Forex News
- USD/JPY weakens to near 157.85 in Thursday’s Asian session.
- Japan’s 10-year JGB yield rose 8 bps to 3.055%, its highest since August 1996.
- Fed's Barr said further policy adjustments are likely to be needed to get inflation under control.
The USD/JPY pair attracts some sellers to around 157.85 during the Asian trading hours on Thursday. The Japanese Yen (JPY) strengthens against the US Dollar (USD) as traders remain on high alert for further intervention from Japanese authorities. The Fedspeak will be closely watched later on Thursday.
Japanese Finance Minister Satsuki Katayama said on Thursday that the principles on foreign exchange established since the coordinated Japan-US intervention remain in effect.
Meanwhile, Japan's 10-year government bond (JGB) yield climbed by 8 basis points (bps) to 3.055%, a 30-year high early on the day after US Treasury yields surged overnight.
Last week, the Bank of Japan (BoJ) raised its policy rate by 25 basis points (bps) to 1.25%, their highest level since 1995. The vote was 7-2 as board members Toichiro Asada and Ayano Sato dissented. Markets view the dissent from two policymakers as a warning that additional hikes may be harder to implement. This, in turn, might cap the upside for the JPY.
Markets are pricing about a 30% chance that the Japanese central bank lifts its benchmark short-term rate to 1.50% in October, according to Bloomberg.
Hawkish remarks from the Federal Reserve (Fed) officials could provide some support to the Greenback. Fed Governor Michael Barr said on Wednesday that the US central bank took an important step last week to "recalibrate" short-term borrowing costs to bring down inflation and will likely need to deliver further interest rate hikes.
Japan-US alignment extends into BoJ policy and Yen carry dynamics
Analysts at Rabobank highlight that the evolving geopolitical backdrop is increasingly intertwined with financial market dynamics. They note that “Trump and Japan’s PM Takaichi met to reaffirm their close geopolitical and geoeconomic alliance,” and stress that “that now encompasses the BoJ and the Yen carry trade too.” In this context, Rabobank points out that “Japan’s big banks' domestic loan share is seeing its first sustained post-1991 bubble burst rise,” describing this as “exactly what the White House and Takaichi want as (defence) industry investment rises.”
Fed’s Barr flags more hikes as inflation risks rise, supporting Dollar upside
Fed’s Barr delivers a distinctly hawkish tone, with the FXS Speechtracker score at 8/10, above the 7/10 historical average and signaling a stronger-than-usual tightening bias. The assertion that “further rate hikes [are] likely needed to ensure timely return to 2% inflation,” alongside comments that inflation risks have increased while labor market risks have receded, underscores a clear prioritization of price stability over employment concerns. By admitting the Fed was “out of position” and needed to recalibrate policy, Barr reinforces the narrative that policy rates may need to move higher or stay restrictive for longer, a backdrop typically supportive for the Dollar and negative for risk-sensitive assets.
The FXS Fed Sentiment Index rose by 0.42 points to 148.81, firmly in hawkish territory well above the neutral 100 threshold, confirming that this speech nudges the overall Fed narrative further toward tightening. The combination of an elevated FXS Fed Sentiment Index and an above-baseline FXS Speechtracker score suggests markets should price in a higher probability of additional rate hikes, with implications for Dollar strength and continued headwinds for duration and high-beta FX.
Technical Analysis: USD/JPY
In the daily chart, USD/JPY maintains a mildly bearish tone as it sits between the 20-period Bollinger middle band and the 100-day moving average (MA) resistance. The pair holds above its lower volatility floor, but with price still capped beneath the upper Bollinger band, the broader setup hints at a market that is heavy on rallies. A Relative Strength Index (14) reading around 54 keeps momentum broadly neutral to slightly positive, suggesting that while downside pressure is contained for now, buyers may struggle to decisively reclaim the cluster of resistance overhead.
On the topside, initial resistance is located at the 100-day MA at 159.55, followed by the upper Bollinger band at 160.75, where any test would likely attract profit-taking and fresh supply. On the downside, the first layer of support emerges at the Bollinger middle band at 156.50, ahead of a stronger structural floor at the lower band near 152.30; a daily close below this latter level would significantly deepen the bearish bias and open the way toward lower medium-term levels.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Japanese Yen FAQs
The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.
One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.
Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.
The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.
- Australia’s Unemployment Rate rose to 4.6% as full-time jobs fell, overshadowing a gain in Part-Time Employment.
- US Treasury Secretary Bessent extended the bilateral trade truce with China through January 10.
- Japan Private Sector Cools as preliminary September PMIs showed slower expansion across manufacturing and services as growth momentum eased.
AUD/JPY extends its losses for the second successive day, trading around 110.80 during Asian hours on Thursday. The currency cross continues to trade under pressure as the Australian Dollar (AUD) remains subdued following the release of the latest domestic labor market data.
Australia’s Unemployment Rate rose to 4.6% in August, ticking up from 4.5% in July and exceeding market expectations of 4.5%. Despite the overall Employment Change beating forecasts with an addition of 39.5K jobs, rebounding sharply from a revised 15.9K loss in July, the underlying data revealed weakness, as full-time employment contracted by 6.3K while part-time roles surged by 45.8K. Concurrently, the labor participation rate edged up to 67.1%.
On the geopolitical front, US Treasury Secretary Scott Bessent confirmed that the United States and China have agreed to extend their bilateral trade truce through January 10, pushing back the original November deadline following an unscheduled meeting in Washington with Chinese Vice Premier He Lifeng. As China and Australia are close trading partners, any change in the Chinese economy could impact the Australian Dollar.
In Japan, S&P Global Composite PMI Business Activity Index edged down to 52.5 in September from August’s final reading of 53.5, according to flash data. The slowdown was reflected across both major sectors, with the S&P Global Services PMI falling to 51.6 from August's five-month high of 52.5. Meanwhile, the Japan Manufacturing PMI declined from 54.9 to 54.1, missing market expectations of 55.0 despite signaling a ninth consecutive month of expansion in factory activity.
Japanese Finance Minister Satsuki Katayama stated on Thursday that foreign exchange principles established during the recent coordinated Japan-US currency intervention remain fully in effect. While reaffirming the commitment to joint policy frameworks, Katayama declined to comment on specific exchange rate levels.
US-Japan alignment extends from geopolitics into yen carry and bank lending
Analysts at Rabobank highlight that the deepening alignment between the US and Japan now spans both geopolitics and financial markets. They note that “Trump and Japan’s PM Takaichi met to reaffirm their close geopolitical and geoeconomic alliance,” and that this “now encompasses the BoJ and the Yen carry trade too.” In parallel, Rabobank points out that “Japan’s big banks' domestic loan share is seeing its first sustained post-1991 bubble burst rise,” a development they describe as “exactly what the White House and Takaichi want as (defence) industry investment rises.”
Economic Indicator
Unemployment Rate s.a.
The Unemployment Rate, released by the Australian Bureau of Statistics, is the number of unemployed workers divided by the total civilian labor force, expressed as a percentage. If the rate increases, it indicates a lack of expansion within the Australian labor market and a weakness within the Australian economy. A decrease in the figure is seen as bullish for the Australian Dollar (AUD), while an increase is seen as bearish.
Read more.Last release: Thu Sep 24, 2026 01:30
Frequency: Monthly
Actual: 4.6%
Consensus: 4.5%
Previous: 4.5%
Source: Australian Bureau of Statistics
The Australian Bureau of Statistics (ABS) publishes an overview of trends in the Australian labour market, with unemployment rate a closely watched indicator. It is released about 15 days after the month end and throws light on the overall economic conditions, as it is highly correlated to consumer spending and inflation. Despite the lagging nature of the indicator, it affects the Reserve Bank of Australia’s (RBA) interest rate decisions, in turn, moving the Australian dollar. Upbeat figure tends to be AUD positive.
Australia’s Unemployment Rate climbed to 4.6% in August from 4.5% in July, according to the official data released by the Australian Bureau of Statistics (ABS) on Thursday. The figure came in above the market consensus of 4.5%.
Furthermore, the Australian Employment Change arrived at 39.5K in August from a fall of 15.9K in July (revised from -15.8K), compared with the consensus forecast of a 20K increase.
The participation rate in Australia increased to 67.1% in August from 66.9% in July. Meanwhile, Full-Time Employment decreased by 6.3K in the same period from a growth of 14.9K in the previous reading (revised from 16.3K). The Part-Time Employment rose by 45.8K in August versus a decline of 30.8K prior (revised from -32.2K).
Sean Crick, ABS head of labour statistics, said with the key highlights noted below
This August we recorded a higher proportion of people who were previously not in the labour force moving to being unemployed, compared to recent years.
“Hours worked rose by 14 million hours in August after falling by the same amount in July. This is partly due to having more employed people working zero hours last month compared to usual July months.”
Employment and hours worked are closely aligned in annual growth, up 1.6 per cent and 1.7 per cent respectively.
Market reaction to the Australia’s employment data
The Australian Dollar (AUD) attracts some sellers following the employment data. At the time of writing, the AUD/USD pair is trading 0.18% lower on the day to trade at 0.7026.
Australian Dollar Price This week
The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies this week. Australian Dollar was the weakest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.94% | 1.19% | 0.73% | 0.85% | 1.26% | 0.77% | 0.33% | |
| EUR | -0.94% | 0.27% | -0.22% | -0.09% | 0.31% | -0.17% | -0.60% | |
| GBP | -1.19% | -0.27% | -0.59% | -0.36% | 0.05% | -0.43% | -0.87% | |
| JPY | -0.73% | 0.22% | 0.59% | 0.16% | 0.52% | 0.06% | -0.37% | |
| CAD | -0.85% | 0.09% | 0.36% | -0.16% | 0.47% | -0.10% | -0.51% | |
| AUD | -1.26% | -0.31% | -0.05% | -0.52% | -0.47% | -0.48% | -0.98% | |
| NZD | -0.77% | 0.17% | 0.43% | -0.06% | 0.10% | 0.48% | -0.43% | |
| CHF | -0.33% | 0.60% | 0.87% | 0.37% | 0.51% | 0.98% | 0.43% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Australian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).
This section below was published at 21:30 GMT on Wednesday as a preview of the Australia Employment report
- The Australian Unemployment Rate is forecast to hold steady at 4.5% in August.
- Australia is expected to have added 20K jobs in the month, after losing 15.8K in July.
- AUD/USD aims lower ahead of the release, with the 0.7000 psychological barrier in sight.
Australia will release the August monthly employment report on Thursday at 01:30 GMT. Ahead of the announcement, analysts expect the country to have added 20K new jobs in the month, while the Unemployment Rate is expected to remain steady at 4.5%. The Australian Bureau of Statistics (ABS) report is also expected to show that the Participation Rate stood at 66.9%, unchanged from the previous month.
ABS separately reports full-time and part-time positions through the monthly Employment Change. Generally speaking, full-time jobs entail working 38 hours or more per week, usually include additional benefits, and typically provide a consistent income. On the other hand, part-time employment generally means higher hourly rates but lacks consistency and benefits. That’s why the economy prefers full-time jobs. In July, Australia lost 32.2K part-time positions and added a modest 16.3K full-time ones.
Australian unemployment rate seen steady in August
The anticipated figures are a modest improvement from the discouraging data posted in July, yet once again, the employment report is unlikely to have a relevant, sustainable effect on the Australian Dollar (AUD).
Employment data will come a week ahead of the Reserve Bank of Australia (RBA) monetary policy meeting. When policymakers met in August, the Board left the Official Cash Rate (OCR) unchanged at 4.35%, citing a softer-than-anticipated impact of the Middle East conflict on inflation. Officials, however, expressed continued concerns, clarifying that “headline inflation is still too high.”
Regarding employment, however, concerns are less: “Labour market conditions have eased by a little more than expected in recent months. Labour market leading indicators point to only limited easing in the near term.”
The Board mandate is to deliver price stability and full employment, yet it remains focused on “ensuring that high inflation does not become embedded,” according to the RBA’s monetary policy statement, which means employment figures have little to no chance of shaping the upcoming central bank decision.
Meanwhile, the US Dollar (USD) trades with a firmer tone across the FX board, pushing AUD/USD to one-month lows below the 0.7100 mark. The Greenback surged amid hawkish comments from Federal Reserve (Fed) officials, and despite hopes for de-escalation in the Middle East.
The Fed pulled the trigger at its early September meeting, hiking the benchmark rate for the first time in three years, now floating in a 3.75%–4.00% range. The widely anticipated move still pushed the Greenback higher, as investors remained uncertain whether policymakers would dare to challenge US President Donald Trump’s wishes for lower rates. Now that they opened the door, market players continue to price in additional hikes before year-end.
Regarding the Middle East war, hopes surged after Iran declared that it could reopen the Strait of Hormuz in a matter of days if the United States (US) eases military pressure and lifts its blockade on Iranian ports. Talks seem to be on between the two countries, boosting expectations of a soon-to-come resolution.
Back to the Australian employment data release, the anticipated figures are expected to have a positive, yet temporary impact. A much better-than-anticipated outcome could spur near-term AUD demand, but whether the currency can sustain those gains will depend on risk sentiment and the current strength of the US Dollar (USD).
When will the Australian employment report be released and how could it affect AUD/USD?
The ABS August employment report will be released early on Thursday. As previously noted, the Australian economy is expected to have added 20K new jobs in the month, while the Unemployment Rate is forecast at 4.5%. Market participants will also watch the breakdown of full-time and part-time positions.
Valeria Bednarik, Chief Analyst at FXStreet, notes: “The AUD/USD pair trades around the 0.7050 region ahead of the announcement, with a clear bearish bias amid persistent USD demand. The pair is currently piercing its 100-day Simple Moving Average (SMA), which slowly turns south, reflecting continued selling interest. AUD/USD is also far below a bearish 20-day SMA currently at around 0.7160. Technical indicators, in the meantime, have turned sharply lower within negative levels, also in line with mounting selling pressure and hinting at lower lows ahead.”
Bednarik adds: “The risk of additional declines will increase if the pair breaks below the 0.7030 level, an immediate support area, while the next relevant hurdle comes at 0.6970. The first line of sellers is located at 0.7100, followed by a stronger one in the 0.7130 region.”
Employment FAQs
Labor market conditions are a key element to assess the health of an economy and thus a key driver for currency valuation. High employment, or low unemployment, has positive implications for consumer spending and thus economic growth, boosting the value of the local currency. Moreover, a very tight labor market – a situation in which there is a shortage of workers to fill open positions – can also have implications on inflation levels and thus monetary policy as low labor supply and high demand leads to higher wages.
The pace at which salaries are growing in an economy is key for policymakers. High wage growth means that households have more money to spend, usually leading to price increases in consumer goods. In contrast to more volatile sources of inflation such as energy prices, wage growth is seen as a key component of underlying and persisting inflation as salary increases are unlikely to be undone. Central banks around the world pay close attention to wage growth data when deciding on monetary policy.
The weight that each central bank assigns to labor market conditions depends on its objectives. Some central banks explicitly have mandates related to the labor market beyond controlling inflation levels. The US Federal Reserve (Fed), for example, has the dual mandate of promoting maximum employment and stable prices. Meanwhile, the European Central Bank’s (ECB) sole mandate is to keep inflation under control. Still, and despite whatever mandates they have, labor market conditions are an important factor for policymakers given its significance as a gauge of the health of the economy and their direct relationship to inflation.
Economic Indicator
Employment Change s.a.
The Employment Change released by the Australian Bureau of Statistics is a measure of the change in the number of employed people in Australia. The statistic is adjusted to remove the influence of seasonal trends. Generally speaking, a rise in Employment Change has positive implications for consumer spending, stimulates economic growth, and is bullish for the Australian Dollar (AUD). A low reading, on the other hand, is seen as bearish.
Read more.Next release: Thu Sep 24, 2026 01:30
Frequency: Monthly
Consensus: 20K
Previous: -15.8K
Source: Australian Bureau of Statistics
Japanese Finance Minister (FM) Satsuki Katayama said on Thursday that principles on foreign exchance established since coordinated Japan-US intervention remain in effect.
Key quotes
Principles on forex established since coordinated Japan-US intervention remain in effect.
Won't comment on forex levels.
Market reaction
At the time of writing, the USD/JPY pair is down 0.25% on the day at 157.93.
- AUD/USD sticks to modest losses as the AUD remains depressed after the unimpressive jobs data.
- Fed rate hike bets remain supportive of elevated US bond yields and continue to support the USD.
- Traders, however, seem hesitant to place aggressive bets ahead of the crucial Trump-Xi meeting.
The AUD/USD pair hits a fresh low since August 7, around the 0.7025 region, following the release of Australian monthly jobs data, though it lacks follow-through selling and defends the 200-day Simple Moving Average (SMA) pivotal support.
The Australian Bureau of Statistics (ABS) reported that the number of employed people rose by 39K in August, compared to 20K expected and a decline of 15.8 K recorded in the previous month. The positive headline reading, however, was offset by a fall in full-time jobs and a rise in the Unemployment Rate to 4.6%, from 4.5% in July. This comes on top of the disappointment from Australia's flash PMIs, which showed a slowdown in services activity and a contraction in the manufacturing sector. The softer data tempers expectations of a follow-through move by the Reserve Bank of Australia (RBA) after the expected 25 basis points (bps) rate hike next week and undermines the Australian Dollar (AUD).
The US Dollar (USD), on the other hand, retains its strong bullish undertone amid rising bets for another interest rate hike by the Federal Reserve (Fed). In fact, traders are now assigning a higher probability that the US central bank will raise borrowing costs again in October. The bets were lifted by the S&P Global report, which showed that US business activity accelerated for a fourth straight month in September and registered the fastest pace of growth since July 2021. This keeps US bond yields close to multi-year highs and acts as a tailwind for the Greenback, weighing on the AUD/USD pair. Bears, however, opt to wait for a meeting between US President Donald Trump and his Chinese counterpart Xi Jinping.
AUD/USD daily chart
Technical Analysis
The AUD/USD pair holds just above the 200-day SMA at 0.7022 and the 61.8% Fibonacci retracement at 0.7006, reinforcing a nascent demand zone around 0.70 and hinting that dips toward this area are likely to attract buyers.
On the topside, initial resistance is seen at the 50.0% retracement at 0.7050, followed higher by the 38.2% level at 0.7094 and then the 23.6% retracement at 0.7149, where upside momentum could slow.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Economic Indicator
Unemployment Rate s.a.
The Unemployment Rate, released by the Australian Bureau of Statistics, is the number of unemployed workers divided by the total civilian labor force, expressed as a percentage. If the rate increases, it indicates a lack of expansion within the Australian labor market and a weakness within the Australian economy. A decrease in the figure is seen as bullish for the Australian Dollar (AUD), while an increase is seen as bearish.
Read more.Last release: Thu Sep 24, 2026 01:30
Frequency: Monthly
Actual: 4.6%
Consensus: 4.5%
Previous: 4.5%
Source: Australian Bureau of Statistics
The Australian Bureau of Statistics (ABS) publishes an overview of trends in the Australian labour market, with unemployment rate a closely watched indicator. It is released about 15 days after the month end and throws light on the overall economic conditions, as it is highly correlated to consumer spending and inflation. Despite the lagging nature of the indicator, it affects the Reserve Bank of Australia’s (RBA) interest rate decisions, in turn, moving the Australian dollar. Upbeat figure tends to be AUD positive.
- WTI may rebound as Iranian President Pezeshkian rejected US threats and threatened to restrict Strait of Hormuz navigation.
- The US administration is working with domestic refiners to voluntarily reduce diesel exports.
- Saudi Arabia prepares to restart its East-West pipeline, while Ukraine discusses an energy ceasefire.
West Texas Intermediate (WTI) oil price depreciates after registering modest gains in the previous day, trading around $90.80 per barrel during Asian hours on Thursday. Crude oil prices may rebound as ongoing uncertainty surrounds the progress of the United States (US)-Iran diplomatic talks.
Speaking at the UN General Assembly, Iranian President Masoud Pezeshkian declared that Tehran would not yield to threats and reaffirmed the nation's right to pursue nuclear technology for economic development. He further emphasized that Iran would restrict freedom of navigation through the strategic Strait of Hormuz for as long as US sanctions and blockades remain active.
In response to domestic energy concerns, US Energy Secretary Chris Wright announced that the Trump administration is collaborating with domestic refiners to voluntarily reduce US diesel exports, offering an alternative to a formal overseas shipment ban. At the same time, geopolitical dynamics in the energy sector continue to shift as Saudi Arabia moves to resume oil exports via its critical East-West pipeline, and Ukrainian President Volodymyr Zelenskyy revealed recent discussions with President Donald Trump regarding a potential energy ceasefire.
Crude sentiment stays cautious as TD flags headline-driven positioning risks
According to TD Securities, market participants are treating the latest “deal headlines” with caution, as the bank’s strategists “remain skeptical of any deal headlines until there is actually something concrete.” They warn that as speculative positioning in crude “becomes more elevated, the more prone the market is to the daily headline flow,” reinforcing their view that current price resilience is increasingly vulnerable to shifts in sentiment rather than fundamentals alone.
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
- GBP/USD retains a negative bias for the fourth straight day amid a bullish US Dollar.
- Rising Fed rate hike bets keep US bond yields elevated and underpin the Greenback.
- The BoE’s cautious stance favors bears as focus shifts to the key Trump-Xi summit.
The GBP/USD pair sticks to a mildly negative bias for the fourth straight day, trading around the 1.3230-1.3225 region during the Asian session on Thursday, near its lowest level since early July, touched the previous day. The fundamental backdrop suggests that the path of least resistance for spot prices remains to the downside, though bears seem hesitant ahead of a crucial meeting between US President Donald Trump and his Chinese counterpart Xi Jinping.
Meanwhile, the US Dollar (USD) preserves the previous day's strong gains to a nearly two-week high amid firming expectations for another interest rate hike by the Federal Reserve (Fed). The bets were lifted by the latest S&P Global report, which showed that US business activity accelerated for a fourth straight month in September and registered the fastest pace of growth since July 2021. This, in turn, keeps the yield on the benchmark 10-year US Treasury close to its highest level since 2007 and continues to act as a tailwind for the Greenback, which, in turn, is seen as a key factor weighing on the GBP/USD pair.
The British Pound (GBP), on the other hand, continues its struggle to attract any meaningful buyers on the back of the Bank of England's (BoE) more cautious holding or gradual easing bias amid stagflation fears. Adding to this, the mixed UK business activity report, published on Wednesday, keeps GBP bulls on the sidelines and contributes to the weaker tone surrounding the GBP/USD pair. Furthermore, the divergent Fed-BoE outlook validates the near-term negative outlook for the currency pair and backs the case for an extension of the recent well-established downtrend witnessed over the past month or so.
GBP/USD daily chart
Technical Analysis
The GBP/USD pair retains a bearish tone below the 100-day Simple Moving Average (SMA) and extends the slide below the 78.6% Fibonacci retracement level. The only nearby structural floor comes at the recent swing at 1.3139, which acts as key support for the bearish move.
On the topside, initial resistance is located at the 78.6% Fibo. at 1.3254, followed by the 61.8% level at 1.3344. Higher up, the 50.0% retracement at 1.3408 and the 100-day SMA at 1.3428 form a dense barrier ahead of the 38.2% level at 1.3471 and the 23.6% Fibo. at 1.3549.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
US Dollar Price This week
The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the strongest against the British Pound.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.91% | 1.16% | 0.68% | 0.82% | 1.11% | 0.73% | 0.28% | |
| EUR | -0.91% | 0.27% | -0.20% | -0.05% | 0.19% | -0.18% | -0.62% | |
| GBP | -1.16% | -0.27% | -0.56% | -0.36% | -0.08% | -0.45% | -0.89% | |
| JPY | -0.68% | 0.20% | 0.56% | 0.17% | 0.42% | 0.06% | -0.38% | |
| CAD | -0.82% | 0.05% | 0.36% | -0.17% | 0.36% | -0.10% | -0.52% | |
| AUD | -1.11% | -0.19% | 0.08% | -0.42% | -0.36% | -0.37% | -0.88% | |
| NZD | -0.73% | 0.18% | 0.45% | -0.06% | 0.10% | 0.37% | -0.44% | |
| CHF | -0.28% | 0.62% | 0.89% | 0.38% | 0.52% | 0.88% | 0.44% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
The People’s Bank of China (PBOC) sets the USD/CNY central rate for the trading session ahead on Thursday at 6.7489 compared to the previous day's fix of 6.7468 and 6.7184 Reuters estimate.
PBOC FAQs
The primary monetary policy objectives of the People's Bank of China (PBoC) are to safeguard price stability, including exchange rate stability, and promote economic growth. China’s central bank also aims to implement financial reforms, such as opening and developing the financial market.
The PBoC is owned by the state of the People's Republic of China (PRC), so it is not considered an autonomous institution. The Chinese Communist Party (CCP) Committee Secretary, nominated by the Chairman of the State Council, has a key influence on the PBoC’s management and direction, not the governor. However, Mr. Pan Gongsheng currently holds both of these posts.
Unlike the Western economies, the PBoC uses a broader set of monetary policy instruments to achieve its objectives. The primary tools include a seven-day Reverse Repo Rate (RRR), Medium-term Lending Facility (MLF), foreign exchange interventions and Reserve Requirement Ratio (RRR). However, The Loan Prime Rate (LPR) is China’s benchmark interest rate. Changes to the LPR directly influence the rates that need to be paid in the market for loans and mortgages and the interest paid on savings. By changing the LPR, China’s central bank can also influence the exchange rates of the Chinese Renminbi.
Yes, China has 19 private banks – a small fraction of the financial system. The largest private banks are digital lenders WeBank and MYbank, which are backed by tech giants Tencent and Ant Group, per The Straits Times. In 2014, China allowed domestic lenders fully capitalized by private funds to operate in the state-dominated financial sector.
- EUR/USD softens to around 1.1380 in Wednesday’s early Asian session.
- The prospect of the US interest rate hikes supports the US Dollar.
- ECB’s Makhlouf said central bank will have to act again if second-round inflation effects appear.
The EUR/USD pair loses ground to near 1.1380 during the early Asian trading hours on Thursday. The major pair extends its downside as hawkish signals from the US Federal Reserve (Fed) boost the US Dollar (USD) against the Euro (EUR). Traders will keep an eye on the US weekly Initial Jobless Claims report and the Fedspeak later in the day.
According to the preliminary reading of the US S&P Global Purchasing Managers Index (PMI), the Manufacturing PMI rose to 52.0 in September from 51.7 in August. This figure came in stronger than the expectations of 51.4.
Meanwhile, the Services PMI eased to 51.7 in September, versus 52.5 prior, below the market consensus of 52.0. The Composite PMI declines to 51.7 in September, compared to 52.5 in the previous session.
On Wednesday, Federal Reserve (Fed) Governor Michael Barr said that “further policy adjustments are likely to be needed” to get inflation under control. Fed President Tom Barkin and Boston Fed President Susan Collins both backed the recent interest rate increase, citing continued inflationary pressures. Hawkish remarks from Fed officials could lift the Greenback and act as a headwind for EUR/USD in the near term.
Markets are now pricing in nearly a 69.7% chance that the Fed would hike rates by a quarter percentage point in October, up from 48.7% one week ago, according to the CME FedWatch tool.
The European Central Bank (ECB) policymaker Gabriel Makhlouf said the central bank may raise interest rates again if high energy prices begin to spread to prices in other sectors, but so far there is no sign of such second-round inflation effects.
Markets are currently pricing roughly a 45% chance of another 25 bps rate hike in October, with a further rate hike fully priced only by December at the earliest, according to Reuters. That leaves plenty of room for incoming data to move expectations.
Societe Generale sticks to long-term Dollar strength despite muted volatility
Strategists at Societe Generale reiterate that their “King Dollar Will Return” framework remains intact, stressing that “the underlying theme of that outlook was that, in a contest between strong dollar fundamentals and the US preference for a weaker currency, fundamentals would eventually prevail.” They acknowledge that market conditions have shifted, conceding that “maybe that is still true, although for now volatility appears to be the loser.” Even so, Societe Generale is clear that “this does not alter the shift in our long-term view,” with the bank continuing to expect Dollar fundamentals to reassert themselves over time.
Fed’s Barr flags more hikes as inflation risks rise, supporting Dollar upside
Fed’s Barr delivered a distinctly hawkish message, with an 8/10 FXS Speechtracker score standing above the 7/10 historical average and signaling a stronger tightening bias relative to the established baseline. The emphasis that “further rate hikes [are] likely needed” and that risks to achieving 2% inflation have increased, while labor market risks have receded, underscores a willingness to lean into additional policy tightening amid strong growth and a solid labor market, a mix typically supportive for the Dollar. The admission that the Fed was “out of position” and needed to recalibrate policy in the “right direction” reinforces the notion that the current stance may still be too loose for a timely return to target, adding to the hawkish tone.
The FXS Fed Sentiment Index rose by 0.42 points to 148.81, firmly in hawkish territory and consistent with the above-baseline FXS Speechtracker score. An index level this far above 100 signals that the broader Fed communication backdrop remains decisively skewed toward further tightening, a configuration that should continue to underpin Dollar yields and, by extension, Dollar demand in FX markets.
Technical Analysis: EUR/USD retains a negative outlook amid oversold RSI
In the daily chart, EUR/USD extends its slide beneath all key moving average and volatility bands, which keeps the near-term bias firmly bearish. Price is holding under the 100-day moving average (MA) and the Bollinger Bands’ middle simple moving average, while the entire Bollinger envelope now sits above spot, underscoring persistent downside pressure. The Relative Strength Index (14) at 25.4 is in oversold territory, which hints at stretched bearish momentum but has yet to trigger a meaningful recovery.
On the topside, immediate resistance emerges around the lower Bollinger Band at 1.1380, a nearby volatility threshold that the pair would need to reclaim to ease the current pressure. Above that, a more consequential resistance cluster is formed by the 100-day MA at 1.1535 and the Bollinger middle band at 1.1545, with the upper Bollinger Band higher up near 1.1710 marking the next bullish objective if a stronger corrective bounce develops. With no clear underlying support levels below the current price in this dataset, the pair remains vulnerable to further declines until buyers can regain at least the 1.1380–1.1550 area.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Euro FAQs
The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
US Treasury Secretary Scott Bessent said that the United States (US) and China have agreed to extend a bilateral trade truce that was set to expire in November through January 10, Blomoberg reported on Wednesday. This move came after Bessent and China’s Vice Premier He Lifeng held an unscheduled meeting in Washington.
“We will extend what we call the ‘Busan Agreement’ — the economic détente between the two countries that was scheduled to end on Nov. 10 — that is going to be extended until Jan. 10,” said Bessent.
Bessent further stated that it’s possible a larger economic package will be agreed upon by January. But it’s also possible to “just roll the current deal” and extend it further.
Chinese President Xi Jinping and his wife Peng Liyuan touched down at Joint Base Andrews outside Washington shortly before 6 p.m. local time on Wednesday. Xi said he was “confident” the trip would produce “fruitful results.”
Market reaction
At the time of writing, the AUD/USD pair is down 0.06% on the day at 0.7034.
US-China Trade War FAQs
Generally speaking, a trade war is an economic conflict between two or more countries due to extreme protectionism on one end. It implies the creation of trade barriers, such as tariffs, which result in counter-barriers, escalating import costs, and hence the cost of living.
An economic conflict between the United States (US) and China began early in 2018, when President Donald Trump set trade barriers on China, claiming unfair commercial practices and intellectual property theft from the Asian giant. China took retaliatory action, imposing tariffs on multiple US goods, such as automobiles and soybeans. Tensions escalated until the two countries signed the US-China Phase One trade deal in January 2020. The agreement required structural reforms and other changes to China’s economic and trade regime and pretended to restore stability and trust between the two nations. However, the Coronavirus pandemic took the focus out of the conflict. Yet, it is worth mentioning that President Joe Biden, who took office after Trump, kept tariffs in place and even added some additional levies.
The return of Donald Trump to the White House as the 47th US President has sparked a fresh wave of tensions between the two countries. During the 2024 election campaign, Trump pledged to impose 60% tariffs on China once he returned to office, which he did on January 20, 2025. With Trump back, the US-China trade war is meant to resume where it was left, with tit-for-tat policies affecting the global economic landscape amid disruptions in global supply chains, resulting in a reduction in spending, particularly investment, and directly feeding into the Consumer Price Index inflation.
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