Forex News
- SVME – PMI rose to 56.7 in October, against expectations of remaining at 55.3.
- The US Dollar fell as Middle East diplomatic efforts reduced safe-haven demand, despite remaining US-Iran conflict fears.
- Traders price in a 75% chance of a December rate hike following resilient US economic and inflation data.
USD/CHF depreciates after posting minor gains in the previous trading day, hovering around 0.8220 during the European hours on Monday. The pair remains subdued as the Swiss Franc (CHF) holds gains following the release of domestic economic data.
SVME - Purchasing Managers' Index rose to 56.7 in October, against expectations of remaining at 55.3. Swiss Real Retail Sales came in at 1.6% year-over-year growth in September, from the previous 3.9% (revised from 3.2%). Market expectations were 3%.
The USD/CHF pair depreciates as the US Dollar (USD) loses ground amid easing safe-haven demand, driven by ongoing diplomatic efforts to end the Middle East conflict despite lingering fears of renewed US military action against Iran. Qatari and Iranian officials continued discussions for a third consecutive day, working toward an agreement to end the war ahead of the US midterm elections.
However, the US Dollar could regain ground on rising expectations for a Federal Reserve rate hike. According to the CME FedWatch Tool, traders are pricing in roughly a 75% chance of a December rate increase, boosted by recent US macroeconomic data pointing to economic resilience and persistent inflation.
Traders await key upcoming events, including the US Nonfarm Payrolls (NFP) report and ISM manufacturing and services data. Remarks from several Federal Reserve officials scheduled throughout the week are also expected to offer further guidance on the central bank's monetary policy path.
Swiss Franc FAQs
The Swiss Franc (CHF) is Switzerland’s official currency. It is among the top ten most traded currencies globally, reaching volumes that well exceed the size of the Swiss economy. Its value is determined by the broad market sentiment, the country’s economic health or action taken by the Swiss National Bank (SNB), among other factors. Between 2011 and 2015, the Swiss Franc was pegged to the Euro (EUR). The peg was abruptly removed, resulting in a more than 20% increase in the Franc’s value, causing a turmoil in markets. Even though the peg isn’t in force anymore, CHF fortunes tend to be highly correlated with the Euro ones due to the high dependency of the Swiss economy on the neighboring Eurozone.
The Swiss Franc (CHF) is considered a safe-haven asset, or a currency that investors tend to buy in times of market stress. This is due to the perceived status of Switzerland in the world: a stable economy, a strong export sector, big central bank reserves or a longstanding political stance towards neutrality in global conflicts make the country’s currency a good choice for investors fleeing from risks. Turbulent times are likely to strengthen CHF value against other currencies that are seen as more risky to invest in.
The Swiss National Bank (SNB) meets four times a year – once every quarter, less than other major central banks – to decide on monetary policy. The bank aims for an annual inflation rate of less than 2%. When inflation is above target or forecasted to be above target in the foreseeable future, the bank will attempt to tame price growth by raising its policy rate. Higher interest rates are generally positive for the Swiss Franc (CHF) as they lead to higher yields, making the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken CHF.
Macroeconomic data releases in Switzerland are key to assessing the state of the economy and can impact the Swiss Franc’s (CHF) valuation. The Swiss economy is broadly stable, but any sudden change in economic growth, inflation, current account or the central bank’s currency reserves have the potential to trigger moves in CHF. Generally, high economic growth, low unemployment and high confidence are good for CHF. Conversely, if economic data points to weakening momentum, CHF is likely to depreciate.
As a small and open economy, Switzerland is heavily dependent on the health of the neighboring Eurozone economies. The broader European Union is Switzerland’s main economic partner and a key political ally, so macroeconomic and monetary policy stability in the Eurozone is essential for Switzerland and, thus, for the Swiss Franc (CHF). With such dependency, some models suggest that the correlation between the fortunes of the Euro (EUR) and the CHF is more than 90%, or close to perfect.
ING strategist Frantisek Taborsky outlines a busy week for Central and Eastern European (CEE) markets, with PMI, inflation and industrial data across Turkey, Hungary and the Czech Republic, plus policy decisions from Poland and the Czech National Bank. He expects NBP to keep rates at 3.75% and delay hikes until 2027, sees CNB likely hiking 25bp, and maintains a dovish bias as rising energy prices and a stronger Dollar weigh on regional FX.
Dovish CEE central banks versus stronger Dollar
"Trading on Friday saw a return of risk-off sentiment, following a brief period of relief after the Fed and European Central Bank meetings. The combination of rising energy prices and a stronger dollar globally, alongside generally dovish central banks within the CEE region, will continue to exert pressure on local currencies."
"Tomorrow, we will see Turkey’s inflation figures for October. Our estimates suggest a monthly acceleration from 1.8% to 2.4%, while the year-on-year figure is expected to tick lower to 29.6%."
"On Wednesday, Hungary’s industrial production data and the Czech Republic’s October inflation figures will be published. We anticipate an acceleration in headline inflation from 2.5% to 2.6%, and a further rise in core inflation from 3.1% to 3.3%. The National Bank of Poland is also expected to keep rates unchanged at 3.75% and present a new forecast. We do not anticipate the first rate hike until the first quarter of 2027."
"On Thursday, the Czech National Bank will follow, likely raising rates by another 25bp to 4.00% while also presenting a new forecast."
"In line with our expectations, EUR/CZK has returned to the 24.300–350 range, which we consider fair for the time being. Although we anticipate a hawkish stance from the CNB, the bar is high given that 100bp of tightening is already priced in and the koruna has a tendency to weaken slightly following CNB meetings. We could see the pair move slightly above 24.350 again."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- AUD/USD extends losses, nearing the 0.7000 area, down from last week's 0.7068 high.
- Mixed Australian data and upbeat Chinese manufacturing figures have failed to lift the Aussie.
- On Tuesday, the RBA is widely expected to deliver the fifth interest rate hike of the year.
The Australian Dollar (AUD) is portraying one of the weakest performances among major currencies on Monday, and dips further against the US Dollar (USD), amid mixed Australian macroeconomic figures and bright Chinese manufacturing activity figures. The AUD/USD pair is trading at 0.7015 at the European session opening, nearing the bottom of the last two weeks’ trading range in the 0.7000 area.
Australian macroeconomic data released earlier on Monday showed mixed results. The S&P Global Manufacturing Purchasing Managers' Index (PMI) accelerated its contraction, to 49.6 in October against expectations of a steady 49.7 reading, while, on the positive side, Building Permits bounced up 5.1% in September, well beyond the 2.1% expected by the market and reversing August’s 5.2% fall.
Apart from that, China’s RantingDog Manufacturing PMI revealed that the sector’s activity grew at a 52.0 pace in October, down from September's 52.1, but above the 51.6 reading expected by the market.
RBA meeting seen as pivotal as Aussie faces worsening inflation outlook
In Australia, the highlight of the week is the Reserve Bank of Australia's (RBA) monetary policy decision, due on Tuesday. Analysts at Rabobank note that the central bank is “widely tipped to deliver another 25bp rate rise,” which would “mark the fifth rate rise this year and take the cash rate target up to 4.85%.”
Rabobank also underscores the shift in the inflation narrative, pointing out that RBA Deputy Governor Hauser recently remarked that the Aussie inflation outlook has become “materially worse” and cautioned that, with “pending events in the Middle East this week, it might get even worse.”
In the US, the main focus is on Tuesday's midterm elections, which are expected to shift the balance of power in Congress and maybe even in the Senate. Such an outcome is likely to lead to a gridlock on the debt ceiling in 2027 and might also put a brake on data center building plans, at a time when clouds are casting over the AI sector.
Before that, the US ISM Services PMI is expected to show strong growth, to support the US economic exceptionalism rhetoric and strengthen the case for a Federal Reserve interest rate hike in December.
RBA FAQs
The Reserve Bank of Australia (RBA) sets interest rates and manages monetary policy for Australia. Decisions are made by a board of governors at 11 meetings a year and ad hoc emergency meetings as required. The RBA’s primary mandate is to maintain price stability, which means an inflation rate of 2-3%, but also “..to contribute to the stability of the currency, full employment, and the economic prosperity and welfare of the Australian people.” Its main tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will strengthen the Australian Dollar (AUD) and vice versa. Other RBA tools include quantitative easing and tightening.
While inflation had always traditionally been thought of as a negative factor for currencies since it lowers the value of money in general, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Moderately higher inflation now tends to lead central banks to put up their interest rates, which in turn has the effect of attracting more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in the case of Australia is the Aussie Dollar.
Macroeconomic data gauges the health of an economy and can have an impact on the value of its currency. Investors prefer to invest their capital in economies that are safe and growing rather than precarious and shrinking. Greater capital inflows increase the aggregate demand and value of the domestic currency. Classic indicators, such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can influence AUD. A strong economy may encourage the Reserve Bank of Australia to put up interest rates, also supporting AUD.
Quantitative Easing (QE) is a tool used in extreme situations when lowering interest rates is not enough to restore the flow of credit in the economy. QE is the process by which the Reserve Bank of Australia (RBA) prints Australian Dollars (AUD) for the purpose of buying assets – usually government or corporate bonds – from financial institutions, thereby providing them with much-needed liquidity. QE usually results in a weaker AUD.
Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the Reserve Bank of Australia (RBA) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the RBA stops buying more assets, and stops reinvesting the principal maturing on the bonds it already holds. It would be positive (or bullish) for the Australian Dollar.
- Gold attracts some buyers on Monday as hopes for Iran diplomacy undermine the safe-haven USD.
- Ukrainian attacks on Russia and US threats of further military action keep a lid on the latest optimism.
- Fed rate hike bets further limit USD losses and cap the commodity ahead of this week’s US macro releases.
Gold (XAU/USD) trims part of its modest intraday gains, trading with a mild positive bias below the $3,900 mark during Monday’s early European session. The US Dollar (USD) attracts fresh sellers amid optimism over a potential diplomatic breakthrough to end the US-Iran war and offers some support to the commodity. Meanwhile, US Federal Reserve (Fed) rate-hike bets remain firmly on the table amid energy-driven inflation concerns, keeping the non-yielding yellow metal near the October 2025 low touched on Friday.
Iranian negotiators reportedly held talks for a third consecutive day with Qatari mediators on Sunday to advance a deal to end the US-Israeli war on Iran. In further developments, Iran has proposed a two-day (48-hour) plan to reopen the Strait of Hormuz, provided that the US fulfills a set of conditions that include lifting the sanctions imposed following the Islamabad memorandum and reducing US forces in the region. Adding to this, US President Donald Trump said that negotiations with Iran were going fine and that Iran wanted a deal.
Trump, however, added that he has not ruled out further military action after the November 3 midterm elections. Furthermore, Iran’s Supreme Leader, Mojtaba Khamenei, ordered his top military commanders to prepare for renewed confrontation with the US and Israel, and to expand Tehran’s options for retaliation. This, along with fresh Ukrainian attacks on Russian oil refineries, keeps the geopolitical risk premium in play and keeps USD bears on the back foot, warranting caution before positioning for any further gains for the Gold price.
Meanwhile, US macro data, released last Thursday, pointed to resilient economic growth and persistent price pressures, solidifying bets for additional Fed tightening. According to the CME Group's FedWatch Tool, traders are currently pricing in around a 75% chance that the US central bank will raise borrowing costs again in December. Hence, strong follow-through buying is needed to confirm a near-term bottom for the XAU/USD pair as the focus now shifts to important US macro releases, scheduled at the start of a new month.
The US ISM Manufacturing PMI will be published later today, followed by the ISM Services PMI on Wednesday ahead of the closely watched US monthly employment details – popularly known as the Nonfarm Payrolls (NFP) report on Friday. In the meantime, the aforementioned fundamental backdrop suggests that any subsequent recovery is more likely to be sold into and remain capped.
XAU/USD 4-hour chart
Technical Analysis
Friday's breakdown and acceptance below the $4,000 psychological mark was seen as a key trigger for bearish traders. Moreover, the precious metal holds well below the 100-period Exponential Moving Average (EMA) on the 4-hour chart, validating the near-term negative outlook. The Moving Average Convergence Divergence (MACD) remains in negative territory with the MACD line below its signal and a weak histogram. That said, the Relative Strength Index (RSI) at 28.94 hovers in oversold territory, hinting that while downside pressure dominates, the latest slide could be stretched in the short term.
Nevertheless, any subsequent upward move is more likely to attract fresh sellers and remain capped near the 100-period EMA at $4,068.55, which acts as the key level bulls would need to reclaim to ease the current bearish bias. On the downside, traders would now look to Friday's swing low, around the $3,870 region for potential demand zones, which, if broken, should pave the way for an extension of the well-established downward trajectory.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Fed FAQs
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.
Commerzbank’s Tatha Ghose reports Poland’s October flash Consumer Price Index (CPI) slowed to 3.5% year-on-year versus 4.1% in September, with prices down 0.3% month-on-month, likely delaying National Bank of Poland tightening. He stresses the drop is driven by temporary fuel tax cuts rather than genuine disinflation. Ghose expects the Zloty to keep underperforming due to political and central bank uncertainty despite the apparent inflation surprise.
Temporary fuel effects cloud policy signal
"Further to our recent commentary on Poland’s central banking outlook, October’s flash CPI estimate came in weaker than expected on Friday: headline inflation slowed to 3.5%y/y from 4.1%y/y in September (a deceleration to 3.7%y/y was the consensus expectation). On our preferred seasonally-adjusted basis, the price level declined by 0.3%m/m. This will probably delay monetary tightening by Poland’s National Bank (NBP), but the reading is highly misleading as a signal of underlying inflation dynamics."
"Passenger fuel prices fell by 9.7%m/m as a result, reducing their estimated contribution to annual inflation by 0.8pp. This was not genuine disinflation, but a temporary tax intervention which is currently scheduled to expire at year-end (although likely to be extended)."
"The softer estimated core reading will give NBP a justification to remain on hold at this week’s meeting (Wednesday). But the underlying macroeconomic picture does not negate the case for tightening."
"In our view, the zloty will continue to underperform because of political and central bank uncertainty – this apparent positive inflation surprise will not help."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- Silver price rebounds strongly to near $50.35 as oil prices corrects further.
- Investors shift their focus to US mid-term elections and key US economic data.
- According to expectations, the probability of the Democrats taking the Senate at 72.0%.
Silver price (XAG/USD) is up 2.45% to near $50.35 in the European trade on Monday. The white metal bounces back strongly after hitting a fresh almost a year low of $48.86 on Friday, as oil prices have extended their correction.
As of writing, the WTI Oil price has corrected slightly below $100 from its five-month high of $104.03 posted on Friday.
Lower oil prices ease fears of acceleration in global inflationary pressures, a scenario that might diminish expectations of prolonged monetary tightening by central banks. Such a case bodes well for non-yielding assets, like Silver.
Oil prices come under pressure after signals from the United States (US) that it would prefer pursuing a diplomatic resolution with Iran than resuming military attacks.
Meanwhile, investors await US mid-term elections, and key US economic data, notably Nonfarm Payrolls (NFP), that could shape expectations for the Federal Reserve’s (Fed) monetary policy outlook.
US midterms set to reshape fiscal outlook as markets eye tight race for Congress
Strategists at Deutsche Bank note that, looking in more depth at the week ahead, “tomorrow’s midterms will determine control of Congress for the final two years of President Trump’s term.” They highlight that current polling “suggests Democrats are favoured to gain the three seats needed for a House majority, while the Senate remains a much closer contest,” with the final outcome in either chamber potentially taking “several days to become clear if the margins are tight.”
In terms of market-implied probabilities, Deutsche Bank point out that “Polymarket currently put the probability of the Democrats taking the Senate at 72.0%. Well renowned pollster Nate Silver currently suggests a 75% probability.”
From a near-term fiscal perspective, Deutsche Bank’s economists caution that “the lame-duck session after the election could prove at least as consequential as the composition of the new Congress,” with “government funding expiring on December 11 and Republicans likely to seek a reconciliation bill that could include additional defence spending and potentially address the debt limit.”
Silver Technical Analysis
In the daily chart, XAG/USD trades at $50.35, extending a bearish near-term bias as price holds clearly beneath the 9-day Exponential Moving Average (EMA) at $53.02. The metal remains pressured by this overhead dynamic barrier, while the Relative Strength Index (RSI) at 28.90 sits in oversold territory, hinting that downside momentum is stretched but not yet decisively reversing.
On the topside, initial resistance is located at the 9-day EMA around $53.02, and a sustained break above this level would be needed to ease the current bearish tone. On the downside, while there is no nearby structural price floor in the dataset, the oversold RSI reading near 28.90 suggests that sellers could begin to lose conviction on further dips, potentially slowing the slide rather than establishing a clear support zone.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
Deutsche Bank’s US equity strategists have upgraded their stance on US technology stocks from neutral to positive following three weeks of sharp underperformance. The sector fell 11% while the rest of the S&P 500 gained 6%, pushing its relative performance to the bottom of a multi-year channel that has previously triggered strong rebounds. The upgrade follows a difficult October for the Nasdaq amid concerns over AI-related capital spending, while a rebound in US equity futures signals improving market sentiment.
Strategists upgrade sector stance
"Equities were mixed, with the STOXX 600 (+2.0%) and the equal-weighted S&P 500 (+5.0%) gaining, but the Nasdaq (-5.3%) suffering its worst month since March 2025 as concerns around AI capex intensified. European credit and European banks also struggled as OAT-Bund spreads neared their 2011 peak."
"Over the weekend our US equity strategists upgraded US tech from neutral to positive, reversing a well-publicised move they made three weeks ago. They see the sector having underperformed the market by 16% over those three weeks, with it being down -11% against the rest of the index being up +6%. It's now at the bottom of a channel versus the index, levels its bounced aggressively off 5 times in the last 2.5 years."
"Asian equity markets are snapping back this morning with the KOSPI (+2.77%) leading gains buoyed by index heavyweights SK Hynix and Samsung Electronics. Elsewhere, Chinese stocks are also trading decently higher with the CSI 300 (+0.89%) and the Shanghai Composite (+0.97%) outperforming the Hang Seng (+0.72%). Meanwhile, the Nikkei (-0.01%) is back to flat with Kioxia down over -15% after a Q3 forecast miss. Kioxia was the largest company in the index in late June trading at over 36,000. It's now back to just over 11,000 showing the recent dispersion in the AI trade. Elsewhere the S&P/ASX 200 (-0.57%) is lower as the RBA starts its two-day policy gathering. "
"S&P 500 (+0.49%) and NASDAQ 100 (+1.01%) futures have snapped back up this morning."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
Iran's Foreign Ministry spokesperson Esmaeil Baghaei says basis of diplomacy with the United States (US) is Tehran’s seven steps proposal, and the chances of its implementation over next few days exists. Baghaei added that exchange of messages with the US continues, and Deputy Foreign Minister Kazem Gharibabadi was in Doha to facilitate the same.
- DXY meets with a fresh supply on Monday amid renewed hopes for Iran diplomacy.
- Fed rate bets could help limit losses as the geopolitical risk premium remains in play.
- Bulls need to reclaim the 100-hour SMA hurdle to negate the intraday negative bias.
The US Dollar Index (DXY), which tracks the Greenback against a basket of currencies, struggles to capitalize on Friday's modest bounce from the 101.60 region and attracts fresh sellers at the start of a new week. The index sticks to intraday losses through the early European session, currently trading near 101.75, down over 0.20% for the day amid renewed hopes of a diplomatic breakthrough to end the US-Iran war.
In fact, Iranian negotiators reportedly held talks with Qatari mediators for the third consecutive day on Sunday and proposed a two-day plan to reopen the Strait of Hormuz, provided that the US fulfills a set of conditions. Moreover, US President Donald Trump said that negotiations with Iran were going well and that Iran wanted a deal, boosting investors' confidence and undermining demand for the traditional safe-haven US Dollar (USD).
Meanwhile, the geopolitical risk premium remains in play as Trump has not ruled out further military action after the November 3 midterm elections. Apart from this, a fresh escalation of the Russia-Ukraine conflict, along with bets that the US Federal Reserve (Fed) will raise borrowing costs again in December, should act as a tailwind for the DXY. This, in turn, warrants some caution for bears as focus shifts to this week's key US macro data.
From a technical perspective, the index keeps a bearish intraday tone below the 100-hour Simple Moving Average (SMA) at 102.10. Moreover, the Moving Average Convergence Divergence (MACD) has slipped marginally into negative territory, while the Relative Strength Index (RSI) holds around 41. Momentum indicators together hint that the attempted recovery in the DXY is losing traction rather than building a sustained upside push.
Hence, the 100-period SMA immediate hurdle would need to be reclaimed to ease immediate downside pressure. On the downside, the 101.60 emerges as an immediate support ahead of the October monthly swing low, near the 101.45 region. A convincing break below the latter would set the stage for deeper losses and drag the DXY further below the 101.00 round figure, towards the 100-day SMA support, currently near the 100.70 region.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
DXY 1-hour chart
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
- EUR/USD approaches the 1.1200 area but remains trading within Friday's range.
- The lower Oil prices are offsetting investors' frustration about the unexpected decline in German Retail Sales.
- The US Dollar is showing a moderately softer tone ahead of the US midterm elections.
The Euro (EUR) appreciates 0.2% against the US Dollar (USD) on Monday as a moderate risk appetite, with Oil prices pulling down from highs, has offset investors' disappointment about the weak German consumption figures. The EUR/USD pair is trading at 1.1185 at the European session opening, up from last week’s highs near 1.1100 but still within Friday’s trading range.
German data released on Monday revealed that Retail Sales fell 2% in September, following a 1.2% growth in August, against market expectations of a 0.4% gain. Year-on-year, sales dropped 2.3% after a 0.3% decline in the previous month.
The impact of these figures, however, has been cushioned by the decline in Oil prices, which gives some respite to the Eurozone’s Oil-importing economies. Brent Oil drops more than 2% on Monday, reaching prices below $110.00 as Qatari mediators keep working with Tehran to resume the US-Iran peace negotiations.
US Dollar suffers with US elections in focus
The US Dollar, on the other hand, has opened the week in a softer tone, as markets turn their focus to the US Midterm elections, which will take place on Tuesday. Recent polls point to a Democrat victory in Congress, with voters frustrated by the higher cost of living, amid escalating energy prices, while the Senate is expected to be a close call.
A clear Democrat victory is expected to hamper plans for data centres and AI infrastructure, which are facing increasing opposition across the country, although the main issue is likely to be the increase of the debt ceiling, which will be reached in 2027 and might lead to a serious standoff.
Beyond that, the week will be packed with data. On Monday, the US ISM Manufacturing Purchasing Managers Index (PMI) will gather some attention, ISM Services PMI data will be out on Wednesday, and the all-important Nonfarm Payrolls review, due on Friday, will complete the US calendar.
In the Eurozone, the HCOB Manufacturing PMI will be released later in the day. On Tuesday, the focus will be on unemployment data; Services PMI and consumer inflation data will be out on Wednesday, ECB’s Lagarde speaks on Thursday, and on Friday, September’s Retail Sales data will close the week.
Economic Indicator
Retail Sales (MoM)
The Retail Sales released by the Statistisches Bundesamt Deutschland is a measure of changes in sales of the German retail sector. It shows the performance of the retail sector in the short term. Percent changes reflect the rate of changes of such sales.The changes are widely followed as an indicator of consumer spending. The positive economic growth usually anticipates "Bullish" for the EUR, while a low reading is seen as negative, or bearish, for the EUR.
Read more.Last release: Mon Nov 02, 2026 07:00
Frequency: Monthly
Actual: -2%
Consensus: 0.4%
Previous: 1.3%
Source:
Economic Indicator
Retail Sales (YoY)
The Retail Sales released by the Statistisches Bundesamt Deutschland is a measure of changes in sales of the German retail sector. It shows the performance of the retail sector in the short term. Percent changes reflect the rate of changes of such sales.The changes are widely followed as an indicator of consumer spending. The positive economic growth anticipates "Bullish" for the EUR, while a low reading is seen as negative, or bearish, for the EUR.
Read more.Last release: Mon Nov 02, 2026 07:00
Frequency: Monthly
Actual: -2.3%
Consensus: -
Previous: -0.4%
Source: Federal Statistics Office of Germany
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