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Commerzbank’s Tatha Ghose highlights that Hungary’s MNB minutes confirm a unanimous decision to halt rate cuts, yet offer no discussion of future hikes or cuts. Despite higher medium-term inflation forecasts and a lower target, the bank gives no signal of tightening. Ghose argues the Forint will remain weak until MNB adopts a much more hawkish stance and resolves its policy contradiction.

MNB stance seen as insufficiently hawkish

"Hungary's National Bank (MNB) published minutes confirming that the decision to stop rate cuts was unanimous at the September meeting. There was no discussion of rate cut or rate hike. Policymakers took comfort from (apparently) low inflation – ‘apparent’ because only the year-on-year measure is low – but stressed risks from higher and volatile energy prices, prospective wage settlements and the medium-term inflation outlook."

"September CPI inflation accelerated slightly to 1.6%y/y, driven by fuel prices, but this year-on-year number is wholly misleading. Month-on-month CPI indicators, including the rate of change of MNB’s underlying core measures, are re-accelerating from disinflation territory back towards target after having turned disinflationary. This reversal deserves attention."

"MNB recently raised its inflation forecast for 2027 sharply to 3.1%, while also reducing its medium-term inflation target from 3.0% to 2.5%, effective from January 2028. Lowering the target lowers tolerance for inflation overshoots too. Yet MNB still gives no signal towards a possible need to hike rates, even while sentiment has turned in this direction in most other countries."

"MNB is using euro adoption and ERM II talk almost like a verbal intervention tool to reassure markets that deeper reforms are on the way. This will not suffice. The forint is still weak and will not recover until MNB has shifted to a much more hawkish stance."

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

ING’s Chris Turner notes the Dollar remains supported after September FOMC minutes showed a Federal Reserve still expecting another rate hike this year. Money markets already price a 25bp move in December and further tightening in 2027, which ING sees as too aggressive but unlikely to be challenged. Elevated Treasury yields, rising volatility and strong demand at the latest US 10-year auction underpin Dollar strength, with US Dollar Index (DXY) seen grinding towards 102.85.

Fed pricing keeps Dollar supported

"September FOMC minutes published last night reflect a hawkish Fed. One sentence which caught our eye was: "Most participants assessed that another increase in the target range for the federal funds rate would likely be appropriate by year-end." This followed a discussion of frustratingly high inflation and the Fed being surprised about the pace and magnitude of the AI build-out."

"But a hawkish Fed is firmly priced by money markets at this stage. After an expected 25bp hike to 4.25% in December, the market still looks for another 50bp of tightening next year. We think that is too aggressive, but doubt the market will want to fight against that hawkish pricing this year."

"Additionally, the US 10-year Treasury auction went very well last night, with a strong bid-to-cover ratio and a strong indirect bid, serving as a reminder that demand for Treasuries does exist if yields are high enough."

"This leaves the dollar well-supported and winning more friends in a slightly more difficult investment environment. Here, elevated Treasury yields and rising volatility have sucked money out of the carry trade, where most Latam currencies have been hit quite hard. Given events in Europe, we're looking for the dollar to hold onto gains over the coming months."

"DXY can grind up towards a target at 102.85."

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

European Central Bank (ECB) Governing Council member Emmanuel Moulin said during the European trading session on Thursday that high inflationary pressures in the Eurozone are 100% driven by energy shocks. Another ECB member who has ruled out fears of second-round inflation effects in the old continent.

Comments

Inflation is clearly 100% energy, don't see second round effects.

Geopolitical shock is also transmitting into a financial shock.

ECB is faced with an inflationary shock.

Economic growth in the Euro area has been quite resilient.

 Market reaction

No immediate action is seen in the Euro (EUR), following remarks from ECB's Moulin. As of writing, EUR/USD trades marginally lower to near 1.1190.

UOB strategists Quek Ser Leang and Lee Sue Ann report that GBP/USD failed to extend gains above 1.3286 and instead retreated to 1.3194, closing at 1.3213. Short-term momentum has turned mildly negative, with the pair expected to consolidate within a lower 1.3180–1.3235 intraday band. Over the next one to three weeks, they see downside risk contained above 1.3140 within a broader 1.3140–1.3280 range.

Pound biased lower but downside limited

"24-HOUR VIEW: After GBP rose to a high of 1.3286 on Tuesday, we highlighted the following yesterday: “Upward momentum has increased, albeit not significantly. Today, there is a chance for GBP to retest 1.3285. A continued rise above this level is unlikely.” The subsequent price movements did not unfold as expected, as GBP declined to a low of 1.3194. Despite the decline, downward momentum has not increased significantly. Today, GBP could edge lower, but it is likely to stay within a 1.3180/1.3235 range."

"1-3 WEEKS VIEW: Following Tuesday’s price action, we highlighted yesterday (07 Oct, spot at 1.3265) that “there has been a slight increase in upward momentum, and GBP may edge higher toward 1.3315.” Our view was invalidated quickly as GBP fell below our ‘strong support’ at 1.3200 with a low of 1.3194. This time around, there has been a slight increase in downward momentum, but it is insufficient to indicate a sustained decline. From here, GBP could edge lower, but any decline is likely to be part of a lower range of 1.3140/1.3280. In other words, GBP is unlikely to break clearly below 1.3140."

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

• Gold attracts some buyers on Thursday, though it lacks follow-through as a bullish US Dollar caps gains
• The hawkish Fed, elevated US bond yields, and geopolitical uncertainties act as a tailwind for the USD.
• The bearish setup warrants some caution before positioning for further XAU/USD appreciation.

Gold (XAU/USD) trims its intraday gains and trades near $4,125 during the early European session on Thursday, up around 0.35% for the day. A combination of factors helps the US Dollar (USD) retain a bullish undertone, which, in turn, keeps a lid on the precious metal's bounce from a two-month low, touched the previous day.

Minutes of the September 15–16 Federal Open Market Committee (FOMC) meeting, published on Wednesday, showed that members voted unanimously to raise the federal funds rate target range and leaned toward further tightening. Most participants viewed that another rate hike would likely be appropriate by the end of this year to combat persistent inflation. The hawkish tone, however, did little to alter expectations that the Federal Reserve (Fed) will pause at its next meeting in October, offering some support to the non-yielding Gold.

Meanwhile, the CME Group's FedWatch Tool indicates that traders are still pricing in around an 80% chance that the US central bank will raise borrowing costs in December. Adding to this, worries that inflation may prove more stubborn than expected amid volatile energy prices keep US bond yields elevated near multi-year highs. This, along with persistent geopolitical uncertainties stemming from the ongoing conflicts in the Middle East, might continue to support the safe-haven Greenback and cap any meaningful appreciation for gold.

In the latest developments, the Pentagon reportedly instructed US Central Command (CENTCOM) several days ago to conclude preparations for resuming major combat operations in Iran as US President Donald Trump weighs a specific date for launching strikes. The US and Israeli sources said that it could happen before the US midterm elections and possibly the Israeli elections a week earlier, raising the risk of a further escalation of tensions in the region. This, in turn, backs the case for the emergence of some USD dip-buyers at lower levels.

Hence, strong follow-through buying is needed to confirm that the Gold price has bottomed out in the near term and position for any further upside. Traders now look to the release of the usual Weekly Initial Jobless Claims data from the US, which, along with speeches from influential FOMC members, will drive the USD. Apart from this, the incoming geopolitical headlines might continue to infuse volatility across the global financial markets and produce short-term opportunities around the XAU/USD pair amid the bearish fundamental backdrop.

XAU/USD daily chart

Technical Analysis

The XAU/USD pair has been showing some resilience below the 78.6% Fibonacci retracement level of the June-August upswing, though it keeps a bearish near-term bias beneath technically significant daily Simple Moving Averages (SMA). Moreover, momentum indicators remain fragile. In fact, the Relative Strength Index (RSI) is hovering near 40 and the Moving Average Convergence Divergence (MACD) is still negative, hinting that selling pressure prevails despite the absence of extreme oversold conditions.

Hence, any subsequent move up is likely to confront an immediate hurdle near the 61.8% Fibo. retracement at $4,233. This is followed by the 50% retracement at $4,320 and the 50-day SMA at $4,332, which collectively reinforce a broader supply zone. Above there, further barriers are located at the 38.2% retracement at $4,408 and the 23.6% level at $4,516. On the downside, immediate support is seen at the 78.6% Fibo. level at $4,108, ahead of the prior cycle low near $3,949.

(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 Thursday, October 8:

The Euro (EUR) holds steady against its rivals in the European session on Thursday after suffering large losses midweek. Later in the day, policymakers from the European Central Bank (ECB), the Bank of England (BoE) and the European Central Bank (ECB) will be delivering speeches. Additionally, the ECB will publish the minutes of its September policy meeting and the US economic calendar will feature weekly Initial Jobless Claims and Wholesale Inventories data for August.

The widening French-German bond yield spreads, and growing doubts over the ECB's ability to tighten the policy forced the Euro to stay under bearish pressure on Wednesday. EUR/USD lost more than 0.5% and came within a touching distance of the 17-month low it touched near 1.1160 last week. EUR/JPY fell 0.6% on the day, while EUR/GBP closed the ninth consecutive trading day in negative territory. Early Thursday, EUR/USD trades marginally lower on the day, slightly below 1.1200.

During the American trading hours, the Fed released the minutes of the September meeting. The publication showed that most policymakers judged that another hike would probably be appropriate by the end of the year and that they increasingly focused on upside inflation risks, a resilient economy and the possibility that strong AI investment could add to demand pressures.

Euro finds limited support as Fed hike odds fade

Analysts at Commerzbank note that, from the perspective of the “expected interest rate differential between the Euro area and the US,” recent developments have actually been “somewhat supportive of the Euro.” They point out that “the probability of a Fed rate hike in October is now seen as lower than it was at the end of last week,” a shift that was “reinforced by the FOMC minutes released yesterday.” According to Commerzbank, while “many policymakers continued to favour another rate increase this year, the timing remains uncertain,” and importantly, a “single additional rate hike was mentioned rather than the multiple hikes that markets are still pricing in,” tempering the hawkish implications for USD and offering only modest relief for EUR.

In the meantime, crude Oil prices gain traction on Thursday, with the barrel of West Texas Intermediate (WTI) rising more than 2% on the day and trading slightly above $90.50. Markets also seem to have adopted a cautious stance as US stock index futures lose about 0.7% on the day.

The Pentagon told US Central Command (CENTCOM) several days ago to conclude preparations for resuming major combat operations in Iran, Axios reported on Wednesday. US President Donald Trump hasn't made any final decisions or included a specific date for launching strikes, but the US and Israeli sources said it could happen before the US midterm elections and possibly the Israeli elections a week earlier. A White House official stated that Trump has all options available at any time.

Japanese Prime Minister Takaichi Sanae said on Thursday that the country does not require reflationary policy now, adding that she aims to gain market trust by keeping communication highly transparent. After closing virtually unchanged on Wednesday, USD/JPY clings to small gains above 158.50 in the European morning.

Gold (XAU/USD) lost more than 1% on Wednesday, pressured by the broad based USD strength. XAU/USD corrects higher on Thursday and trades above $4,100.

GBP/USD struggles to gather recovery momentum and trades near 1.3200 following Wednesday's sharp decline.

AUD/USD trades in the red near 0.6950 after losing 0.3% on Wednesday. Earlier in the day, the data from Australia showed that Consumer Inflation Expectations climbed to 5.3% in October from 4.9% in September.

• NZD/USD turns lower from a 0.5622 high on Wednesday and approaches an 18-month low at 0.5580.
• High Oil prices amid the escalating tensions in the Middle East have hammered risk appetite on Thursday.
• The pair is trading at the bottom of the recent range, ready to extend the downtrend from August's highs.
  

The New Zealand Dollar (NZD) reverses earlier gains as market sentiment sours on Thursday's early European session, and turns negative against the US Dollar (USD) in the daily chart. Higher Oil prices amid escalating tensions in the Middle East are pushing Treasury yields higher and setting a floor on the US Dollar's pullback seen during the Asian trade.

New attacks on Saudi Arabian airports by the Houthis from Yemen, an Iran proxy, have boosted Oil prices, pushing the Brent Crude barrel to levels near $102.00, amid growing concerns about supply constraints if new attacks damage Saudi's Oil sites.

Crude's rally is also boosting Treasury yields amid markets’ conviction that the elevated energy prices will force central bankers to tighten monetary policy. This has offset the mild US Dollar weakness witnessed after the release of September’s Federal Reserve (Fed) meeting, which showed concerns about inflation but did not alter the view that the central bank will stand pat on rates in October.

Technical Analysis: Support at 0.5580 is coming into play

NZD/USD trades at 0.5596, with bearish momentum building as the 0.5580 support area comes into focus. Indicators on the 4-hour chart endorse this view, with the Relative Strength Index (14) around 40 and the Moving Average Convergence Divergence (MACD) hovering near zero, altogether leaving the bears with a slight edge.

Bears are focused on Monday's low at the mentioned 0.5580. Below here, the next downside target would be the 127.2% Fibonacci retracement of the June-August rally, at 0.5530, ahead of the 2025 floor, at 0.8490.

On the topside, the late June low in the 0.5630 area is keeping upside attempts capped for now, and closing the path towards the September 28 high near 0.5690 and a support-turned-resistance around the June 23 lows at 0.5765.

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

Deutsche Bank strategists highlight a global equity selloff as wider European bond spreads and inflation concerns weigh on risk sentiment. European banks lead losses, while the S&P 500 retreats from record highs and the Russell 2000 underperforms. Asian equities also weaken despite Samsung’s sharp profit growth.

Risk-off tone hits global stocks

"This backdrop of wider bond spreads and fresh inflation fears meant it was a rough day for risk assets. That was particularly clear in Europe, where the STOXX 600 (-1.00%) fell back after three consecutive gains, and there were even bigger losses for the CAC 40 (-1.22%) and Italy’s FTSE MIB (-2.51%) with European banks (-3.38%) bearing the brunt of the losses."

"That also carried over to the US, where the S&P 500 (-0.22%) slipped back from its record high the previous day. And while the headline decline moderated as the session went on, there were still signs of stress under the surface, with almost three-quarters of the index lower on the day as cyclical sectors including industrials (-2.14%) and materials (-1.53%) underperformed."

"And while relative resilience in tech stocks limited the losses for the Nasdaq (-0.22%) and Mag-7 (-0.20%), the small-cap Russell 2000 (-1.31%) sunk to a 4-month low."

"Chinese markets reopened after the week-long Golden Week holiday on a positive note but have struggled to sustain their early gains with the CSI 300 (-0.43%) and Shanghai Composite (-0.27%) now lower. Elsewhere the Hang Sang (-0.69%) and the ASX (-0.74%) are also lower but with US and European equity futures broadly flat."

"In Asia, the KOSPI (-1.24%) is the weakest main market, and it’s a sign of the times that Samsung reported a 9-fold increase in profits which disappointed some investors. The weakness in tech stocks is also impacting the Nikkei (-0.87%)."

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

• The Indian Rupee attracts slight bids against the US Dollar due to suspected RBI intervention.
• Hawkish Fed bets are expected to keep the US Dollar stronger against the Indian Rupee.
• The RBI hiked its key Repo Rate by 25 bps to 5.5%.

The Indian Rupee (INR) opens mildly higher against the US Dollar (USD) on Thursday due to possible Reserve Bank of India’s (RBI) intervention. According to a Reuters report, Indian central bank likely sold US dollars near the market open on Thursday to support the Indian rupee, four traders said.

The RBI intervention was highly anticipated by financial markets, as the Indian currency fell sharply against the US Dollar on Wednesday, following the RBU’s monetary policy announcement.

As of writing, the USD/INR pair is mildly lower at around 96.72, but is close to Wednesday’s high of 96.85 and within striking distance of its all-time high at around 97.00.

What happens at RBI meeting?

Economists at ING reported that the RBI’s Monetary Policy Committee (MPC) “unanimously voted to raise the policy repo rate by 25bp to 5.50%, marking its first rate hike in four years.” At the same time, the MPC “shifted its policy stance to calibrated tightening, signalling that rate cuts are off the table in the near term,” and stressed that “future policy choices would be limited to either a rate hike or a pause, depending on evolving economic conditions and the inflation outlook.”

ING notes that “the pace and extent of further tightening will hinge on growth and inflation dynamics,” with particular focus on “the trajectory of underlying inflation, the broadening of price pressures, the risk of second-round effects from supply shocks, and the strength of demand conditions.” Much of that assessment, they add, “will depend on external inflation drivers,” where “key risks stem from international oil prices, exchange rate dynamics, and global monetary conditions.”

What to expect from INR in near-term?

Regarding the Indian currency’s outlook against the US Dollar, ING said that the external backdrop remains challenging for the Rupee, with “further Fed tightening” likely to “keep the US Dollar stronger for longer, maintaining depreciation pressure on the INR and increasing the risk of imported inflation.”

This reinforces their view that currency weakness and higher global rates could complicate the Reserve Bank of India’s gradual tightening path.

Recovery signs in oil prices

There have been some signs of a recovery in oil prices after remaining under pressure for weeks. Oil prices rebound after a tanker north of Qatar was struck by multiple projectiles, causing casualties, the United Kingdom Maritime Trade Operations agency said on Wednesday, Reuters reported.

Oil prices came under pressure in the past few weeks as the outflow of energy products from the Middle East increased, with United States (US) military supporting ships a safe passage.

Higher oil prices bode poorly for currencies from nations, such as India, which rely heavily on oil imports to meet their energy needs. 

USD/INR Technical Analysis

In the daily chart, USD/INR trades at 96.72, holding a bullish near-term bias as spot remains above the 20-day exponential moving average (EMA) at 96.07. The pair has extended its recovery from late-August lows, and the elevated Relative Strength Index (RSI) at 72.6 hints at overbought conditions, suggesting upside momentum may be stretched even as the broader structure stays supportive.

On the downside, initial support is seen at the 20-day EMA at 96.067, where any pullback could find fresh buying interest while this level holds. Looking up, the pair aims to revisit the all-time high near 97.00

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

• EUR/GBP rebounds to around 0.8485 in Thursday’s early European session.
• UK faces challenging fiscal picture, weighing on the British Pound.
• Traders are worried France’s fragile public finances risk spilling over to the rest of Europe.

The EUR/GBP cross recovers some lost ground to near 0.8485, snapping the nine-day losing streak during the early European trading hours on Thursday. The British Pound (GBP) edges lower against the Euro (EUR) amid UK fiscal risks. Traders will closely monitor Finance Minister John Healey's first budget on October 28.

After the UK's long-term borrowing costs reached their highest level since the 1990s last week, the focus remains firmly on Healey's first budget later this month. Finance Minister is expected to raise taxes to restore some of his fiscal room for manoeuvre which has been eroded by the global surge in borrowing costs caused by the ‌Iran war, per Reuters.

"It's going to be a budget which leans towards fiscal tightening and ultimately impacts growth," said Dominic Bunning, head of G10 FX strategy at Nomura. If it includes tax increases, such as a rise in capital gains tax, investment could suffer and that could weigh more on sterling's cyclical outlook than its structural one, he said.

On the Euro’s front, the risk premium on French government debt climbed to its highest level since the Eurozone debt crisis as traders dump French bonds in favor of safer German bunds. French Prime Minister Sébastien Lecornu's minority government announced plans last month for a €54bn savings drive to stave off a catastrophic downgrade or sovereign default.

Worries about France’s ability to rein in its budget deficit and a sharp bond market selloff last week elevated fears of a potential sovereign debt crisis in the Eurozone. This, in turn, could drag the EUR lower in the near term.

France budget path narrows as political risk premium persists into 2027

Analysts at Nomura highlight that France’s proposed budget, which aims to cut the deficit from an expected “5.4% of GDP this year to 5.0% in 2027,” faces a difficult political backdrop. They describe this as a “fairly modest reduction” that nonetheless “looks challenging amid political and public resistance to further belt-tightening.”

On the political front, Nomura notes that “recent comments from Marine Le Pen suggest her party is likely to be open to amending this year’s budget, rather than blocking it,” but they “believe there are risks that France Insoumise will vote it down.” In their view, opposition parties more broadly “could ultimately decide against voting in favour of Lecornu’s budget, requiring it to be passed by force (Article 49.3), as happened last year.”

Nomura sees “routes for PM Lecornu to secure budget passage, potentially through opposition party compromises or Article 49.3,” yet cautions that “even a successful passage of the budget is unlikely to remove the political risk premium from France.” They add that “we expect headlines surrounding the 2027 elections to also increase investor caution,” with France’s political risk premium “unlikely to remove” ahead of that vote.

Lane flags energy and fiscal uncertainty but keeps Euro outlook broadly steady

Lane’s 5.4/10 FXS Speechtracker score is almost unchanged from the 5.5/10 historic average, pointing to a broadly steady policy tone. Emphasis on the inflation implications of the energy shock leans mildly hawkish, but the admission that pass-through to the wider economy remains uncertain tempers any strong tightening bias.

Forward guidance that fiscal support will fade after 2026 suggests less growth tailwind, which is modestly dovish for the Euro over the medium term. The positive nod to AI supporting the economy offsets some downside risks, leaving the Euro reaction finely balanced and focused on incoming energy and inflation data rather than a clear policy shift.

Technical Analysis: Negative outlook of EUR/GBP remains intact

In the daily chart, EUR/GBP extends its slide below key trend markers and keeping the near-term bias bearish. The pair is capped by the 100-day simple moving average (SMA) and the Bollinger Bands’ 20-day middle SMA, underscoring a downside-skewed structure after the recent break lower. The 14-day Relative Strength Index around 30 hovers near oversold territory, which hints that while bears remain in control, the pace of the decline could start to moderate rather than accelerate aggressively.

On the downside, immediate support emerges at the lower Bollinger Band near 0.8465, where sellers may begin to book profits if the oversold readings deepen. On the topside, any rebound would first face resistance at the 20-day Bollinger middle band at 0.8550, followed by the 100-day SMA at 0.8575, before a more substantial barrier at the upper Bollinger band around 0.8635 comes into view.

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