Forex News

• EUR/USD extends gains, rising for the sixth straight day as the US Dollar recovery loses momentum.
• Investors await a crucial US congressional vote to end the government shutdown.
• Hawkish ECB commentary and stable German inflation underpin the Euro’s resilience.

The Euro (EUR) edges higher against the US Dollar (USD) on Wednesday, reversing earlier losses as the Greenback’s rebound loses steam ahead of a critical congressional vote to end the record-long US government shutdown. At the time of writing, EUR/USD is trading around 1.1589, extending its winning streak for the sixth consecutive day after bouncing off an intraday low near 1.1594.

The US House of Representatives is set to vote later on Wednesday on a bill to reopen the government and restore federal operations. House Majority Leader Steve Scalise told CNBC the vote is expected around 7 p.m. ET, following Monday’s 60-40 bipartisan approval in the Senate.

The progress has helped ease near-term fiscal concerns and lifted overall market sentiment. If the spending bill passes as planned, it will head to President Donald Trump for final approval. The measure would keep most federal agencies funded through January 30, 2026, while extending allocations for select departments until September 30, 2026.

On the Euro side, the single currency draws mild support from steady German inflation data and hawkish European Central Bank (ECB) rhetoric. Germany’s Harmonized Index of Consumer Prices (HICP) rose 0.3% MoM and 2.3% YoY in October, both matching forecasts and reinforcing expectations that Eurozone inflation remains broadly stable.

Meanwhile, ECB policymaker Isabel Schnabel noted earlier in the day that the bloc’s economy still shows “positive underlying momentum” and that “services inflation remains sticky.” She added that interest rates are “absolutely in a good place,” though inflation risks are “tilted slightly to the upside,” signaling the ECB is comfortable maintaining its current policy stance for now.

Looking ahead, traders will monitor developments in Washington as the shutdown vote unfolds, while focus in Europe shifts to Thursday’s Eurozone Industrial Production report. In the US, uncertainty over the release of delayed data, including the Consumer Price Index (CPI), keeps markets cautious on the Federal Reserve’s (Fed) monetary policy path.

• Reports of a possible leadership challenge to PM Starmer spark political jitters ahead of the UK fiscal budget.
• UK jobs data showing a 5% unemployment rate and slower wage growth lifts the odds of a December BoE rate cut to 90%.
• DXY steady at 99.58 as markets await House vote to end US government shutdown.

The Pound Sterling (GBP) tumbles during the North American session on Wednesday against the US Dollar (USD) as reports emerged that Prime Minister Keir Starmer’s leadership was questioned, ahead of the release of the UK’s fiscal budget. The GBP/USD pair tumbles over 0.34% to 1.3105 at the time of writing.

Pound slides as Starmer faces leadership rumors and traders price in a near-certain BoE rate cut next month

UK newspapers cited some allies of the Prime Minister on a feared plot, but the PM distanced himself from a briefing by unnamed allies that he would fight any leadership bid, according to Reuters.

Health minister Wes Streeting, who was mentioned to challenge Starmer, denied the plot and said to Sky News, “I'm not going to demand the Prime Minister's resignation.”

In addition to that, a weaker jobs report revealed on Tuesday increased the chances of a Bank of England (BoE) rate cut in December. In the last meeting, BoE’s Governor Andrew Bailey sided with the hawks on a 5-4 vote split. However, the jump of the Unemployment Rate to 5%, and wages growth easing, prompted traders to discount a 25 basis points rate cut by the BoE at the December meeting, with odds standing near 90%, according to Prime Market Terminal data.

Across the pond, a Wall Street Journal headline reading, “Hopes the government shutdown will end as soon as Wednesday,” keeps the US Dollar bid as depicted by the US Dollar Index (DXY).

The DXY, which measures the buck’s performance versus six currencies, bounced off Tuesday’s lows and trades at 99.58, up 0.13%.

Nevertheless, the US Dollar’s recovery could be questioned, as Reuters reported that 80% of the economists polled estimate the Fed will lower rates by 25 bps next month.

Meanwhile, the US House of Representatives is expected to vote on the bill to end the government shutdown around 19:00 ET, said Rep. Scalise on CNBC.

The government reopening could release an avalanche of US economic data pending to be unveiled, from October 1, when federal offices closed.

GBP/USD Price Forecast: Technical outlook

The GBP/USD technical picture remains biased downward, though sellers need to drag the exchange rate below 1.3100 to challenge the latest cycle low of 1.3010, hit on November 5. A breach of those two levels could expose the April 7 low of 1.2707.

Conversely, a daily close above 1.3100, could set the tone to remain subdued at around 1.3100-1.3150 amid the lack of catalysts, with a light UK economic docket, and the US government shutdown.

• Gold advances amid a cautious mood, supported by dovish Fed expectations and a subdued US Dollar.
• Fed commentary in focus after softer labor data strengthens expectations for further monetary easing.
• Technical setup remains constructive, with $4,100 acting as firm support and bulls eyeing $4,200.

Gold (XAU/USD) regains strength on Wednesday after consolidating for most of the day, with prices edging higher as investors remain cautious ahead of a crucial US congressional vote to end the record-long government shutdown. At the time of writing, XAU/USD is trading around $4,170, up nearly 1.0% on the day.

The US House of Representatives is set to vote later on Wednesday on a stopgap funding bill aimed at reopening the government. The proposal would keep most federal agencies funded through January 30, 2026, while extending funding for some departments until September 30, 2026.

Signs of progress toward restoring government operations have helped stabilize risk sentiment. Investors are now turning their focus to the upcoming release of delayed US economic data once the government reopens, which could offer clearer guidance on the Federal Reserve’s (Fed) monetary policy path.

Overall, dovish Fed expectations and persistent geopolitical risks keep Gold supported. Recent private employment data have reinforced signs of a cooling labor market, boosting bets that the Fed could pivot toward rate cuts, keeping XAU/USD well bid on dips.

Market movers: House vote and Fed commentary steer sentiment amid light US calendar

• The US Dollar Index (DXY), which gauges the Greenback’s value against a basket of six major currencies, is trading around 99.55, retreating from day highs near 99.71 as momentum fades.
• The Senate’s 60-40 bipartisan vote on Monday to pass the temporary funding bill marked a key step toward ending the record-long shutdown. The progress has eased near-term fiscal worries, although investors remain cautious until the House confirms final approval.
• Recent private employment figures provided a mixed but generally softer outlook for the US labor market. ADP data released on Tuesday showed that the United States lost an average of 11,250 private-sector jobs in the four weeks ending October 25, compared with an average loss of 14,250 in the preceding month.
• Meanwhile, last week’s ADP Employment Change report indicated that private payrolls rose by 42,000 in October, beating expectations for a 25,000 gain and reversing the 29,000 decline recorded in September. In the same period, the Challenger Job Cuts report revealed that US employers announced 153,074 job cuts in October, the highest monthly total since 2003.
• Easing global trade tensions surrounding the US tariff regime has reduced some of the safe-haven appeal of Gold. Nevertheless, sentiment remains cautious as the US Supreme Court examines the legality of the Trump administration’s tariff measures, a ruling that could reshape future trade policy.
• Looking ahead, a light US economic calendar on Wednesday is likely to keep trading subdued, leaving investors focused on comments from several Fed officials for fresh policy cues.

Technical analysis: XAU/USD breaks above $4,150

Gold extends its advance, breaking above the $4,150 resistance level on the 4-hour chart, confirming a bullish breakout from the recent consolidation range.

The breakout opens the door for a potential move toward the $4,200 area, which could cap gains before the metal attempts a retest of the all-time high near $4,381.

On the downside, the former resistance at $4,150 now acts as immediate support, followed by the $4,100 zone and the 100-period SMA near $4,050-$4,030. The Relative Strength Index (RSI) sits near 68, just below overbought territory.

• The Australian Dollar rises against the US Dollar, supported by expectations of a restrictive policy stance from the RBA.
• Investors await Australia’s October employment figures, expected to confirm the resilience of the labor market.
• The US Dollar weakens as markets increase bets on a more dovish Federal Reserve.

AUD/USD climbs slightly on Wednesday toward 0.6530 at the time of writing, supported by renewed demand for the Australian Dollar (AUD) ahead of the release of October’s employment report due on Thursday. Markets remain convinced that the Reserve Bank of Australia (RBA) will maintain a restrictive policy stance in its upcoming meetings, as inflationary pressures prove persistent.

Inflation accelerated to 1.3% in the third quarter, compared with 0.7% in the previous quarter. RBA Deputy Governor Andrew Hauser stated at a UBS conference in Sydney that monetary policy must remain sufficiently restrictive to bring inflation back to target, adding that the Australian economy “continues to run above its potential,” limiting the room for near-term rate cuts.

Traders now turn their focus to Thursday’s employment report, with consensus expecting the addition of 20,000 new jobs in October after 14,900 in September. A figure that would confirm the labor market’s resilience despite the global economic slowdown.

In the United States (US), the US Dollar (USD) is weakening as expectations rise for a Federal Reserve (Fed) rate cut as early as December. The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of major currencies, trades near its weekly low around 99.30. According to the CME FedWatch tool, the chance of a 25-basis-point rate cut to 3.50%-3.75% has climbed to 68%, up from 62% earlier in the week.

Overall, investors remain cautious ahead of the release of delayed US economic indicators due to the ongoing budget impasse in Washington. This uncertainty continues to weigh on the US Dollar and support AUD/USD.

• EUR/GBP hits fresh yearly highs as UK political uncertainty and BoE rate-cut expectations weigh on the Pound.
• Steady German inflation and hawkish ECB tone support the Euro’s relative strength against the Pound.
• Markets eye key data ahead, including UK GDP and Eurozone Industrial Production, for near-term direction.

The Euro (EUR) extends gains against the British Pound (GBP) on Wednesday as the Sterling weakens across the board following reports of growing tension within the UK Labour Party and speculation over Prime Minister Keir Starmer’s leadership, which has added to political uncertainty ahead of this month’s budget.

At the time of writing, EUR/GBP is trading around 0.8836, marking fresh year-to-date highs and its strongest level since April 21, 2023.

According to recent media reports, allies of Prime Minister Keir Starmer have warned that any move to challenge his leadership would be “reckless,” amid rumours of internal divisions and weakening public support. The uncertainty comes just days before the November 26 budget, with investors increasingly concerned that fiscal tightening and potential tax hikes could weigh on the UK’s growth outlook.

On the macro front, weak labour market data released on Tuesday has reinforced expectations that the Bank of England (BoE) will lower interest rates at its December meeting. According to a Deutsche Bank report, the probability of a BoE rate cut jumped from 72% at Monday’s close to around 86% on Tuesday.

On the Euro side, data from Germany showed that inflation held steady in October. The Harmonized Index of Consumer Prices (HICP) rose 0.3% MoM and 2.3% YoY, both in line with expectations.

Meanwhile, hawkish comments from European Central Bank (ECB) policymaker Isabel Schnabel added to the Euro’s relative strength, as she noted that the economy still shows “positive underlying momentum” and that “services inflation remains sticky.” Schnabel further said interest rates are “absolutely in a good place” but warned that inflation risks are “tilted slightly to the upside,” signaling that the ECB is comfortable keeping rates unchanged for the foreseeable future.

Looking ahead, traders brace for a slew of key economic releases on Thursday, including the UK’s preliminary third-quarter Gross Domestic Product (GDP), Industrial Production, and Manufacturing Production figures. The Eurozone will also publish Industrial Production data for September

Federal Reserve (Fed) Bank of New York President John Williams spoke at the United States (US) Treasury Market Conference in New York on Wednesday. He said that determining whether reserves are ample is an inexact science and claimed he is closely watching the markets for signals.

Key takeaways

Fed close to desired level for bank reserves.

I am closely watching markets for liquidity signals.

Renewed balance sheet expansion is technical and not monetary policy.

Standing repo facility is effective, should be used when needed.

It is an inexact science to determine whether reserves are ample.

Standing repo facility can be used without stigma."

The Japanese Yen (JPY) weakened 0.5% against the US Dollar (USD), hitting fresh local lows last seen in February, as traders reacted to Prime Minister Takaichi’s call for closer coordination between the government and the Bank of Japan, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

JPY underperforms G10 as markets react to Takaichi’s BoJ push

"The JPY is weak, down 0.5% against the US Dollar (USD) and once again underperforming all of the G10 currencies with a break to fresh local lows reaching levels last seen in February. Fundamental releases have been limited, and market participants are reacting to newly arrived PM Takaichi’s efforts to boost govt/BoJ collaboration."

"Takaichi has asked BoJ Gov. Ueda to report regularly to the government’s economic and fiscal council meeting, and markets appear to be interpreting this as a form of imposed cooperation."

The Pound Sterling (GBP) is soft, down 0.2% against the US Dollar (USD) as we head into Wednesday’s NA session, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

GBP is trading defensively after Tuesday’s jobs data disappointment

"The GBP’s latest recovery looks to have stalled on the back of Tuesday’s employment release that offered broad disappointment across wage growth, jobless claims, and employment growth. The unemployment rate has pushed to a fresh post-covid high of 5%, threatening the December 2020 high at 5.3%."

"UK rate expectations are showing signs of stabilization following Tuesday’s jobs-driven decline, and UK-US yield spreads have bounced back. However, much of the GBP ‘s recent spread-driven gains have been eroded by this latest data disappointment."

The Euro (EUR) is trading quietly in the mid/upper 1.15s as it tentatively extends last week’s bullish reversal.

ECB comments nudge rate expectations higher

"Data releases have been limited to the final German CPI print for October, remaining unchanged from the preliminary at 2.3% y/y. The latest comments from the ECB’s Schnabel have reaffirmed the central bank’s neutral bias while signaling concerns about upside risks to inflation."

"These comments have supported euro area rate expectations, lifting year-end 2026 rates to 2% – a fresh local high. Interest rate differentials are once again pushing higher, offering the EUR a fundamental lift."

"The EUR is tentatively extending last week’s recovery and threatening fresh local highs back above 1.16. The recovery in the RSI is confirming the moves in spot, and currently hovering around the neutral threshold at 50. Near-term resistance is limited ahead of the 50 day MA (1.1662) and we look to a nearterm range between 1.1550 and 1.1650."

The Canadian Dollar (CAD) is little changed and clearly struggling to make headway through the 1.40 area—which spot has tested four times over the past three days, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

Bullish trend studies are weakening

"Background factors driving the CAD (for example spreads, risk appetite) are tilting a little more constructively for the CAD this morning, pushing our fair value estimate to 1.3858. Trade uncertainty remains a major drag on CAD sentiment, however, and with no resolution in sight, the currency is liable to keep performing below its potential."

"Building Permits are out at 8.30ET but are liable to have little or no impact on the market. USD/CAD’s reversal from the mid-1.41 zone has halted around 1.40—noted “psychological” support and roughly the halfway point of the USD’s late October/early November rally (the 50% Fibonacci retracement sits at 1.4014)."

"The charts reflect solid support developing for the USD right at the 1.40 point but the lack of any major USD rebound is keeping the short-term technical picture tilted to the downside. Short-term trend momentum is bearish and broader, bullish trend studies are weakening. Support is 1.3890/00. A breakdown should see spot push lower to the 1.3900/50 range."