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Deutsche Bank strategists highlight renewed volatility in US equities as the anniversary of Black Monday coincides with a sharp late-Friday sell-off in the S&P 500, followed by a rebound in S&P and Nasdaq futures. They note concentrated weakness in AI-related names and semiconductors, with credit markets showing distress in that sector and key tech indices posting sizable weekly declines.

AI sector drives US equity stress

"39 years ago today we woke up to the origins of what would forever be known as Black Monday, where the Dow fell -22.6% on the day. It’s rare the anniversary falls on a Monday so it’s a more memorable one today. The late US trading session on Friday almost felt people were worried we'd get a repeat today as the S&P fell from flat just before the European close to -1.09% by the US one. However, this morning we are seeing a bounce with S&P (+0.79%) and Nasdaq (+1.29%) futures making up most of their late Friday losses. "

"Clearly the main nervousness last week was around AI-related names, with credit markets starting to show some distress in that sector. The Philly semiconductor index was down -11.41% last week (-3.83% Friday), whilst the NASDAQ was down -4.48% (-2.14% Friday)."

"At the heart of the sell-off was CoreWeave, which was down -25.21% last week (-11.91% Friday), whilst their 5yr CDS was up +225bps on the week to 1128bps with their cash bonds trading at around a 15% yield. Meanwhile, Oracle’s share price was down -9.31% (-4.64% Friday), and their 5yr CDS was up +44bps on the week to 300bps. "

"Asia has started the week relatively calm with the KOSPI (+0.55%) and S&P/ASX 200 (+0.32%) both trading higher, while the CSI 300 (+0.09%) and Shanghai Composite (+0.16%) are just above flat. The Nikkei (-0.73%) is the region’s weakest performer, extending losses after falling -5.4% last week as technology stocks came under heavy pressure."

"Elsewhere, Indonesia’s benchmark stock index is down more than 5% to its lowest level in six years, as concerns over the potential MSCI downgrade we discussed on Friday continues to heighten fears of further foreign investor outflows. The index is down over -16% in these past two sessions."

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

• USD/JPY steadies near 158.00 in Monday’s early European session.
• BoJ’s Governor says underlying inflation is "quite close" to the central bank's 2% target.
• Fed Chairman Warsh says he does not "prejudge meetings.

The USD/JPY pair trades on a flat note around 158.00 during the early European session on Monday. Traders scale back Federal Reserve (Fed) rate hike bets despite hot US inflation data. The Japan’s National Consumer Price Index (CPI) inflation data will take center stage later on Friday.

Bank of Japan (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.

Ueda added that lifting interest rates at an appropriate pace would help avoid spikes in bond yields. Many market players expect the Japanese central bank to leave interest rates unchanged at 1.25% but drop hints that leave open scope for a hike to 1.5% as ‌early as December, according to Reuters.

At the IMF annual meetings in Bangkok on Friday, Fed Chair Kevin Warsh offered no clues about future rate decisions. “We removed a dose of accommodation about a month ago,” said Warsh. “I don’t prejudge meetings. I don’t believe in saying now what I might do at the meetings that we have in the balance of this year,” he added.

Fed funds futures are pricing an implied 83.9% chance that the Fed will hold rates steady at its next two-day meeting on October 28, little changed from Friday, according to the CME Group's FedWatch tool.

BoJ tone turns firmer as Ueda flags inflation progress and yield risks

Analysts at Danske Bank highlight a firmer tone from the Bank of Japan, noting that Governor Kazuo Ueda now judges underlying inflation to be "quite close" to the 2% target, supported by tight labour markets and strong global AI demand as sources of price pressure. Danske adds that Ueda "warned that failing to raise rates at an appropriate pace could push long-term bond yields higher," underscoring the risks of moving too slowly. Looking ahead to the BoJ’s next meeting, which concludes on 30 October 2026, the bank points out that markets expect policy rates to remain at 1.25%, but will be watching closely for any guidance that keeps a hike to 1.5% as early as December "on the table."

Ueda leans mildly hawkish as inflation loop firms and JGB guidance stays cautious

FXS Speechtracker at 7/10 is slightly below Ueda’s 7.4/10 average, but the emphasis on “underlying inflation near 2%” and a “positive loop” of wages, prices, and robust global demand marks a mild hawkish tilt versus past caution. The focus on anchoring core inflation near 2%, demand-led price gains, and a tight labor market suggests the Bank of Japan is more confident that the 2% goal is becoming sustainable, which is Yen-supportive at the margin.

At the same time, Ueda stresses no shift in the fundamental bond taper approach and refuses to preannounce emergency JGB operations, signaling a desire to let long-term yields rise “steadily” alongside any future policy-rate hikes. The message that accommodative conditions will persist, but that miscalibrated policy could push long-term rates higher, frames a gradual normalization path that can underpin the Yen while keeping JGB volatility contained, limiting an immediate bullish impulse for the currency.

Technical Analysis: Negative tone of USD/JPY remains intact under the 100-day SMA

In the daily chart, USD/JPY holds a capped tone as spot remains below the 100-day simple moving average (SMA) despite stabilizing above the 20-day Bollinger SMA. The pair has rebounded from the lower band, but the upper band and the nearby 100-day SMA overhead suggest rallies are likely to meet supply, while the Relative Strength Index (RSI) at 52.35 points to only modest, neutral-to-slightly positive momentum.

On the topside, immediate resistance aligns first at the upper Bollinger band near 158.85, followed by the 100-day SMA at 159.45, a level that would need to be reclaimed to ease the broader downside pressure. On the downside, initial support is seen at the 20-day Bollinger SMA around 158.00, with a break exposing the lower band support at 157.10, where a deeper pullback could attempt to stabilize.

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

• NZD/USD holds recent gains around 0.5660, close to late September highs around 0.5690.
• Upbeat data from China has offset weak Trade Balance data from New Zealand.
• The US Dollar remains on the defensive with investors bracing for a Fed pause in October.

The New Zealand Dollar (NZD) stands its ground against the US Dollar (USD) at the start of the week, as positive data from China offset the downbeat New Zealand Trade Balance earlier in the day. The NZD/USD pair maintains its immediate bullish trend, trading at 0.5660, just below three-week highs and with bulls looking at the late September highs at 0.5990.

Data from China, New Zealand’s main trading partner, revealed that the country’s Gross Domestic Product (GDP) grew at a 4.5% pace in the third quarter, beyond the second quarter’s 4.3% growth and beating expectations of a 4.4% increase. Beyond that, Retail Sales rose 1.1% in September, more than twice the market consensus, easing concerns about the country’s weak domestic demand.

In New Zealand, on the contrary, the trade deficit widened to NZD 1.97 billion in September, from NZD 1.54 billion in August. Also on Monday, the NZ Business PSI, a gauge measuring the services sector’s performance, showed a moderate slowdown, to 50.9 in September from a downwardly revised 51 in the previous month, with businesses showing concern about political uncertainty ahead of the elections and the higher cost of living.

The US Dollar has opened the week in the same bearish trend seen in the previous one. US inflation figures revealed that prices remain well above the Federal Reserve's (Fed) target. Central bank policymakers, however, requested some more time to assess the impact of September's rate hike, which hints at a pause in the October 29-29 monetary policy meeting.

Technical Analysis: Bulls remain in control while above 0.5930

NZD/USD trades at 0.5659, holding a constructive near-term bullish bias as it consolidates above previous highs in the 0.5630-0.5640 area. Momentum conditions favor the upside, with the Relative Strength Index hovering in the low 60s and the Moving Average Convergence Divergence (MACD) line holding in positive territory, which together suggest buyers retain control.

The immediate target is the September 24 and 28 top at 0.5660. Further up, the September 22 high, at the 0,5750 area, would come into focus. On the downside, a bearish reversal below the 1.5130 area (October 6, 14 and 15 highs) would increase pressure towards last week's lows at the 0.5590 and 0.5565 areas.

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

Danske Research Team reports that Brent crude opened lower near USD 108/bbl after touching USD 109/bbl on Friday. The decline followed President Trump’s waiver of key Russia-related sanctions and tariffs, which could boost fuel exports. However, they stress that supply risks remain elevated due to Ukrainian strikes and threats to Gulf crude flows.

Brent slips but supply risks stay high

"In commodities, Brent crude opened lower this morning, trading around USD 108/bbl after reaching around USD 109/bbl on Friday.The decline followed President Trump's waiver of key sanctions and tariffs on Russia, potentially allowing higher fuel exports."

"Still, supply risks remained elevated, as Ukraine struck Russian energy infrastructure on Sunday and attacks on vessels near Hormuz continued to threaten Gulf crude flows."

"In geopolitics, the split between the EU and the US on Russia policy widened over the weekend. EU leaders meeting in Brussels vowed to maintain sanctions on Russia and sustain support for Ukraine, with von der Leyen saying no sanctions would be lifted unless Russia stops the war and that the EU is working on a 22nd sanctions package."

"Zelenskyy criticised the waiver as "wrong", saying it would help Moscow and prolong the war. However, concerns about US support eased somewhat on Sunday after Zelenskyy said US intelligence-sharing had resumed and that he had discussed next diplomatic steps with Trump envoys, including a possible new peace meeting this week."

"Trump then signed an executive order on Friday waiving key Russia-related sanctions and tariffs under the Graham Act, including measures targeting Russian goods and countries buying Russian oil and gas, shortly before they were due to take effect. Secretary of State Rubio said Trump would use up to 60 days to assess the economic impact, while also defending a separate agreement for Russia to increase diesel supplies to the US and global markets."

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

• EUR/GBP softens to near 0.8420 in Monday’s early European session.
• France’s Macron said the country felt anger and shame following widespread violence over the weekend.
• The UK employment and inflation reports will be the highlights later this week.

The EUR/GBP cross declines to around 0.8420 during the early European trading hours on Monday. Violent protests in France put pressure on the Euro (EUR) against the British Pound (GBP). European Central Bank (ECB) policymaker Frank Elderson is set to speak later in the day.

Reuters reported that French President Emmanuel Macron condemned the “shocking” violence that occurred during protests over the rising cost of living in a televised national address on Sunday, following one of France’s most severe days of unrest in recent years. France had the broadest of a series of demonstrations that took place across Europe, with Belgium, Italy and Portugal also affected.

"The weekend unrest matters for the euro mainly through French bonds rather than directly," said Kieran Williams, head of Asia FX at InTouch Capital Markets in London.

Traders brace for the UK jobs data on Tuesday, followed by the Consumer Price Index (CPI) inflation report on Wednesday. These readings are likely to help seal the deal on the first rate hike from the Bank of England (BoE) in over three years in November.

“We expect a 25-basis-point hike at the central bank’s next meeting in November. We also see another move in February,” said Bloomberg Economics chief UK economist Dan Hanson.

The UK Unemployment Rate is projected to tick up to 5.0% (3M) in August from 4.9% in the previous reading. Additionally, the headline CPI is expected to show a rise of 3.4% YoY in September, while the core CPI is forecast to show an increase of 2.7% YoY during the same period.

ECB weighs risks of falling behind the curve versus overtightening

Analysts at Rabobank note that recent commentary from ECB policymaker Wunsh underscores the central bank’s delicate balancing act. They highlight that Wunsh “confirmed that the recent rise in longer-dated yields does not necessarily prevent some further rate hikes,” suggesting that higher market rates alone will not automatically stay the ECB’s hand. At the same time, Rabobank warns that allowing inflation pressures to build unchecked “would mean the central bank has fallen behind the curve, and policymakers will be wary of making a similar mistake as the previous energy shock.” However, they caution that “acting more forcefully before such evidence materializes would meaningfully increase the risk that the ECB errs on the side of too tight monetary policy,” leaving officials to carefully judge how far additional tightening can be justified.

Bailey frustration on inflation keeps GBP supported but cautious

FXS Speechtracker scores this speech at 6.2/10, slightly below Governor Bailey’s historic 6.4/10, pointing to a marginally softer tone despite clear frustration with above-target UK inflation. Emphasis that second-round effects are still “too early” to judge, and currently “subdued” with businesses focused on cost-cutting, leans mildly dovish at the margin by downplaying an imminent wage-price spiral, which can cap aggressive GBP upside.

At the same time, comments that the UK economy is “more resilient than we expected, not as strong as we need” keep the door open to maintaining restrictive policy for longer, limiting downside for GBP. The remark that news from the Middle East is the biggest factor moving UK gilt yields underscores that near-term GBP moves may be driven more by global risk and rates dynamics than by a clear new policy signal from the Bank of England.

Technical Analysis: EUR/GBP retains a negative bias amid oversold condition

In the daily chart, EUR/GBP holds a clear bearish bias as spot remains decisively under the 100-day Simple Moving Average (SMA) and below the Bollinger Bands’ 20-day middle line. The pair is drifting toward the lower Bollinger Band, while the Relative Strength Index (RSI) at roughly 22 sits deep in oversold territory, hinting that downside pressure persists but that fresh selling may start to look stretched at these levels.

On the topside, initial resistance is located at the Bollinger Bands’ 20-day SMA around 0.8505, with the 100-day SMA at 0.8565 reinforcing a broader supply zone ahead of a stronger cap near the upper band at 0.8630. On the downside, the lower Bollinger Band at 0.8385 offers the first significant support, and a sustained break below this area would open the door to an extension of the current downtrend.

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

• The British Pound exhibits a mixed performance against its peers in countdown to key UK data.
• Both the UK inflation and Japan National CPI data are expected to have grown at a faster pace in September.
• UK’s ILO Unemployment Rate is seen rising to 5% in quarter ending August.

The British Pound (GBP) trades mixed against its currency peers at the start of the United Kingdom (UK) data-packed week. Against the Japanese Yen (JPY), the British currency is almost flat at around 210.74.

This week, financial markets will pay close attention to the UK employment data for three months ending August and the Consumer Price Index (CPI) data for September, which are scheduled for Tuesday and Wednesday, respectively.

The Office for National Statistics (ONS) is expected to report that the ILO Unemployment Rate increased to 5% from 4.9% in three months ending July. Average Earnings Including Bonuses is estimated to have risen at a moderate pace of 3.8% Year-on-Year (YoY) against the previous reading of 3.9%.

Deutsche Bank sees UK inflation pushing higher and staying elevated into 2027

Economists at Deutsche Bank expect UK inflation to re-accelerate in the near term, projecting that September will mark “its highest rate all year,” with “headline CPI rising to 3.49% y-o-y, with core CPI pushing to 2.74% y-o-y.” They also look for “Services CPI, we expect, will also rise, picking up pace to 3.71% y-o-y on stronger base effects.”

Looking beyond the immediate print, Deutsche Bank warns that “price pressures” are likely to “increase further,” noting that “energy prices remain on an ascent” and that “lower harvests have already starting to show up in food cost price data.” Against this backdrop, the bank says “our updated projections see CPI taking another step up, with 2027 CPI averaging 3.7% (previously, 3.5%) from 3.2% this year,” while “headline RPI, we expect, will rise from 3.7% y-o-y to 5.2% (previously, 4.8%).”

The economists acknowledge that “our projections sit broadly above the Bank’s forecasts with the exception of two categories: core goods CPI and food & non-alcoholic beverages CPI,” and indicate they “break down how our projections look relative to the Bank of England’s below.” Summing up the trajectory, Deutsche Bank concludes: “We see headline CPI still making its way higher from here, peaking at 4.3% y-o-y in February next year. For the full year now, we see headline CPI averaging 3.2% y-o-y in 2026 and rising to 3.8% y-o-y next year (previous: 3.5%).”

The labor market and the inflation data are expected to have a significant impact on Bank of England’s (BoE) interest rate expectations for the November meeting.

This week, investors will also focus on the UK Retail Sales and preliminary S&P Global PMI data, which will be released on Friday.

• USD/CHF drops as the Fed's neutral tone drastically reduced expectations for an October interest rate hike.
• Markets now price in an 83.9% chance the Federal Reserve holds rates steady this month.
• Low Swiss borrowing costs keep the franc highly appealing for carry trade funding.

USD/CHF depreciates after opening at a bullish gap, remaining in positive territory and trading around 0.8240 during Asian hours on Monday. The currency pair lost ground as the US Dollar (USD) came under pressure from declining expectations of an October interest rate hike by the Federal Reserve.

Speaking at an International Monetary Fund event on Friday, Fed Chairman Kevin Warsh stated that he does not prejudge monetary policy decisions, leaving markets without a clear direction ahead of the central bank's upcoming October 27–28 meeting.

As a result of these neutral remarks, expectations for a rate increase dropped sharply. According to data from the CME FedWatch Tool, traders are now pricing in an 83.9% chance that the central bank will keep interest rates unchanged later this month, a substantial rise from the 49% probability recorded just a month ago.

Meanwhile, the Swiss National Bank (SNB) is widely anticipated to hold its policy rate at 0% through the end of the year, with policymakers dialing back threats of active currency intervention. Because Swiss borrowing costs have remained the lowest in the world for over a year, the franc continues to maintain its strong appeal as a preferred funding currency for carry trades.

USD/CHF downside momentum leaves UOB looking to 0.8200

Strategists at UOB Group note that the bearish bias in USD/CHF has intensified more quickly than they had anticipated. They recall that in their 1–3 week view last Friday (16 Oct, spot at 0.8280), they had highlighted that “downward momentum is building and if USD closes below 0.8245, it could decline toward 0.8225,” adding that “the odds of USD closing below 0.8245 will remain intact as long as it holds below the ‘strong resistance’ level, now at 0.8350.” Instead, they concede, “we did not expect downward momentum to strengthen so quickly, as USD plummeted to a low of 0.8215 and closed at 0.8239 (-0.34%).” Looking ahead, UOB now judges that “from here, USD could decline further to 0.8200,” while on the topside, “the ‘strong resistance’ is now at 0.8300.”

Technical Analysis:

In the daily chart, USD/CHF trades at 0.8240, holding in a neutral-to-capped stance as it sits above the 50-day Exponential Moving Average (EMA) but below the shorter nine-day EMA. This configuration suggests the recent pullback is consolidating rather than trending decisively, while the 14-day Relative Strength Index (RSI) around 47 hints at fading upside momentum after prior overbought readings, leaving the pair vulnerable to further mean reversion if buyers fail to reclaim nearby resistance.

On the topside, immediate resistance is located at the nine-day EMA around 0.8288, where a daily close higher would open the door to a stronger recovery phase. On the downside, initial support is provided by the 50-day EMA near 0.8213; a break beneath this floor would reinforce the nascent bearish bias and expose deeper losses toward prior swing lows not visible in the current indicator set.

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

United Overseas Bank (UOB) strategists Quek Ser Leang and Lee Sue Ann highlight that EUR/USD extended gains to 1.1269 before easing, with current price action seen as part of a consolidation. Intraday, the Euro (EUR) is expected to hold between 1.1180 and 1.1245. On a 1–3 week horizon, the bank has shifted to a neutral stance, looking for range trading between 1.1160 and 1.1280 after the recent rebound.

Euro seen consolidating after sharp rise

"24-HOUR VIEW: EUR rose sharply to a high of 1.1240 last Thursday. When it was at 1.1215 on Friday, we highlighted the following: “The sharp advance appears to be overextended. This, combined with early signs of slowing momentum, suggests EUR is unlikely to rise much further. Today, we expect EUR to trade in a range between 1.1180 and 1.1240.” However, EUR rose sharply to 1.1269. EUR closed at 1.1239 (+0.19%), but it traded lower after opening today. The current price movements are likely part of a range-trading phase. Today, we expect EUR to trade between 1.1180 and 1.1245."

"1-3 WEEKS VIEW: We revised our EUR view from negative to neutral last Friday (16 Oct, spot at 1.1215). We indicated that EUR “has likely entered a rangetrading phase, and for the time being, it is likely to trade between 1.1160 and 1.1280.” We continue to hold the same view for now."

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

• Gold attracts some buyers on Monday amid receding October Fed hike bets and sliding bond yields.
• Traders still see around a 90% chance of a December Fed rate hike, which caps the precious metal.
• Geopolitical tensions lend support to the safe-haven USD, which further keeps a lid on the commodity.

Gold (XAU/USD) clings to modest intraday gains through the Asian session on Monday, albeit it lacks bullish conviction and remains in a familiar range below $4,200. US Federal Reserve (Fed) Chair Kevin Warsh’s reluctance to offer fresh cues on further policy moves forced investors to price out the possibility of policy tightening later this month. Moreover, the recent sharp pullback in US government bond yields from multi-year highs, which dragged the US Dollar (USD) to a two-week low, acts as a tailwind for bullion.

Fed blackout looms as Warsh’s silence cuts October hike odds

Deutsche Bank’s strategists note that with the Fed about to enter its blackout period ahead of the October 27–28 meeting, Kevin Warsh declined to push back against market rate expectations, stressing that he doesn’t “prejudge meetings” even after this week’s hotter inflation data. According to the bank, markets interpreted the absence of a more hawkish tone as a positive surprise, with “October hike pricing dropping to around 15% from roughly 30% as he spoke,” while “S&P and Nasdaq futures are both +0.15% higher having been negative for most of the session before he spoke,” and “Stoxx futures are +0.68% higher.”

Meanwhile, last week's hotter-than-expected US inflation reports lifted market bets for an imminent Fed rate hike. According to CME Group's FedWatch Tool, traders are pricing in over a 90% chance that the US central bank will raise borrowing costs in December. Furthermore, energy-driven inflation fears underpin prospects for further policy tightening by the Fed. In fact, crude oil prices surged to a nearly one-month high on Friday as escalating hostilities in the Middle East and Eastern Europe kept supply risks elevated.

Three tankers were also damaged in the Strait of Hormuz over the weekend as Iran’s IRGC navy maintained that the waterway remained closed and vessels could pass only with its authorization. In Europe, Ukrainian attacks sparked fires at an oil export terminal and a storage depot in St. Petersburg on Sunday, as Kyiv launched more than 1,000 drones at Russia in one of the war’s largest aerial assaults. Moreover, clashes between Saudi Arabia and the Iran-backed Houthi rebel group in Yemen have shown little sign of abating.

Adding to this, a secretary of Iran’s Supreme National Security Council, Mohsen Rezaei, warned that Tehran has prepared a new retaliation plan for any renewed US-Israeli attack. This keeps the geopolitical risk premium firmly in play, acting as a tailwind for crude oil prices and easing the selling bias surrounding the safe-haven Greenback. This keeps a lid on any further appreciating move for the Gold, making it prudent to wait for strong follow-through buying before positioning for further gains.

XAU/USD 4-hour chart

Technical Analysis

The range-bound price action could be categorized as a bearish consolidation phase against the backdrop of a fall from the $4,700 neighborhood, touched in August. Moreover, the XAU/USD pair remains decisively below the 200-period Simple Moving Average (SMA) on the 4-hour chart, suggesting that recent gains are still unfolding within a broader corrective phase rather than a confirmed uptrend.

Meanwhile, the Relative Strength Index (14) at 55.1 leans modestly to the bullish side, and the Moving Average Convergence Divergence (MACD) stays above zero with a positive, though slightly softening, profile. Nevertheless, acceptance above the $4,200 mark and a move beyond the trading range barrier, around the $4,215-$4,220 region, is needed to ease the prevailing downside pressure and open the way for a more constructive medium-term outlook.

On the downside, the $4,150-$4,145 area could offer immediate support ahead of the $4,100 round figure and last week's swing low, around the $4,075-$4,065 region. A convincing break below the latter would make the Gold vulnerable to challenge the year-to-date (YTD) low, near the $3,957 zone, touched in July.

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

• The Indian Rupee gains against the US Dollar at the start of the week.
• Sell-off in US AI-related stocks continues to weigh on the US Dollar.
• The RBI announces that it will infuse up to 1 trillion rupees through variable rate repo operation.

The Indian Rupee (INR) extends its positive momentum after last week’s outperformance against the US Dollar (USD) on Monday. The USD/INR pair declines to near 94.80 as continuous sell-off in United States (US) Artificial Intelligence (AI)-related stocks is keeping the US Dollar under pressure.

As of writing, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, is almost flat at around 101.80, but is close to its over two-week low of 101.57 posted on Friday.

Dollar softens as AI debt jitters reshape safe-haven dynamics

Analysts at ING argue that the latest moves in foreign exchange offer “a preview of how currencies will perform during a big AI correction.” They note that, rather than rallying as a traditional safe haven, “those currencies most linked to AI chip shipments, such as the Taiwanese dollar and the Korean won,” coming under the heaviest pressure. ING adds that investors are likely to “keep an eye on the debt of the big AI issuers today, and any further sell-off could weigh on the dollar.”

The ongoing weakness in the US Dollar amid correction in AI stocks has forced market experts to reprice US Dollar’s outlook.

Strategists at Scotiabank highlight that the US Dollar’s recent downturn has gathered momentum, describing DXY price action as “clearly bearish with an acceleration of the bearish reversal from Wednesday’s local peak.” They note that “the break below 102 is extending,” adding that they “see little in terms of support ahead of 101,” underscoring the vulnerability of the index as it grinds lower toward that next technical floor.

Meanwhile, the Indian Rupee continues to gain strength from Reserve Bank of India’s (RBI) liquidity infusions and new measures announced this month.

According to a Reuters report, the Indian central bank will conduct a seven-day variable rate repo operation to infuse liquidity on Monday, the Reserve Bank of India said. The RBI will infuse up to 1 trillion rupees ($10.53 billion) through the operation, which traders said is aimed at helping lenders tide over tax outflows amid tighter daily cash reserve requirements.

This month, the RBI announced various measures to curb the US Dollar’s demand, which led to a sharp rally in the Indian currency last week.

Analysts at Societe Generale said in a note that these measures include “the reintroduction of a dedicated oil import window, tighter restrictions on corporate hedging, limits on uncovered FX transactions, a ban on rebooking cancelled derivatives, and fresh open market operation (OMO) bond sales,” underscoring the central bank’s determination to stabilise the currency through both FX-market tools and balance-sheet operations.

USD/INR Technical Analysis

In the daily chart, USD/INR trades at 94.9655, extending a bearish tone as spot holds below the 20-period exponential moving average (EMA) at 95.6968, which now acts as the first meaningful topside barrier. The Relative Strength Index (RSI) sits near 34 in negative territory, hinting that downside momentum persists but is approaching oversold conditions that could slow the recent decline rather than reverse it outright.

On the topside, immediate resistance is located at the 20-day EMA around 95.70, and sellers are likely to defend this level while it caps corrective rebounds. With no nearby technical supports derived from moving averages or Fibonacci levels beneath current price in this dataset, the pair remains vulnerable to further slippage, and any recovery would need a sustained break above the 20-day EMA to ease the current bearish pressure.

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