Forex News

• EUR/USD holds just above 1.1200 after bouncing from 17-month lows near 1.1150 earlier this week.
• The Euro recovery is more due to US Dollar weakness ahead of the release of US inflation data than to EUR strength.
• High Oil prices and ongoing concerns about France's fiscal stability are acting as headwinds for Euro rallies.

The Euro (EUR) is showing a frail recovery against the US Dollar (USD) on Tuesday, due more to the Greenback’s weakness ahead of the release of the US inflation data than to any noticeable Euro strength. The EUR/USD pair hovers just above 1.1200, after bouncing from 17-month lows near 1.1150 earlier in the week, although it maintains its broader bearish structure intact.

The US Dollar is trimming recent gains against its main rivals on Wednesday, as investors brace for the release of September’s US Consumer Price Index (CPI) figures. Consumer inflation is expected to have accelerated to a 3.6% year-over-year (Y-o-Y) growth from 3.4% in August, with core inflation showing a more moderate uptick to 2.5% from 2.4% in the previous month.

Fed tightening expectations are the main driver for the US Dollar

Apart from that, the Federal Reserve’s (Fed) Vice Chair of Supervision, Michelle Bowman, is due to speak at the IMF Annual Summit in Bangkok and might provide further clues about the central bank’s monetary policy. On Tuesday, the influential New York Fed President, John Williams, played down market speculation about further interest rate hikes in 2027, putting additional pressure on the US Dollar.

The common currency, on the other hand, faces serious headwinds, namely the high Oil prices and the ongoing concerns about France, which so far are capping any recovery attempt. European Central Bank (ECB) President Christine Lagarde urged the French government to consolidate its fiscal policy and discarded any intervention in bond markets to alleviate pressure on French debt.

Eurozone data released on Wednesday added to evidence of the inflationary impact of high energy prices, keeping pressure on the ECB to tighten its monetary policy further. German Wholesale Price Index accelerated to 1.9% in September from 0.9% in August, against expectations of a moderate slowdown to 0.7%. In Spain, the Harmonised Index of Consumer Prices (HICP) has grown at a 0.6% pace in September and 5% year-on-year, unchanged from the previous month. The impact of these releases on the Euro has been marginal.

Commerzbank’s Volkmar Baur notes EUR/USD briefly dipped to 1.115 before recovering above 1.12 as French bond yields stabilized and sentiment improved following the IMF’s World Economic Outlook. He stresses that for EUR/USD today, US September CPI will overshadow structural issues, with elevated market expectations meaning a downside surprise could ease Federal Reserve pressure and support the Euro.

Euro focus shifts to US CPI

"During the night into Tuesday, EUR/USD temporarily fell as low as 1.115, but the exchange rate managed to recover somewhat over the course of yesterday’s session and is back above 1.12 this morning."

"For EUR/USD today, however, structural developments are likely to take a back seat to the concrete US inflation numbers for September."

"The market expects prices to rise sharply by 0.6% month-on-month, which would push the annual inflation rate up to 3.6%. Much of this is once again attributable to higher energy prices. However, the expected increase in core inflation from 2.4% to 2.5% also shows that the story does not end with diesel prices."

"The good news for the euro is that market expectations are already fairly elevated, with US headline inflation forecast at 0.6% month-on-month."

"A modest downside surprise could therefore take some pressure off the Fed and the bond market and, in turn, provide some support for the euro."

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

• DXY attracts sellers for the second straight day amid the recent pullback in US bond yields.
• Hawkish Fed expectations and geopolitical uncertainties limit losses for the safe-haven USD.
• The technical setup further warrants caution for bears as focus remains on the US CPI report.

The US Dollar Index (DXY), which tracks the Greenback against a basket of currencies, drifts lower for the second straight day on Wednesday, retreating further from its highest level since April 2025, touched on the first day of this week. The index, however, holds above the 102.00 mark through the early European session as traders keenly await the release of the US Consumer Price Index (CPI) report, due later today.

Apart from this, the US Producer Price Index (PPI) on Thursday and US Federal Reserve (Fed) Chair Kevin Warsh's speech on Friday will be looked to for more cues about the future policy outlook, which, in turn, will influence the near-term DXY price dynamics. Heading into the key data/event risks, the recent pullback in US bond yields prompts traders to lighten their bullish bets following a strong rally from the September monthly swing low.

However, the growing acceptance that the US central bank will raise borrowing costs again in December, along with geopolitical uncertainties stemming from escalating conflicts in the Middle East, helps limit the downside for the safe-haven US Dollar (USD). This makes it prudent to wait for strong follow-through selling before confirming that the DXY has topped out in the near-term and positioning for any meaningful corrective decline.

From a technical perspective, the index holds a bullish near-term bias above the 101.65-101.70 horizontal resistance breakpoint. Moreover, the Moving Average Convergence Divergence (MACD) indicator remains in positive ground with a modest reading of 0.02, suggesting that upward momentum is still present. Meanwhile, the Relative Strength Index (RSI) at 64.81 stays in positive territory but remains shy of extreme overbought conditions.

Hence, any further weakness below the 102.00 mark is more likely to attract fresh buyers near the 101.70-101.65 resistance-turned-support. A daily close back under it would hint at a deeper corrective phase as momentum indicators retreat from elevated levels and lose some intensity compared with prior sessions. Meanwhile, a sustained hold above this zone keeps buyers in control, warranting some caution for aggressive bearish traders.

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

DXY daily chart

• The Indian Rupee rallies further on RBI’s forceful measures to curb US Dollar’s demand.
• Oil prices recover due to ongoing Middle East tensions.
• The US Dollar corrects ahead of the US CPI data for September.

The Indian Rupee (INR) extends the rally against the US Dollar (USD) for the third trading day on Wednesday, driven by fresh Reserve Bank of India’s (RBI) measures to curb the US Dollar’s (USD) demand. In the opening trade, the USD/INR pair is down 0.35% to slightly below 95.00, the lowest level seen in over a month.

Over the weekend, the RBI unveiled several measures, including special window for Public Sector Undertaking’s (PSU) Oil Marketing Companies (OMCs) for buying US Dollars against crude oil imports and tighter hedging rules, in an attempt to curtail demand for US Dollars.

Meanwhile, market experts doubt that the near-term rally in the Indian currency is sustainable due to external pressures.

RBI steps seen stabilising INR but not reversing broader depreciation

Strategists at OCBC argue that the RBI’s “increasingly forceful response may help contain near-term INR depreciation pressures,” but they remain “cautious about extrapolating the latest rebound into a sustained recovery.” They note that “higher hedging costs may temper forward USD demand, but could also discourage genuine corporate hedging,” while “the special USD window for oil companies shifts demand away from the spot market rather than reducing India’s underlying US dollar requirements.”

OCBC adds that “we may still see room for some near-term INR gains, but the sustainability of the move will depend on whether portfolio outflows moderate and external pressures from oil prices and US yields ease.” In their view, “for now, the policy measures may help establish a firmer near-term footing for INR, rather than mark a decisive reversal in its broader depreciation trend.”

Oil prices rebound as Middle East risks remain intact

In the opening trade, the MCX Crude Oil contract expiring on October 19 is up almost 0.5% to near Rs. 9,000. Oil prices have recovered from its monthly low of Rs. 8,338 in the past week as supply risks from the Middle East remain intact due to tensions between Saudi Arabia and Iran-backed Houthis.

Currencies from economies, such as India, which rely heavily on oil imports to meet their energy needs, tend to underperform in a high-oil-price environment.

The Houthis attacked an administrative building belonging to state-owned oil firm Saudi Aramco in the city of Dhahran, causing a limited fire, Saudi Arabia’s energy ministry said on Wednesday, Reuters reported.

Lower US Dollar weighs on USD/INR

The correction in the US Dollar ahead of the release of the United States (US) Consumer Price Index (CPI) data for September at 12:30 GMT has also weakened the USD/INR pair.  

In the Asian trade, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades 0.1% lower to near 102.10. The DXY has retreated from its yearly high of 102.61 posted on Monday.

Investors will pay close attention to the US CPI data to get fresh cues regarding the Federal Reserve’s (Fed) monetary policy outlook.

The US CPI report will likely to show that the headline inflation rose to 3.6% Year-on-Year (YoY) from 3.4% in August. The core CPI – which excludes volatile food and energy items – is seen arriving at 2.5% YoY, higher than the previous reading of 2.4%.

India's WPI Inflation rises further

India's Consumer Price Index (CPI) at the wholesale level rises at a faster pace of 11.39% Year-on-Year (YoY), faster than the previous reading of 9.92%. A faster growth in India's factory-level inflation could prompt expectations of more interest rate hikes by the RBI this year.

Technical Analysis: USD/INR slides below 95.00

In the daily chart, USD/INR trades at 94.95, keeping a bearish near-term tone as spot holds below the 20-day Exponential Moving Average (EMA) at 95.92.

The break under the short-term trend gauge suggests the pair remains under corrective pressure after recent overbought conditions, while the Relative Strength Index (14) easing toward 34 hints at fading bullish momentum rather than outright oversold stress.

On the topside, immediate resistance is located at the 20-day EMA near 95.92, where any recovery would likely meet initial supply and define whether the latest pullback is merely a pause within the broader uptrend or the start of a deeper correction. Looking down, the pair could extend its decline towards the September low near 94.30.

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

MUFG’s Michael Wan explains that recent RBI FX measures have supported spot Indian Rupee, while temporarily disrupting derivatives liquidity. Offshore INR forward premiums fell sharply after restrictions on non-resident NDF access and higher hedge costs. These actions reduced speculative Dollar demand and helped INR rally, though at the expense of wider bid-ask spreads and less liquid onshore forwards.

FX measures tighten INR hedging

"The RBI’s latest FX measures have supported spot INR to the 95.2 level but added some costs to rupee derivatives liquidity."

"Reuters reported that USD/INR forward quotes were temporarily withdrawn amid uncertainty over whether the 20% cash-margin requirement covered interbank trades, although the RBI subsequently indicated that it did not."

"Until formal clarification is issued, cautious market-making could widen bid-ask spreads, raise hedging costs and shift activity offshore."

"We note that offshore INR forward premiums fell sharply across all tenors between 12 and 13 October. The broad-based move suggests that offshore demand for INR downside protection was rapidly unwound after the RBI restricted non-resident NDF access to genuine hedging, raised the cost of FX hedges and provided state oil companies with a dedicated dollar window."

"Together, these measures reduced speculative NDF demand and spot dollar buying, helping INR rally by around 1.5%, albeit at the cost of higher hedging expenses and less liquid onshore forward markets."

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

• Silver price slumps to near $58.70 amid the recent recovery in oil prices.
• Investors keenly await the US CPI data for September.
• Danske Bank said that the Fed has signaled no urgency for interest rate hikes.

Silver price (XAG/USD) is down 0.65% to near $58.70 during the European trading session on Wednesday. The white metal is under pressure as oil prices have increased recently amid ongoing tensions in the Middle East.

As of writing, the WTI Oil price trades 0.5% lower to near $93.44, but has recovered almost 7.5% from its recent low of $86.32.

Analysts at Commerzbank report that oil prices extended its recent advance, as "fresh Houthi attacks on Saudi infrastructure and continued tanker diversions from the Persian Gulf stoked supply fears." The bank highlights that the renewed disruption to Saudi facilities and shipping routes is reinforcing market concerns over the reliability of Middle East supply at current price levels.

Higher oil prices prompt global inflationary fears, a scenario that boosts the odds of hawkish interest rate decisions from central banks, which diminishes the appeal of non-yielding assets, such as Silver.

Meanwhile, investors keenly await the United States (US) Consumer Price Index (CPI) data for September, which will be published at 12:30 GMT. The data is expected to have a significant impact on Federal Reserve’s (Fed) interest rate expectations.

US inflation seen edging higher but Fed likely to stay patient

Analysts at Danske Bank expect a modest firming in the September data, forecasting “headline inflation at 0.5% m/m SA, 3.6% y/y (prior: 0.6% m/m, 3.4% y/y) and core inflation at 0.2% m/m SA, 2.5% y/y (prior: 0.3% m/m, 2.4% y/y), with energy prices being the main driver of the expected pickup in headline inflation.” For the policy outlook, Danske Bank emphasises that “for the Fed, focus will be on whether underlying inflation pressures are broadening.” With this being the final inflation release before the October FOMC meeting and “recent Fed communication signalling little urgency to hike again,” the bank judges that “it would take a clear upside surprise for the Fed to signal a rate hike already in October.”

Silver Technical Analysis

In the daily chart, XAG/USD trades at $58.75, extending its slide below the 20-day exponential moving average (EMA) at $61.45, which now acts as immediate overhead resistance and keeps the near-term tone bearish. The location of price under this key trend gauge suggests rallies are likely to be capped while the Relative Strength Index (14) at 37.49 stays on the weak side of neutral, hinting at lingering downside pressure rather than a decisive oversold rebound.

On the topside, the first level to watch is the 20-day EMA at $61.45, and a sustained break above this barrier would be needed to ease the current bearish bias and open scope for a broader recovery. On the downside, while no nearby structural price supports are evident in the dataset, the RSI reading at 37.49 indicates that sellers still have control but are approaching levels where dip-buying interest could start to emerge if the slide in XAG/USD extends further.

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

• Gold hovers around $4,150 as USD extends its retracement slide from an 18-month high.
• Energy-driven inflation risks lift Fed rate hike bets, cap the upside for the non-yielding bullion.
• Traders also seem hesitant ahead of the latest US inflation figures and Fed Chair Warsh’s speech.

Gold (XAU/USD) trades with a negative bias for the third straight day, hovering below $4,150 heading into Wednesday’s European session as focus remains on the latest US inflation figures. The US Consumer Price Index (CPI) is due for release later today, followed by the Producer Price Index (PPI) on Thursday. Moreover, US Federal Reserve (Fed) Chair Kevin Warsh's speech at the annual IMF and World Bank meetings in Bangkok on Friday will be scrutinized for cues about the future policy path. The outlook, in turn, will play a key role in driving the US Dollar (USD) and determining the next leg of a directional move for the non-yielding yellow metal.

In the meantime, the CME Group's FedWatch Tool indicates that traders are assigning a nearly 90% chance that the US central bank will raise borrowing costs again at its December policy meeting. The bets were lifted by the recent hawkish comments from influential FOMC members, signaling openness to additional interest rate hikes before the end of the year amid persistent price pressures. Moreover, worries about energy-driven inflation risks underpin prospects for further Fed tightening, which might continue to act as a headwind for gold. In fact, crude oil prices rose to a nearly two-week top amid supply concerns due to escalating conflicts in the Middle East.

Fighting between the Iran-allied Houthis and Saudi Arabia has intensified over the past week in retaliation for the kingdom's support of ‌Yemeni government forces. Moreover, Houthi energy terminals and fuel reserves in Yemen were reportedly struck by a Saudi-led coalition. Meanwhile, tensions between the US and Iran also continued to simmer amid the standoff over the Strait of Hormuz. In fact, US Central Command rejected claims by the commander of Iran’s Islamic Revolutionary Guard Corps Navy that the strategic waterway is under Iran’s control and that any approaching US Navy warships would be sunk. This keeps the geopolitical risk premium firmly in play.

The USD, however, drifts lower for the second straight day, retreating further from its highest level since April 2025 and offering some support to gold. That said, the aforementioned bearish fundamental backdrop makes it prudent to wait for strong follow-through buying and a breakout through a short-term trading range held over the past two weeks or so before positioning for any meaningful upside for the XAU/USD pair.

XAU/USD 4-hour chart

Technical Analysis

Barring last week's knee-jerk fall to a two-month low, the range-bound price action might be categorized as a bearish consolidation phase against the backdrop of a decline from the August swing high. The Gold price, however, holds just above the 78.6% Fibonacci retracement at $4,115, suggesting a tentative floor. Meanwhile, the Moving Average Convergence Divergence (MACD) indicator stays in negative territory with a slightly contracting bearish histogram that hints at fading downside pressure. The Relative Strength Index (RSI) around 50 points to neutral momentum, reinforcing the idea of consolidation within a broader corrective phase rather than a fresh bullish leg.

Hence, any subsequent move up might continue to face stiff resistance at the 100-period Simple Moving Average (SMA) on the 4-hour chart, at $4,193. This is followed by the top boundary of the trading range, near the $4,215-$4,220 region, and the 61.8% Fibo. retracement at $4,238, with further barriers seen at $4,325, corresponding to the 50.0% retracement level. Above these, the 38.2% retracement at $4,412 and the 23.6% retracement at $4,519 mark progressively stronger supply zones. On the downside, immediate support is seen at the 78.6% retracement at $4,115, ahead of the prior cycle low area at $3,957.83. A sustained break below $4,115 would likely open the door for a deeper slide toward that lower structural base.

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

Here is what you need to know on Wednesday, October 14:

The US Dollar Index (DXY) weakens to near 102.10 as oil prices ease and US bond yields fall. Traders await the release of the US September Consumer Price Index (CPI) inflation data on Wednesday for fresh clues on the Federal Reserve's (Fed) interest rate path. On Thursday, the US Producer Price Index (PPI) and Retail Sales will be in the spotlight.

Markets see about a 79% probability that the Fed will leave rates unchanged at its October 27-28 meeting, up from 51% a month ago, but are pricing in an 89.4% chance of an increase at the final meeting of the year in December, according to the CME FedWatch tool.

Traders weighed the prospect of additional Russian diesel supplies and the situation in the Middle East. Yemen’s Houthi rebels launched a series of missile attacks targeting cities across Saudi Arabia as the military said projectiles are being intercepted. The Saudi Ministry of Energy stated that an attack on the Saudi Aramco facility in Dhahran caused a small fire, but no casualties were reported.

Data released by the National Bureau of Statistics of China on Wednesday showed that the country’s CPI climbed 0.9% YoY in September, compared to a rise of 0.8% in August. This figure came in softer than the market expectation of 1.0%. Meanwhile, PPI jumped 5.0% YoY in September, versus a 3.8% increase prior, stronger than the forecast of 4.5%.

Elsewhere, US President Donald Trump said on Tuesday that Taiwan agreed to purchase 30% of the gas from a proposed pipeline project in Alaska, per Reuters. However, details of the agreement have not yet been disclosed.

US CPI in focus as Fed weighs AI-driven inflation risks

Analysts at Danske Bank highlight that, in the US, “the most important data release of the week will be the September CPI, released this afternoon.” They forecast “headline inflation at 0.5% m/m SA, 3.6% y/y (prior: 0.6% m/m, 3.4% y/y) and core inflation at 0.2% m/m SA, 2.5% y/y (prior: 0.3% m/m, 2.4% y/y), with energy prices being the main driver of the expected pickup in headline inflation.”

For the Fed, Danske Bank expects that “focus will be on whether underlying inflation pressures are broadening.” With this being “the final inflation print before the October FOMC meeting, and recent Fed communication signalling little urgency to hike again,” they judge that “it would take a clear upside surprise for the Fed to signal a rate hike already in October.”

On the policy narrative, Danske Bank notes that “on the wires in the US, Fed's Waller (voter) noted that AI-related demand is already spilling over into inflation, while the productivity gains that could eventually ease price pressures will take time to emerge.” Chicago Fed's Goolsbee (non-voter) “struck a similar tone, warning that AI-related investment is beginning to look like aggregate overheating and risks broadening into more persistent inflation.” Danske Bank concludes that “this supports the case for keeping policy tight in the near term and leaves the comments hawkish on the margin.”

EUR/USD gains traction above 1.1200 in the European morning. Traders await the speeches from European Central Bank (ECB) policymakers later in the day, including President Christine Lagarde, Frank Elderson and José Luis Escrivá.

GBP/USD gathers strength to near 1.3270 on Wednesday. Bank of England (BoE) Chief Economist Huw Pill said earlier in the day that he is a bit more sceptical about market pricing of four rate hikes over the next year.

USD/JPY trades with mild losses around 158.30 in the European session on Wednesday. Pricing in the overnight swaps market showed that traders are pricing in nearly a 10% odds of a Bank of Japan (BoJ) rate hike this month, with the probability rising to 88% for a move by December, according to Bloomberg.

Gold declines to near $4,150 on Wednesday. The key US inflation data later this week will be closely watched as it could offer some hints on the Fed's latest monetary policy stance.

Danske Bank strategists highlight September Consumer Price Index (CPI as this week's key US release, with headline and core inflation expected to edge higher year-on-year despite moderating monthly readings. The Fed will assess whether underlying price pressures are broadening, including those linked to AI investment. They believe only a clear upside inflation surprise would prompt the Fed to signal another rate hike at its October meeting.

CPI print seen key for Fed

"In the US, the most important data release of the week will be the September CPI, released this afternoon."

"We forecast headline inflation at 0.5% m/m SA, 3.6% y/y (prior: 0.6% m/m, 3.4% y/y) and core inflation at 0.2% m/m SA, 2.5% y/y (prior: 0.3% m/m, 2.4% y/y), with energy prices being the main driver of the expected pickup in headline inflation."

"For the Fed, focus will be on whether underlying inflation pressures are broadening. With this being the final inflation print before the October FOMC meeting, and recent Fed communication signalling little urgency to hike again, we think it would take a clear upside surprise for the Fed to signal a rate hike already in October. "

"On the wires in the US, Fed's Waller (voter) noted that AI-related demand is already spilling over into inflation, while the productivity gains that could eventually ease price pressures will take time to emerge."

"Chicago Fed's Goolsbee (non-voter) struck a similar tone, warning that AI-related investment is beginning to look like aggregate overheating and risks broadening into more persistent inflation."

"This supports the case for keeping policy tight in the near term and leaves the comments hawkish on the margin."

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

• EUR/GBP dips to fresh lows at 0.8442 and posts a 1.9% decline in less than three weeks.
• UK Government's pledge for fiscal discipline has provided a fresh boost to the pound.
• Societe Generale's experts see chances of a further decline below 0.8400.

The Euro (EUR) resumes its downtrend against the British Pound (GBP) as France’s public debt keeps investors on their toes while the UK Government pledges fiscal discipline. The EUR/GBP pair has reached a fresh 16-month low at 0.8442 and shows a 1.92% decline in less than three weeks.

The Financial Times reported on Wednesday that UK Finance Minister John Healey is planning to finance its new initiatives with higher taxes or spending cuts, rather than with public debt, which has provided a fresh impulse to the Pound.

This makes a stark contrast with the Eurozone, which has all eyes on France, whose debt burden has spiralled to post-war levels, boosting concerns about a credit crisis. On Tuesday, the European Central Bank (ECB) President Christine Lagarde urged the French government to consolidate its fiscal policy and discarded the possibility of purchasing French bonds to ease borrowing costs. 

High Oil prices increase the risk for Eurozone economies

Oil prices, however, remain steady at high levels amid reports of fresh attacks on Saudi Arabia by the Iran-backed Houthi militias and the new Iranian tactics to target vessels attempting to cross the Strait of Hormuz. Brent Oil prices remain above $104, boosting the risk of pushing Eurozone economies into a stagflation period of low growth and high consumer prices.

The Pound, meanwhile, has remained resilient to the energy shock so far. Strong UK data and hawkish comments by Bank of England (BoE) policymakers have boosted expectations that the bank might hike rates at November's meeting. Against this background, UK monthly GDP figures and Industrial production data, due on Thursday, will be carefully analysed to confirm those views.

Analysts at Societe Generale note that EUR/GBP has dipped below the July lows, a move that underscores the “prevalence of downward momentum.” Looking ahead, Societe Generale warns that “failure to reclaim last week's high at 0.8500 could result in a continuation of the decline,” with “the next projections…located at 0.8405 and 0.8370/0.8355.”