.
USD/TRY: Key Market Drivers
1. CBRT Policy
The CBRT’s official rate, which is the benchmark interest rate in Turkey, stands at 37.00%. The overnight lending rate is at 40.00% while the overnight borrowing rate stands at 35.50%. The current inflation rate in Turkey stands at 29.78% according to the latest data released in September 2026. This represents a cooling of the headline print from the August numbers which came in at 31.51%. However, these levels remain high as Brent crude continues to trade above the $100 mark. Turkey is a net energy importer and its economy has been negatively impacted by the geopolitical situation in the Middle East. Regional tensions have kept inflation rates elevated, which has led the CBRT to keep interest rates in very restrictive territory.
High interest rates are supposed to have an impact in supporting local currency savings and generate investor interest in lira-denominated government bonds. The effectiveness of this policy also depends on whether there is a decline in inflation expectations and whether local investors regain confidence in the lira. If this investor confidence is absent in the face of unattractive interest rates or in an environment of doubtful policy credibility, lira pressure is likely to persist.Notwithstanding, the CBRT’s interest rate decision remains the major catalyst determining the valuation of the USD/TRY pair.
2. Inflation and Domestic Dollar Demand
Turkey’s inflation woes and the gradual weakening of the lira have led to an erosion of the economic value of the holdings of citizens. This has encouraged businesses and individuals to seek protection in foreign currencies like the US dollar. Persistent local price increases have weakened the purchasing power of the lira and have added a layer of complication to the central bank’s drive toward disinflation. The policy outlook will only show improvement if there is a sustained decline in inflation. Currently this is not the case and renewed inflationary pressures will just lead to the prolongation of the restrictive policy. The lira will continue to face persistent pressure as long as there is a surge in demand for foreign currencies like the dollar.
3. Global Risk Sentiment
The USD/TRY is also impacted by global risk sentiment. The current risk environment is largely risk-off as investors are seeking the safety of the US dollar in a bid to protect their investments as long as the US-Iran war continues. The sentiment shift towards the US dollar and away from emerging market currencies is not only a produce of risk sentiment, but also comes from the recent increase in interest rates by the US Federal Reserve and the recent surge in US bond yields. Higher US bond yields have made the US Dollar much more attractive versus the weaker lira.
If the dollar weakens and this improves investor appetite for the lira and emerging market assets, this could slow the pace of advance but is not likely to cause a full-scale reversal. A full-scale reversal in the current uptrend would only occur if Turkey’s inflation is driven down and the policy risks or further restriction disappear.
USD/TRY Forecast Scenarios
Fig 1: USD/TRY Weekly Chart showing managed lira depreciation (snapshot: 21 October 2026)
Base case: Consolidation around 49.30–49.80 with a bias for a gradual upward shift will follow a CBRT rate hike in the next policy meeting. Restrictive policy only helps to maintain a structured gradual depreciation while preventing volatility.
Bull case — USD/TRY rises: A sharp breakout move above 49.65 opens the pathway to new record highs, with the psychological 50.00 level also up for grabs. This outlook follows sharp dollar strengthening, especially if the Fed hikes rates in the October meeting and domestic inflationary pressures intensify.
Bear case — Lira strengthens: Lira strengthening only follows improvement in local inflationary conditions along with a restrictive CBRT stance with improved policy credibility. This favours a breakdown of 49.30, targeting downside targets at 49.00 and lower.
Antje Praefcke at Commerzbank highlights that political and rating risks in France, plus cautious European Central Bank (ECB) expectations, weigh on the Euro (EUR) but are largely priced in. Markets now see an ECB hike in December and more tightening next year, which may be revised lower. She anticipates relatively stable EUR/USD into next week, with downside risk if French protests escalate and curfews prove ineffective.
France and ECB shape Euro outlook"The situation in France is an underlying factor weighing on the euro. More protests are expected this weekend. Moody’s could also be the last rating agency to downgrade France on Friday. And the ECB is unlikely to deliver a hawkish surprise next week. The market is no longer pricing in a rate hike for October, but is pricing in one for December and slightly more than one additional hike by the middle of next year. Here, too, the market may have to adjust its expectations should the ECB sound cautious regarding the future interest rate path, which would put the euro under downward pressure."
"In general, however, I think a great deal of negative news is already priced into the euro, particularly with regard to France; at the same time, the euro zone purchasing managers’ indices are likely to remain stable on Friday, so based on the current news landscape, I expect little new downward pressure on the euro. On the other hand, of course, a resolution to France’s debt problem or a credible budget proposal is unlikely, so there is also no reason to bet heavily on a recovery of the euro."
"At least for the coming days leading up to the central bank meetings in the middle of next week, I expect relatively stable EUR/USD rates, as there are no compelling reasons to favor one currency over the other. After all, everyone has their own cross to bear. Nevertheless, I see a slightly higher risk that the euro could see a short dip again if protests in France escalate, especially if the curfews imposed fail to have the desired effect."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
Měnový pár EUR/USD má prostor k odrazu, pokud jsou obavy z evropské dluhové krize přehnané. Podporou je očekávání, že Fed do prosince přeruší zvyšování sazeb.
Neither rising oil prices nor the stabilisation of Treasury bond yields nor the rebound in stock indices is helping the US dollar. Investors increasingly view the risks of a repeat of the 2012 European debt crisis and the 2022 energy crisis as exaggerated. If so, the sell-off in EURUSD has gone too far. The bulls now have a chance to stage a comeback.
Rumours that Qatar and Pakistan have put forward a new proposal to resume talks between the US and Iran have led to increased volatility but have had little impact on Brent prices. European gas, however, reacted with a sharp fall. At present, there is no question of an energy crisis, as prices are still far from the 2022 peaks, despite storage facilities in Europe being only 75% full – a record low for this time of year.
Franklin Templeton Fixed Income argues that France, with its €3 trillion economy and €3.6 trillion in debt – ten times Greece’s during its crisis in 2011–2012 – poses a far greater threat to the eurozone than the PIGS did 14 years ago. On the other hand, France’s share of global GDP is less than 3%, half of what it was in 1980. Despite France’s debt burden rising to 119% of GDP, the currency bloc’s overall debt burden has fallen since the Greek crisis, now standing at a manageable 89%.
According to BlackRock, the region is far better prepared for financial stress than it was back then. Banks are stronger, and the ECB has vast experience and the tools to stabilise markets. Yet it was precisely the banking system that contributed to the European debt crisis in 2011–2012, as credit institutions were burdened by the debt of the eurozone’s peripheral countries. At present, banks’ share prices – with the exception of French banks – are showing no sign of falling.
If there is no repeat of the European crisis of 14 years ago, the sell-off in EURUSD has gone too far. The euro is gaining momentum for a rebound, supported by a pause in the Fed’s rate rises until December. Furthermore, there is a high chance that the Democrats will gain control of Congress following the midterm elections and will then throw a spanner in the works of Donald Trump’s inflationary policies.
Summary: EUR/USD may rebound if the risks of a new European debt crisis are exaggerated, the Fed pauses until December, and the dollar gets no help from oil, yields or equities.
USD/ZAR Forecast: UBS Backs Rand Recovery Ahead of Budget UBS analysts expect the South African Rand to strengthen against the US Dollar as reforms support growth, with Wednesday's budget a test of fiscal progress. The South African Rand slipped on Wednesday morning, with the Dollar to Rand exchange rate near 16.43, around 0.2% higher on the day, ahead of the government's medium-term budget statement.
UBS nevertheless retains its forecast for USD/ZAR to reach 16.00 by March 2027, with domestic improvements expected to help the Rand recover as pressure from US interest rates and energy prices eases.
Its nearer-term projection remains 16.20 for December 2026, with 16.00 also forecast for the June and September 2027 quarter-ends.
These forecasts are unchanged.
Finance Minister Enoch Godongwana is scheduled to present the Medium-Term Budget Policy Statement at 13:00 BST on Wednesday, giving investors a fresh assessment of spending, revenue and borrowing plans.
Bond investors already recognise some fiscal progress UBS strategists Pietro Santin and Tilmann Kolb identify improvements in South Africa's public finances:
"Rising primary surpluses, better revenue collection, and the reduction in risks around contingent liabilities are key areas where improvements have been made."
A primary surplus means revenue exceeds spending before interest payments, leaving more scope to meet debt-servicing costs without additional borrowing.
They add: "After weighing on public finances over the last few years, the profitability of some key state-owned enterprises in the country has also started to improve."
UBS says the statement "could be a positive catalyst for the rand should the government demonstrate further progress on fiscal consolidation and the stabilization of the country's debt trajectory."
The bank adds: "In addition, investors will be watching closely for any measures aimed at strengthening the fiscal framework, including the potential introduction of a formal fiscal anchor."
Such an anchor would set a firmer constraint on future fiscal policy, helping investors judge whether debt control can survive competing spending demands.
There is already optimism to protect: UBS says South Africa's credit spreads, the extra yield on its foreign-currency debt relative to benchmark bonds, are close to their tightest levels in a decade.
Our reading is that a reassuring statement would validate part of that improvement, while fresh spending commitments without credible funding could challenge it.
Growth and export earnings underpin the Rand forecast UBS forecasts South African growth of 1.3% in 2026 and 2.0% in 2027, despite acknowledging that expensive fuel and tighter monetary policy have hurt households.
The bank expects growth to beat the consensus estimates cited in its assessment:
"We see scope for domestic growth to exceed these expectations, provided global growth remains resilient, as the effects of the structural reforms implemented over the last few years should start to show in GDP growth data."
Precious metals offer another source of support through South Africa's export income.
"Finally, elevated precious metal prices, particularly gold, which we expect to rise above USD 5,000/oz next year, continue to support South Africa's external position."
That exposure also leaves the Rand vulnerable when higher US yields support the Dollar and weigh on metal prices, a combination UBS identifies as an obstacle to recovery.
Carry support does not require repeated SARB hikes UBS says "the rand continues to offer a yield advantage over the US dollar (around 2.5% p.a.), and we expect the South African Reserve Bank (SARB) to retain a cautious approach to monetary policy."
This is carry support, not a guaranteed return, since an adverse exchange-rate move can outweigh the income earned.
UBS considers the two South African rate increases priced over six months at the time of its assessment excessive, while expecting the central bank to remain cautious about inflation.
The possibility of Rand gains without further aggressive tightening also featured in the earlier Crédit Agricole outlook, which questioned how much additional policy restraint the economy needed.
US rates remain the counterweight, although UBS believes much of the prospective tightening is anticipated:
"In our view, two additional rate hikes by the Fed over the next six months are likely; however, these are already largely priced into US interest rate markets."
The analysts qualify their confidence: "Overall, these factors should help absorb some of the pressure from tighter US monetary policy, as long as risk sentiment does not weaken materially."
What This Latest Outlook Means for USD/ZAR South Africa's improving public finances, precious-metal exports and yield advantage give UBS reasons to expect Rand strength even while US interest rates remain a headwind. Wednesday's budget now needs to reinforce that domestic support, with bond prices already reflecting considerable confidence in fiscal progress.
Credible measures to contain borrowing and stabilise debt would strengthen the case for UBS's unchanged USD/ZAR forecasts of 16.20 in December and 16.00 by March 2027. A firmer fiscal framework would also help investors judge whether the improvement can withstand future spending pressures.
The recovery remains vulnerable to a more aggressive Fed or weaker global growth, particularly if falling metal prices reduce South Africa's export earnings. A disappointing budget would add a domestic setback to those external risks, making the SA Rand's yield advantage less persuasive to investors.
GBP/USD posiluje po zářijové inflaci ve Spojeném království: CPI meziročně vzrostl o 3,5 % oproti očekávaným 3,4 %, což podporuje očekávání zvýšení sazeb Bank of England v listopadu.
The British Pound (GBP) trades 0.1% higher at around 1.3395 against the US Dollar (USD) during the European trading session on Wednesday. The British currency strengthens as hotter-than-expected United Kingdom (UK) Consumer Price Index (CPI) data for September has prompted hawkish Bank of England (BoE) expectations.
Earlier in the day, the Office for National Statistics (ONS) has reported that the headline CPI grew by 3.5% Year-on-Year (YoY), faster than 3.4% estimates and the August reading of 3.1%. The core CPI – which strips off volatile components of food, energy, alcohol and tobacco – also grew stronger by 2.8% YoY vs. estimates of 2.7% and the previous release of 2.6%.
BoE path seen as firmly higher as markets price multiple UK rate hikesAnalysts at Societe Generale argue that the near-term policy path is now largely predetermined, with “for the BoE, a 25bp increase bank rate in November is locked in.” They add that money markets are already discounting a more extended tightening cycle, noting that they are “aggressively priced for another three hikes by next summer to 4.75% unless the progress in inflation stalls and the economy extends its resilient performance into 2027.”
Going forward, investors will focus on the UK Retail Sales data for September and flash S&P Global PMI data for October scheduled for Friday.
Meanwhile, the US Dollar is under pressure due to concerns over United States (US) Artificial Intelligence (AI)-growth optimism and expectations that the Federal Reserve (Fed) will keep interest rates steady in the policy meeting later this month.
GBP/USD Technical Analysis
In the daily chart, GBP/USD trades at 1.3391. The pair holds above the 20-period exponential moving average (EMA) at 1.3303, keeping the near-term tone constructive as price extends its recovery from recent lows. The Relative Strength Index (RSI) at 57.5 leans to the bullish side without yet signaling overbought conditions, suggesting room for further upside while the pair remains supported by the reclaimed short-term trend baseline.
On the downside, initial support is seen at the 20-day EMA at 1.3303, with the latest close at 1.3391 acting as a nearby pivot level for any corrective pullbacks. Looking up, the pair could enter a fresh upside leg if it manages a decisive break above 1.3410.
(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.
EUR/JPY halts its four-day winning streak, trading around 177.70 during Asian hours on Tuesday. Technical analysis of the daily chart shows the currency cross remains within a descending channel pattern, suggesting an ongoing bearish bias.
The EUR/JPY cross is consolidating between short-term support and medium-term resistance. The currency cross holds just above the nine-day Exponential Moving Average (EMA) at 177.54, while the 50-day EMA at 179.84 caps the topside and keeps the broader bias neutral rather than decisively bullish. The 14-day Relative Strength Index (RSI) at 42.59 sits below the midline, hinting at modestly soft momentum but not outright oversold conditions.
The EUR/JPY cross tests the immediate support at the nine-day EMA of 177.54. A successful break below the short-term price average would strengthen the bearish bias and put downward pressure on the currency cross to test the 11-month low of 175.70, which was recorded in November 2025, followed by the lower boundary of its descending channel around 175.60. If selling pressure intensifies and pushes the currency cross below this confluence support zone, further declines could expose the 14-month low at 169.72.
On the upside, the primary resistance lies at the upper boundary of the descending channel near 178.70, followed by the 50-day EMA of 179.84. A move above the medium-term price average would cause a bullish reversal, opening the doors for the EUR/JPY cross to approach the all-time high of 187.95, reached on April 17.
BoJ’s Ueda flags inflation near target as price pressures buildAnalysts at Danske Bank highlight that in Japan, BoJ Governor Kazuo Ueda now judges underlying inflation to be "quite close" to the 2% target, pointing to tight labour markets and strong global AI demand as key sources of price pressure.
EUR/JPY: Daily Chart(The technical analysis of this story was written with the help of an AI tool. Know more.)
Euro Price Today The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the weakest against the Australian Dollar.
USDEURGBPJPYCADAUDNZDCHFUSD0.05%0.07%0.00%0.03%-0.28%0.17%0.15%EUR-0.05%-0.05%-0.05%-0.01%-0.28%0.07%0.05%GBP-0.07%0.05%-0.02%-0.02%-0.23%0.12%0.10%JPY0.00%0.05%0.02%0.03%-0.18%0.14%0.13%CAD-0.03%0.01%0.02%-0.03%-0.22%0.13%0.11%AUD0.28%0.28%0.23%0.18%0.22%0.35%0.32%NZD-0.17%-0.07%-0.12%-0.14%-0.13%-0.35%-0.01%CHF-0.15%-0.05%-0.10%-0.13%-0.11%-0.32%0.01% The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).
Růst EUR/USD brzdí slabé momentum a napětí kolem výnosů francouzských dluhopisů, přestože USD celkově oslabuje. Scotiabank uvádí intradenní support na úrovni 1,1175–1,1180 a rezistenci na úrovni 1,1275.
EUR/USD Forecast: Euro Rates Edge Higher as French Bond Risks Limit Recovery Scotiabank sees the Euro struggling to build momentum against the US Dollar as French bond tensions offset support from a weaker American currency. The Euro-to-Dollar exchange rate recovered to 1.1230 on Tuesday, up 0.15%, but remained below Friday's closing level.
Latest — Exchange Rates:
Euro to Dollar (EUR/USD): 1.122745 (+0.12%)
Pound to Dollar (GBP/USD): 1.337252 (+0.47%)
Dollar to Yen (USD/JPY): 158.20857 (-0.20%)
Scotiabank's assessment is neutral, with French borrowing concerns limiting the currency's ability to benefit from broader Dollar weakness.
Earlier, with EUR/USD at 1.1212, Scotiabank said: "The EUR is lagging its major currency peers on the day, weighed down by tensions in Eurozone government bond markets."
Scotiabank put the gap between French and German 10-year government bond yields near 150 basis points, equivalent to 1.5 percentage points, reflecting France's social and fiscal tensions.
That premium represents the extra yield investors demand to hold French debt rather than German bonds, making it a measure of concern about France's finances.
German improvement offers limited reassurance Germany's October ZEW survey showed a better assessment of current conditions, at minus 35.9, alongside a fall in expectations to 28.1.
ZEW president Achim Wambach said: "The German economy is slowly emerging from stagnation, but the recovery is not self-sustaining."
The institute identified high energy prices as a restraint on household spending and investment, through pressure on purchasing power and production costs.
Scotiabank also cautioned against treating the survey as a direct measure of economic activity: "The survey of financial professionals tends to be heavily weighted by market, rather than economic, developments but generally indicates the economy remains in "slow recovery" mode."
EUR/USD recovery needs stronger momentum Last week's rebound from support in the low 1.11s had raised hopes that an oversold Euro could stabilise.
Scotiabank now sees that opportunity struggling to develop:
"Sentiment and momentum are soft, preventing the EUR from taking advantage of the generally weaker USD tone and leveraging the bullish impulse that developed on the weekly chart last week-at least for now."
Scotiabank's support and resistance levels apply to intraday trading, rather than quarter-end forecasts.
"Intraday support is 1.1175/80. Resistance is 1.1275", Scotiabank says.
EUR/USD Exchange Rate FAQ Is Scotiabank bullish on EUR/USD?
Its latest short-term assessment is neutral, with weak momentum preventing last week's bullish signal from developing further.
Which EUR/USD levels is Scotiabank watching?
The bank identifies intraday support at 1.1175-1.1180 and resistance at 1.1275.
Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.
NZD/USD Outlook: Westpac Sees 0.64 in 2027 After Near-Term Downgrade
Westpac analysts expect a weaker New Zealand Dollar (NZD) against the US Dollar (USD) this December, but see rising domestic rates supporting a recovery through 2027.
The New Zealand Dollar-to-US Dollar exchange rate climbed to around US$0.5684 on Tuesday morning, extending a five-day recovery of roughly 1.25% despite a sizeable downgrade to Westpac's near-term forecast.
Westpac now expects NZD/USD at 0.56 in December 2026, down from 0.59, as higher energy costs and borrowing rates weaken the outlook for consumption and investment.
The bank still sees the Kiwi recovering to 0.64 by December 2027, supported by a narrowing interest-rate disadvantage against the US.
The new path is lower than Westpac's previous recovery projections, but preserves the argument for a substantial rise next year.
That recovery would have to develop alongside a domestic economy that is growing more slowly than the bank previously expected.
Weaker demand changes the near-term outlook
Westpac senior economist Darren Gibbs has reduced his forecast for growth through 2027 by 0.3 percentage points to 2.7%.
He writes: "This downward revision reflects a less positive assessment of the outlooks for consumption and investment (including residential investment) considering the more elevated path assumed for energy prices and a higher near-term track for long-term interest rates".
Gibbs describes a housing market struggling to clear unsold homes: "House sales fell a further 4% in September-the seventh consecutive month of decline-to be 12% lower than a year earlier. With the stock of listings at an 11-year high, the median selling time remains elevated."
Higher mortgage costs make it harder for buyers to absorb that supply, while falling house prices give households less reason to increase spending.
A recovery in housing, Gibbs argues, requires a stronger economy: "Given upward pressures on mortgage rates, broader strength in the economy-including a stronger labour market-will likely be required to reverse this trend."
Monday's BNZ-BusinessNZ services survey recorded a fourth consecutive month of expansion, but September's reading of 50.9 was barely above the 50 threshold and slightly below August's revised result.
Retail remained in contraction, with the survey highlighting fuel costs and constrained household spending.
The economy is therefore still expanding unevenly, rather than showing the broad acceleration that would make higher interest rates easier to absorb.
A cheaper Kiwi helps exporters but raises import costs
A weaker currency would provide some relief for businesses selling abroad.
Gibbs says: "A partial offset to weaker growth in domestic demand is provided by a slightly more positive outlook for exports (particularly exports of manufactured goods and tourism inflows) because of a downward revision to our expectations for the NZ dollar."
Manufacturers and tourism operators can become more competitive when their costs are measured in foreign currencies, helping them attract demand while local households remain cautious.
The bank already sees evidence of that effect: "We think that the low value of the NZ dollar-in trade-weighted terms now at a 17-year low-helps to explain the recent strong performance in the previously moribund manufacturing sector, as well as tourist inflows from key markets such as Australia."
The same exchange-rate weakness makes imported fuel more expensive, however, adding to the inflation problem that could eventually bring the Reserve Bank of New Zealand back to tightening.
Westpac expects the RBNZ to pause on 28 October before raising rates in December, with the Official Cash Rate reaching 4% by September 2027.
Its US forecasts envisage much less additional tightening, allowing New Zealand's policy-rate gap to narrow and improving the relative return available on Kiwi assets.
Thursday's inflation report could challenge the pause
The September-quarter CPI release on 22 October is the immediate test of that policy sequence.
Westpac expects annual headline inflation to fall to 3.7% from 4.1%, but sees underlying measures firming to around 3%, near the top of the RBNZ's target band.
Lower headline inflation would therefore not necessarily remove pressure for higher rates if imported costs are spreading more widely.
Gibbs warns: "Upside surprises in core inflation would be an important development for the RBNZ ahead of the October OCR review, as this could suggest that the lower NZD and higher oil prices are boosting underlying price pressures by more and sooner than they may have expected."
NZD/USD Exchange Rate FAQ
Why has Westpac cut its NZD/USD forecast?
Higher energy costs and borrowing rates have weakened its outlook for domestic demand, prompting a lower December 2026 currency projection.
Does Westpac still expect the Kiwi to recover?
Yes. It forecasts NZD/USD at 0.64 in December 2027, supported by a narrowing interest-rate gap with the US.
What is the next important release?
September quarter inflation on 22 October could test Westpac's expectation of an October RBNZ pause.
The Euro-Dollar Rate Edges Higher as Crédit Agricole Raises Its ECB Rate Forecast The Euro is recovering against the US Dollar, but Crédit Agricole's higher ECB rate forecast still leaves it cautious about market tightening bets. The Euro-to-Dollar exchange rate recovered to $1.1230 on Tuesday morning, up 0.15% from Monday's close.
Latest Exchange Rates:
Euro to Dollar (EUR/USD): 1.121472 (+0.01%)
Pound to Dollar (GBP/USD): 1.334184 (+0.24%)
Dollar to Yen (USD/JPY): 158.16954 (-0.23%)
Crédit Agricole has raised its forecast for the European Central Bank's peak deposit rate to 3% in March 2027, adding another increase to its previous outlook.
Yet its new forecast remains below the eventual peak markets were pricing when the bank made the revision.
UBS separately expects EUR/USD to recover to $1.16 by end-2026 and $1.20 by June 2027, provided European risks become less damaging than investors fear.
The latest French unrest is an immediate test of that confidence.
More ECB tightening, but less than markets expect Crédit Agricole's Louis Harreau expects quarter-point increases in December and March, with an October rise still possible but unlikely.
Higher oil and gas prices have pushed the bank's inflation forecasts upwards, leaving underlying price growth uncomfortably high through next year.
Harreau writes: "In our view, our new inflation forecasts warrant deposit rate hikes until 3.0%. But as things stand currently, we see no reason for the ECB to hike to 3.25%."
"Of course, if gas prices continue increasing, then our core inflation forecasts would change and accordingly our ECB scenario."
The bank expects core inflation to peak in the first quarter of 2027 before easing, weakening the case for extending the hiking cycle beyond March.
Harreau writes: "Until March 2027, we are more or less aligned with the current market pricing (as we have upwardly revised our call and the market has de-priced some hawkishness)."
"Beyond March 2027, markets expect one more hike-by around July 2027. Again, we see this pricing as too high, but 3.25% is still within the limits of what is possible."
Harreau also identifies a larger disagreement further ahead, with markets not pricing the eventual cuts Crédit Agricole expects as inflation declines.
An upward revision to one bank's forecast therefore need not lift the Euro if investors are already assuming a stronger tightening cycle.
The ECB itself remains cautious about how widely expensive energy is spreading through the economy.
In her latest statement to the IMF's policy committee, Christine Lagarde said wage growth had shown no material response to the energy shock and that underlying inflation measures remained broadly stable in September.
She also noted that financing conditions had tightened as long-term interest rates rose.
French bond stress complicates the recovery That tightening can occur without another ECB decision.
Investors demanding a higher premium to lend to France can also raise funding costs for private borrowers, restraining activity and reducing the amount of additional monetary tightening required.
Crédit Agricole warns that either a sovereign crisis or the fiscal retrenchment needed to repair France's finances would hurt growth.
On Monday, French bonds sold off following weekend riots, with MarketWatch reporting that the 10-year yield rose nearly six basis points to 4.845% early in trading as investors questioned the government's ability to reduce its deficit.
UBS's recovery forecast, published before that unrest, depends partly on a budget agreement restoring confidence.
Its strategists Constantin Bolz and Clémence Dumoncel write: "Although the fiscal situation in France remains challenging and is unlikely to improve materially in the near term, we do not expect a broader European debt crisis."
"Instead, we believe some form of budget agreement is likely to be passed, potentially through the use of Article 49.3."
The bank expects an agreement to narrow France's borrowing premium over Germany and help the Euro recover.
A budget agreement could give the recovery more lasting support than the oversold conditions Scotiabank identified near $1.11.
UBS's longer-term currency forecast also relies on relief from Europe's energy bill.
The UBS strategists write: "With the situation in the Middle East unresolved and the Northern Hemisphere entering the winter season, it is difficult to envisage a significant near-term decline in energy prices. However, in our base case, we expect energy prices to moderate during 2027, particularly after the winter period with Brent oil prices approaching 80 USD/bbl next summer."
Oil and US yields could still pull the Euro lower Standard Chartered's Steve Englander cautions against treating the Euro's difficulties as exclusively French.
His analysis links the recent decline to higher US yields relative to Germany, widening borrowing premiums within the Eurozone and rising oil prices, while acknowledging that their separate effects are difficult to isolate.
Those risks are related: stronger US growth can lift Treasury yields while increasing concern about Europe's capacity to cope with higher borrowing costs.
Englander writes: "Alternatively, if the driver of higher yields is higher oil prices, all three EUR negatives could be pushing in the same direction simultaneously, as has been the case over the last seven weeks."
"Even having two of three factors pushing in the same direction is likely to be enough to put some downward pressure on the EUR. So while the market may pause to absorb recent moves, we could easily see a resumption of EUR depreciation down the road."
EUR/USD Exchange Rate FAQ What is UBS's EUR/USD exchange rate forecast?
UBS expects $1.16 by end-2026 and $1.20 by June 2027. Its recovery case includes lower energy prices and reduced French political uncertainty.
Does Crédit Agricole expect more ECB rate rises?
Yes. It forecasts quarter-point increases in December and March, taking the deposit rate to 3% in March 2027. That is an interest-rate projection, not an exchange-rate target.
Why might higher European rates fail to lift the Euro?
Some tightening is already priced in. Expensive energy and widening government borrowing premiums can also weaken growth and confidence in European assets.
Indian Rupee Forecast: BofA Sees USD/INR at 99 Despite Recovery The Indian Rupee is recovering, but BofA and MUFG expect renewed losses as RBI support leaves oil costs and underlying US Dollar demand unresolved. The Dollar-to-Rupee exchange rate fell to 94.72 early on Tuesday, down 0.29% on the day as the Indian currency extended its recovery.
The stronger Rupee is moving away from both Bank of America and MUFG's projections for renewed depreciation in 2027, despite central-bank measures that have curbed immediate demand for Dollars.
BofA forecasts USD/INR at 99 in September 2027, against MUFG's 97.50 for the same quarter.
That puts BofA's projection roughly 4.5% above Tuesday's rate.
Both banks' forecasts predate the latest US waiver of Russia-related sanctions and tariffs.
The waiver offers India relief from an additional trade threat, while the Reserve Bank of India's currency measures have already helped to reverse some Rupee weakness.
Neither development necessarily resolves the financing pressures behind the banks' forecasts.
Oil importers get relief, but Dollar demand can return BofA's Abhay Gupta identifies a cost to the RBI's success in reducing immediate demand for Dollars: some of that demand may simply have been postponed.
The measures divert state-owned oil importers' currency purchases away from the market, raise the cost of importers' forward hedging and signal tighter liquidity conditions.
That can make the Rupee less vulnerable to concentrated buying of Dollars, but protecting the exchange rate uses resources the central bank may later need to replenish.
Gupta writes: "However, these steps would still weigh on the RBI's net FX reserves which would need to be re-built in the future."
"Thus, it does little more than provide a near-term respite for INR while increasing the medium-term challenges for the RBI, in our view. Similarly, discouraging importers' forward hedging would create pent-up demand for hedging as and when these measures are reversed."
Hedging allows an importer to secure an exchange rate for a future payment.
Making it more expensive can discourage that transaction today without removing the underlying need to pay an overseas supplier later.
Gupta nevertheless favours a dedicated facility for oil imports: "FX window for oil import demand is a more effective usage of RBI's reserves, rather than broad-based market intervention. Diverting oil importer demand would be the most impactful (assuming take-up is higher than previously announced USD credit line in Apr'26) as it reduces the effective CA gap for market to less than USD 10Bn in 4Q (which will still need RBI smoothing in the market)."
The current-account financing gap left for the market would shrink, but only if importers make sufficient use of the facility.
The US waiver changes the risks around the forecasts President Donald Trump's executive order waives new duties and sanctions under the Graham Act, including additional tariffs aimed at major buyers of Russian energy.
The order leaves earlier sanctions under existing executive orders intact, and the waivers can be reconsidered by the US administration.
For India, the pause eases the threat of a further 100% US tariff linked to purchases of Russian oil, as The Indian Express reports.
Our reading is that this reduces an external risk to the Rupee, but does not by itself establish that India's energy import bill will fall enough to reverse the banks' currency outlooks.
Before the waiver, MUFG's Michael Wan identified several sources of demand for foreign currency:
"A wider current-account deficit, elevated oil prices and continued gross FDI repatriation linked to India's strong IPO pipeline remain sources of dollar demand."
Foreign investors converting proceeds from Indian investments into overseas currency can put pressure on the Rupee even when domestic growth is healthy.
That problem was already evident in MUFG's earlier assessment of persistent Dollar demand despite larger RBI reserves.
The latest measures have had a more immediate effect on trading, according to Wan:
"The steps reduced speculative NDF demand and spot dollar buying, helping reverse part of the earlier rupee weakness, although the adjustment came with higher hedging costs and thinner liquidity in onshore forwards."
NDFs are non-deliverable forward contracts used to trade currencies offshore, while onshore forwards allow participants to agree a future exchange rate in India.
Higher rates may already be reflected in market prices The RBI has raised its repo rate to 5.50%, but MUFG questions whether the central bank will deliver all the tightening investors have anticipated.
Wan says: "We think the RBI has turned hawkish, but not enough to validate the tightening already priced into INR rates."
"We maintain one further 25bp hike in February 2027, taking the repo rate to 5.75%, with some risk that it eventually reaches 6.00%."
BofA sees a greater risk that defending the currency will ultimately require a more aggressive hiking cycle.
Gupta writes: "With domestic pressures (strong growth, higher inflation) well-aligned towards need for tighter monetary policy, these measures raise the risks of RBI undertaking more aggressive hiking cycle to lean-on rate-differentials to support INR."
For MUFG, cheaper Rupee valuations and softer short-term US yields offer support alongside RBI intervention.
Its forecast nevertheless allows renewed depreciation without a disorderly sell-off: "For FX, we continue to see USD/INR moving gradually higher over time, but with the topside capped by RBI intervention."
USD/INR Exchange Rate FAQ What do BofA and MUFG forecast for USD/INR?
BofA projects 99 for September 2027, while MUFG expects 97.50 in the third quarter. Both imply a weaker Rupee than Tuesday's 94.72 rate.
Why can the Rupee weaken despite RBI support?
Intervention can reduce immediate market pressure, but oil payments and investors repatriating funds still create demand for Dollars. BofA also warns that deferred hedging demand can return.
Does the US waiver remove all Russia-related sanctions?
No. The order waives new measures under the Graham Act while leaving earlier sanctions under existing executive orders intact.
Pound-Euro could test €1.19 if French political and fiscal tensions persist, although weaker UK jobs data may limit Sterling’s upside. The Pound to Euro (GBP/EUR) exchange rate rallied on Monday, after France was rocked by violent protests over the weekend.
At the time of writing, the GBP/EUR exchange rate was trading at around €1.1891. Up around 0.3% from the start of Monday’s session.
Latest — Exchange Rates:
Pound to Euro (GBP/EUR): 1.186886 (+0.07%)
Pound to Dollar (GBP/USD): 1.331202 (-0.14%)
Euro to Dollar (EUR/USD): 1.121592 (-0.21%)
DAILY RECAP:
The Euro (EUR) faced renewed selling pressure on Monday as a wave of civil unrest across France over the weekend exacerbated concerns about the country's deteriorating fiscal position and added to uncertainty surrounding its political outlook.
The unrest, which saw clashes with police, widespread looting and a fire that severely damaged the historic town hall in Limoges, has placed further pressure on President Emmanuel Macron's government.
The demonstrations come at an already difficult time for French policymakers, who are struggling to secure support for a 2027 budget aimed at reducing the country's sizeable deficit ahead of next year's presidential election.
The prospect of further political instability has raised doubts over whether the government can implement the spending reductions and fiscal reforms needed to restore confidence in France's public finances.
These fears have added to France’s bond-market woes, which EUR investors are growing increasingly concerned could spill over into the wider Eurozone.
While able to advance against the Euro, the Pound (GBP) was largely rangebound against its other peers on Monday ahead of a run of key UK data.
A heavy macroeconomic calendar is anchored by the latest domestic labour market and consumer price figures, followed later in the week by retail sales numbers and flash PMIs.
Traders will scour the upcoming prints for fresh clues on how domestic activity is weathering the recent climb in energy costs, and whether stubborn price pressures will force the Bank of England (BoE) to tighten monetary policy more aggressively.
Near-Term GBP/EUR Forecast: Weak UK Jobs Data to Drag on Sterling? Looking ahead, the Pound Euro exchange rate may take its cues primarily from the UK’s latest jobs figures on Tuesday.
Consensus forecasts point to another uptick in the unemployment rate for August alongside a cooling in wage growth. If confirmed, signs of domestic labour market slack could sap Sterling demand by tempering expectations of future interest rate hikes from the BoE.
In the meantime, it seems safe to assume that France’s political and fiscal headaches will continue to influence EUR sentiment, with headwinds against the Euro only likely to grow if the situation deteriorates further.
Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.
The Pound-Australian Dollar could remain under pressure if UK jobs data weakens BoE hike expectations, while hawkish RBA signals may keep the Aussie supported. The Pound to Australian Dollar (GBP/AUD) exchange rate opened this week’s session on the defensive, following hawkish remarks from a Reserve Bank of Australia (RBA) policymaker.
At the time of writing, GBP/AUD was trading at AU$1.8896. Down around 0.4% from the start of Monday’s European session.
Latest — Exchange Rates:
Pound to Dollar (GBP/USD): 1.331469 (-0.12%)
Australian Dollar to Dollar (AUD/USD): 0.6983 (+0.54%)
DAILY RECAP:
The Australian Dollar (AUD) strengthened on Monday after Reserve Bank of Australia Assistant Governor Christopher Kent suggested that interest rates may need to rise further if inflation remains stubbornly elevated
Speaking at a banking conference, Kent highlighted evidence that underlying inflationary pressures remain persistent, while questioning whether monetary policy is restrictive enough to bring price growth sustainably back towards the RBA’s target.
Kent also acknowledged that there are signs that the labour market is cooling, but stressed that markets shouldn’t read too much into a single month of data.
This follows last week’s abysmal jobs report, which triggered significant weakness in the Australian Dollar after reporting a sharp fall in employment growth last month.
If the RBA is willing to look past September’s jobs data, it increases the odds that the bank might deliver another interest rate hike by the end of the year.
The Pound (GBP) traded in a narrow range on Monday, as investors were reluctant to make significant adjustments to their positions in the currency ahead of a busy week for UK economic data.
This week’s data is headlined by the UK’s latest employment and inflation figures and also includes retail sales and PMI releases at the end of the session.
GBP investors will be looking for fresh insight into how the UK economy is faring amid a fresh rise in energy prices and how this data could influence the Bank of England (BoE) outlook on policy.
Near-Term GBP/AUD Forecast: Soft Jobs Data to Sap Sterling Sentiment? Looking ahead, the main catalyst of movement for the Pound to Australian Dollar exchange rate on Tuesday will likely be the publication of the UK’s latest employment data.
Consensus estimates predict unemployment will have risen again in August at the same time that wage growth slowed, potentially applying pressure on Sterling if this is seen as weakening the case for the BoE to hike interest rates in the coming months.
Meanwhile, in the absence of any notable domestic data, movement in the ‘Aussie’ is likely to be tied to market risk dynamics on Tuesday, with a cautious mood potentially denting the currency.
Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.
Pár EUR/JPY oslabil pod 178,00 kvůli nepokojům ve Francii a jestřábím signálům BoJ. Kurz zůstává pod 100denním klouzavým průměrem SMA na úrovni 182,75, což udržuje medvědí výhled.
The EUR/JPY cross trades with mild losses near 177.70 during the early European trading hours on Tuesday. The Euro (EUR) weakens against the Japanese Yen (JPY) as street riots in France raise concerns over political stability. Zew Surveys from Germany and the Eurozone will be released later on Tuesday. Also, European Central Bank (ECB) policymaker José Luis Escrivá is set to speak.
French authorities have imposed overnight curfews in parts of central Paris and other cities after a weekend of riots and looting across the country, per the BBC. French Prime Minister Sébastien Lecornu said on Monday that he was “fully resolved to restore public order” and had called for “local and partial” curfews if needed. There was “no question” of imposing a full curfew on entire cities, he said.
On the Japanese front, hawkish comments from a Bank of Japan (BoJ) policymaker could underpin the JPY. BoJ policy board member Junko Koeda said that there is no need to be excessively cautious about rate hikes given that upside inflation risks remain substantial.
Meanwhile, BoJ Governor Kazuo Ueda said on Monday that underlying inflation is "quite close" to the central bank's 2% target, with strong global AI demand adding to inflationary pressure from a tight job market, signalling scope for further rate increases.
Global bond selloff shifts focus to cross-currency rate tradesStrategists at Societe Generale note that the recent global bond rout has been broad-based, with the move in US Treasuries rippling across major markets. They highlight that “the bond selloff has put pressure on bonds everywhere, and a 1% rise in 10yr US yields this year has sent gilts up by 93bp, BTPs by 94bp and OATs by 123bp.”
Societe Generale argues that while this “brings its own narrative to the market,” the extent of the US move means “if the US rate story is getting stretched, that does reinforce the notion that selling EUR/JPY and GBP/AUD here, may be a better risk-reward strategy than selling EUR/USD and GBP/USD at these levels.” In their view, the current backdrop favours cross-currency relative-rate trades over outright Dollar or Pound positions.
Ueda keeps BoJ cautiously hawkish as inflation nears targetUeda’s 7/10 FXS Speechtracker score is slightly below the historic 7.4/10 baseline, but the emphasis on “underlying inflation near 2%” and a positive wages–prices loop marks a mildly hawkish tilt. The focus on demand-led inflation from robust global activity, tight labor markets and domestic capex, alongside warnings that miscalibrated policy could push long-term rates higher, reinforces a narrative that the BoJ is edging closer to further normalization while keeping financial conditions accommodative.
At the same time, Ueda’s insistence on no shift in the fundamental bond taper approach and refusal to preannounce emergency JGB measures signal a desire to avoid market overreaction while retaining flexibility. For FX, the combination of rising inflation, the prospect of steady increases in long-term yields if short-term rates are lifted, and a commitment to stabilizing the JGB market is modestly supportive for the Yen, especially if global risk sentiment remains fragile amid Middle East-driven energy price pressures.
Technical Analysis: Bearish tone of EUR/JPY prevails under the 100-day SMAIn the daily chart, EUR/JPY keeps a bearish tone as it holds below the 20-period Bollinger simple moving average and remains well under the 100-day simple moving average (SMA). Price is also capped beneath the upper Bollinger band, reinforcing a downside bias while the Relative Strength Index (14) at 42.80 suggests subdued momentum rather than oversold conditions.
On the downside, initial support level is located at the October 15 low of 176.52. The next contention level to watch is the lower limit of Bollinger band around 175.80, where sellers may consider booking profits on further weakness.
On the topside, immediate resistance level appears in the 177.95-178.00 zone, representing the 20-period Bollinger SMA and psychological level. A stronger barrier is seen at the upper boundary of Bollinger band near 180.10, while the 100-day SMA at 182.75 marks a major resistance level that would need to be reclaimed to ease the broader bearish pressure.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Japanese Yen FAQs The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.
One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.
Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.
The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.
EUR/USD se drží v medvědím trendu pod 20denním klouzavým průměrem EMA na úrovni 1,1274; tlak na euro zvyšují francouzská fiskální rizika a napětí kolem Ukrajiny.
The Euro (EUR) is up 0.15% at around 1.1230 against the US Dollar (USD) during the Asian trading session on Tuesday. The major currency pair gains as the US Dollar is under pressure ahead of Meta Q3 earnings on Wednesday.
As of writing, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades 0.16% lower to near 101.80. The DXY has been under pressure for a week amid concerns regarding the continuation of Artificial Intelligence (AI) spending by United States (US) hyperscalers.
US Dollar Price Last 7 Days
The table below shows the percentage change of US Dollar (USD) against listed major currencies last 7 days. US Dollar was the weakest against the New Zealand Dollar.
USDEURGBPJPYCADAUDNZDCHFUSD-0.68%-0.94%-0.25%-1.41%-0.33%-1.55%-1.23%EUR0.68%-0.23%0.44%-0.75%0.37%-0.85%-0.54%GBP0.94%0.23%0.70%-0.46%0.61%-0.62%-0.25%JPY0.25%-0.44%-0.70%-1.13%-0.00%-1.28%-0.85%CAD1.41%0.75%0.46%1.13%1.09%-0.18%0.22%AUD0.33%-0.37%-0.61%0.00%-1.09%-1.22%-0.86%NZD1.55%0.85%0.62%1.28%0.18%1.22%0.44%CHF1.23%0.54%0.25%0.85%-0.22%0.86%-0.44%
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
The third quarter earnings report by Meta would reflect whether hyperscalers are stick to their investment agenda what they committed in previous quarters.
According to Goldman Sachs, Meta is one of five AI hyperscalers expected to increase combined capital expenditure to about $1.2 trillion next year, Reuters reported.
Meanwhile, the Euro is broadly under pressure due to continued tensions between Russia and Ukraine, and French fiscal risks.
Euro underperforms as French assets lag and geopolitical worries buildStrategists at Scotiabank highlight that the Euro is underperforming, pointing to “widespread and violent protests across France against poor conditions in schools and hospitals and broader concerns about affordability” as a key drag on sentiment. They add that French equities and fixed income have come under particular pressure, noting that “French stocks and bonds are underperforming and bond spreads versus Germany have widened to 145bps, sitting at the top of the (recent) historic range.”
Geopolitical risk is also feeding into the cautious tone. Scotiabank flags comments from President Zelenskyy, who said “the US is pushing Ukraine, not Russia to concede,” which the bank suggests is adding to broader geopolitical concerns around the Euro complex.
EUR/USD Technical Analysis
In the daily chart, EUR/USD trades at 1.1232, keeping a bearish near-term tone as spot remains below the 20-period exponential moving average (EMA) at 1.1274. The pair’s inability to reclaim this EMA suggests that recent bounces are still capped by overhead supply, while the Relative Strength Index (14) at 40.28 recovers from oversold territory but stays below the midline, hinting at only modest improvement in downside momentum rather than a clear bullish shift.
On the topside, immediate resistance is located at the 20-period EMA at 1.1274, which acts as the first barrier that bulls would need to overcome to ease the current downside bias and open the way for a more sustained corrective phase. On the downside, the October 14 low at 1.1113 is the key support level.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Euro FAQs
The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day.
EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy.
The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa.
The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control.
Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency.
A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall.
Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period.
If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
AUD/USD čelí riziku poklesu po odrazu k úrovni 0,70; spekulanti drží čisté dlouhé pozice v objemu 50 591 futures kontraktů, což zvyšuje zranitelnost v případě zhoršení sentimentu.
Cyclical assets driving recent Aussie and Kiwi strength
US dollar and Treasury yield rebounds threaten gains
Speculators heavily long AUD, short NZD, creating contrasting vulnerabilities
AUD/USD looks heavy, NZD/USD breaks its minor uptrend
The Aussie and Kiwi have enjoyed decent bounces against the US dollar over recent days, benefiting from a recovery in risk appetite, China's latest data dump coming in marginally firmer than expected, and potentially a short-term rotation away from US tech and AI-linked stocks towards more cyclical and value-orientated areas of the market.
A reduction in hawkish Fed pricing and a decline in US Treasury yields, led by the back end of the curve, may have provided an additional tailwind, particularly for cyclical assets.
However, while both Antipodean currencies continued to rise against the greenback on Monday, the narrower US Dollar Index found its footing, helped in part by renewed concerns over France's fiscal outlook, while Treasury yields and US tech stocks pushed higher. Broader risk appetite remained firm, helping to sustain the gains, but an extension of those moves could create headwinds for both the Aussie and Kiwi today.
Cyclicals Lead the Way
Source: LSEG
AUD/USD continues to track industrial metals prices closely, with correlations of +0.93 over five sessions and +0.62 over ten. NZD/USD, in contrast, has shown a stronger relationship with global materials equities and USD/CNH, with ten-session correlations of +0.62 and −0.57, respectively.
Interestingly, neither currency has shown much of a relationship with broader risk appetite, proxied here by S&P 500 futures, or volatility measures such as VIX futures and the MOVE index over the past ten sessions. Nor have interest rate differentials shown a particularly meaningful relationship over the near term, suggesting cyclical factors have been a more consistent influence on both currencies recently than broader risk appetite or relative interest rate movements.
Speculative Divide
Perhaps reflective of the Aussie's outperformance against the Kiwi for large portions of this year, positioning among speculative traders remains heavily skewed in the Aussie's favour, as seen in the graphic below showing the latest CFTC leveraged funds gross and net positioning.
Source: LSEG
Leveraged funds hold 87,632 gross long AUD futures contracts against just 37,041 shorts, leaving them net long 50,591 contracts. It's almost the mirror image for the Kiwi, with 17,668 gross longs against 29,287 shorts, leaving speculative traders net short 11,619 contracts.
While this represents only one segment of the broader FX market, it gives a sense of how positioning may be skewed. With Aussie longs heavily outweighing shorts, there's potential vulnerability to long liquidation should sentiment deteriorate. For the Kiwi, the opposite applies, with short covering potentially providing support if the recovery continues.
Recent economic data may also explain why the Kiwi has started clawing back ground, with softer Australian labour market data last week seeing traders curtail expectations for further RBA tightening. A full 25 basis point hike is no longer priced by the end of next year.
In contrast, New Zealand's latest manufacturing and services PMIs suggest the economic recovery continues to build despite headwinds from elevated energy prices and persistent inflationary pressures, with markets continuing to price more than four full rate hikes by the second half of next year.
The divergence in economic performance may also be contributing to the shift in relative performance between the two currencies.
Aussie Looking Heavy
Source: TradingView
Having hit its lowest level since July last week, the latest Aussie bounce has seen the pair recover from just beneath 69 US cents to within a whisker of 70 cents on Monday.
However, looking at the four-hourly candles overnight, you can't help but notice the elongated upper wicks, resembling something akin to shooting stars. While we've yet to see follow-through selling, the pair is now resting right on the minor uptrend that's been in place from the recent lows, suggesting directional risk may be starting to skew to the downside.
RSI (14) remains above the neutral 50 level but has now flatlined, while MACD is beginning to converge towards its signal line, albeit in positive territory.
After a decent bounce, the price action looks heavy, putting downside levels such as 0.6967 and 0.6940 in focus in the near term.
Should the Aussie resume its advance, 0.69931 marks the level where the price stalled overnight, while 0.7004 has acted as both support and resistance over recent weeks. A break above 0.7015, the high set on October 14, would disrupt the sequence of lower highs and begin to skew directional risk higher again.
For now, though, the immediate price action suggests the bulls may have their work cut out extending the recovery.
Kiwi Losing Momentum
Source: TradingView
NZD/USD has followed a similar pattern to the Aussie, although the pair has already broken beneath the minor uptrend that had been in place from the lows set earlier this month. While that suggests directional risk may be shifting sideways to lower, overnight selling pressure was not as pronounced by comparison.
Looking at the last two four-hourly candles, bids have emerged around 0.5660, making that the immediate focal point for trade construction. On the downside, 0.5641 marks the low set late last week, with 0.5627 a more substantial support zone, having acted as resistance for a lengthy period earlier this month.
Overhead, 0.56753 marks the high set late last week, with 0.56863 and 0.5704 the next levels of note.
RSI (14) remains above the neutral 50 level but has yet to set a higher high, providing a cautionary message for bulls considering chasing further upside in the near term. That view is reinforced by MACD, which is now converging towards its signal line in positive territory, raising the possibility of a bearish crossover.
It's not an outright bearish message by any stretch, but it does put greater emphasis on how the price responds around these levels rather than holding a firm directional bias in the near term.
The Canadian dollar strengthened despite a slightly softer-than-expected CPI report, as rising longer-term inflation expectations complicated the Bank of Canada's rate outlook. With the BoC meeting on 28 October, conflicting inflation signals could shape expectations for USD/CAD and AUD/CAD.
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Canadian Dollar Holds Firm as BoC Inflation Risks Persist
The Canadian dollar strengthened against most FX majors on Monday despite a slightly softer-than-expected CPI report and reduced expectations of an October BoC hike. Headline CPI rose 3.1% y/y, just below the 3.2% expected, while trimmed mean inflation eased to 1.84%. That divergence suggests inflationary pressures remain relatively contained beneath the headline figure, giving the BoC some breathing room ahead of its 28 October meeting.
BoC Surveys Reveal Persistent Inflation Risks
However, the BoC's quarterly surveys presented a less dovish picture. While consumer inflation expectations edged lower over the one- and two-year horizons, five-year expectations rose to 3.9% from 3.4% in Q2, their highest level in the available series since 2015. Businesses also reported persistent inflation pressures from energy prices and tariffs, raising concerns that price increases could become more widespread.
This divergence may help explain why CAD remained supported despite softer near-term BoC pricing. While an October hold appears increasingly likely, elevated longer-term inflation expectations suggest the tightening cycle may not be over. Attention now turns to whether the BoC's updated projections reinforce expectations of further hikes later this year or into 2027.
USD/CAD Technical Analysis: US Dollar vs Canadian Dollar
The potential pullback I had been circling for USD/CAD has finally got underway, with last week’s bearish engulfing candle snapping a five-week winning streak. It is also the third candle of the bearish reversal pattern known as an evening star formation. Prices continued lower on Monday following the hotter long-term inflation outlook, even though the US dollar index held its ground.
The daily chart shows that Monday’s low found support almost perfectly at the monthly pivot point and 50-day EMA. And with the daily RSI (2) oversold below 10 and a lower wick on the daily candle, perhaps we’ve seen the best part of the initial move lower for USD/CAD. Bears may therefore be seeking to fade smaller bounces into resistance levels from here, which brings the 2025 high, 1.42 handle or June high into focus – in anticipation of a move down towards 1.40.
Source: ICE, TradingView
AUD/CAD Technical Analysis: Australian Dollar vs Canadian Dollar
Momentum has turned lower on AUD/CAD after a very brief parity party – and with traders less certain of RBA hikes, the cross has the potential to move lower. Note that the AU–CA two-year yield spread is heading lower ahead of prices as markets continue to reprice relative expectations between the RBA and BoC.
Last week’s candle wasn’t quite a bearish engulfing – but it was close enough. The daily chart shows a shooting star candle on Thursday and a lower high, ahead of a direct break beneath the monthly pivot point down to monthly S1. While AUD/CAD is showing signs of support around S1, bears may be seeking to fade minor rallies within Thursday’s bearish candle in anticipation of a move down to the April 2021 high or 200-day EMA. A break beneath these levels would bring the 50-week EMA into focus near the 0.97 handle.
GBP/USD po silném týdenním obratu od spodní hranice pásma míří k otestování úrovní 1,3650–1,3675; nejbližší klíčová rezistence se nachází u 1,3435, kde leží 200denní klouzavý průměr.
Scotiabank strategists Shaun Osborne and Eric Theoret note GBP/USD is little changed as markets await UK labour data, Consumer Price Index (CPI) and next week’s budget, where investors expect Chancellor Healey to maintain fiscal discipline. Technically, the British Pound (GBP) has staged a strong bullish weekly reversal from the lower end of its sideways range, with scope to retest 1.3650/75 and initial resistance at the 200-day moving average near 1.3435.
Pound eyes retest of range top
"The GBP is little changed on the session. Spot is marking time ahead of tomorrow’s jobs and wage, with CPI released on Wednesday."
"Next week’s budget is starting to attract a little attention as well, with local reports suggesting that investors are banking on Chancellor Healey maintaining a steady hand on spending and borrowing to boost Gilts."
"Bullish – Solid GBP gains from Wednesday’s post-US CPI low drove a huge bullish weekly reversal on the chart (outside range week)."
"Follow through demand so far has been limited but the scale of last week’s rebound from the weekly low and net gain is hard to ignore."
"With recent price action basing around the low point of the sideways range in place since April, the pound’s solid gain last week should put spot on course to retest the upper end of the range (1.3650/75) in the coming weeks."
"Initial, key resistance sits at 1.3435 (200-day MA)."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
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
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.
