Forex News
UOB strategists Quek Ser Leang and Lee Sue Ann describe USD/CNH as holding largely unchanged, but with a slight increase in downward momentum. Intraday, they see the bias tilted lower toward 6.6950, with resistance at 6.7055 and 6.7100 and a clear break below 6.6950 deemed unlikely. Over 1–3 weeks, they expect USD/CNH to trade between 6.6950 and 6.7270, while over 1–3 months they anticipate gradual downside as long as it stays below the cloud near 6.7815.
Dollar-Yuan bias leans lower
"24-HOUR VIEW: We stated yesterday that USD “could edge higher,” but we held the view that it “is likely to stay within a 6.7000/6.7100 range.” USD subsequently rose to 6.7095, declined to 6.7015 before closing largely unchanged at 6.7027 (+0.02%). The slight increase in downward momentum suggests the bias is tilted to the downside toward 6.6950. A clear break below this level is unlikely. Resistance is at 6.7055, followed by 6.7100."
"1-3 WEEKS VIEW: In our most recent narrative from last Tuesday (29 Sep, spot at 6.7110), we highlighted that “for the time being, we expect USD to trade in a range between 6.6950 and 6.7270.” We continue to hold the same view for now."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- USD/MXN jumps to 18.14 after tech selloff triggers risk aversion.
- Hawkish Fed talk and strong US jobs data weigh on the Mexican Peso.
- Banxico minutes reveal upside inflation risks ahead of US sentiment.
The Mexican Peso (MXN) depreciates about 0.91% against the US Dollar (USD) on Thursday amid positive US data, while Bank of Mexico (Banxico) minutes from last meeting indicated inflation edging higher, a trend confirmed by the September print. The USD/MXN pair trades at 18.14 after reaching a low of 17.95.
US equities weighed on the Mexican Peso
The emerging-market currency is weighed down by a sudden shift in market mood, as the Financial Times reports that OpenAI's annual revenue is $20 billion lower than previously signaled. The news weighed on tech stocks and sent US equities tumbling amid traders' fears that the rally may be questionable.
Before that news, global equities were underpinned by US President Donald Trump's post on Truth Social, saying that they held productive discussions with Iran and that there wouldn’t be attacks on Iran before the midterm elections.
In FX markets, the Greenback underperforms against most G7 currencies, but not against the Peso. The US Dollar Index (DXY), which measures the buck’s value against six currencies, is down 0.07% at 102.17.
Would Banxico raise rates as headline inflation approaches 3.50%?
Headline inflation in Mexico rose from 3.26% to 3.45% YoY in September, below estimates of 3.47%. Core figures for the same period decreased from 3.88% to 3.75%, below forecasts of 3.8%.
Doubt lingers over whether the Bank of Mexico (Banxico) could make a U-turn and raise rates if inflation surpasses the 4% threshold in the future. Nonetheless, the minutes revealed that policymakers “projected inflation path over the forecast horizon remains skewed to the upside.”
Fed’s Musalem remains hawkish; US jobs market solid
In the US, St. Louis Fed President Alberto Musalem was hawkish, saying that inflation remains above 2% and that further tightening is needed. He added that contacts are about inflation rather than jobs.
The latest Fed minutes revealed that all members backed September’s rate hike and that the board sees the labor market as “stable and generally viewed … as close to maximum employment.”
Data from the US showed that Initial Jobless Claims dipped below estimates, indicating labor market strength.
Ahead, USD/MXN traders will eye the release of the University of Michigan Consumer Sentiment print, as the Mexican economic schedule is absent.
USD/MXN Price Forecast: Technical outlook
In the daily chart, USD/MXN trades at 18.1986, extending its recovery above the clustered simple moving averages (SMA) around 17.2852 and maintaining a clear bullish near-term bias. Price action is now well supported by that SMA floor and the prior horizontal base at 16.8866, while the Relative Strength Index (14) at 72.18 shows the pair in overbought territory, hinting that upside momentum is stretched but not yet reversing.
On the downside, initial support is seen at the triple SMA area near 17.29, ahead of the horizontal support level at 16.89 which marks the latest significant reaction low. As long as USD/MXN holds above these supports, dips are likely to attract buying interest, with a period of consolidation or a modest pullback favored to cool the overbought daily RSI before the broader uptrend can sustainably extend.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Mexican Peso FAQs
The Mexican Peso (MXN) is the most traded currency among its Latin American peers. Its value is broadly determined by the performance of the Mexican economy, the country’s central bank’s policy, the amount of foreign investment in the country and even the levels of remittances sent by Mexicans who live abroad, particularly in the United States. Geopolitical trends can also move MXN: for example, the process of nearshoring – or the decision by some firms to relocate manufacturing capacity and supply chains closer to their home countries – is also seen as a catalyst for the Mexican currency as the country is considered a key manufacturing hub in the American continent. Another catalyst for MXN is Oil prices as Mexico is a key exporter of the commodity.
The main objective of Mexico’s central bank, also known as Banxico, is to maintain inflation at low and stable levels (at or close to its target of 3%, the midpoint in a tolerance band of between 2% and 4%). To this end, the bank sets an appropriate level of interest rates. When inflation is too high, Banxico will attempt to tame it by raising interest rates, making it more expensive for households and businesses to borrow money, thus cooling demand and the overall economy. Higher interest rates are generally positive for the Mexican Peso (MXN) as they lead to higher yields, making the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken MXN.
Macroeconomic data releases are key to assess the state of the economy and can have an impact on the Mexican Peso (MXN) valuation. A strong Mexican economy, based on high economic growth, low unemployment and high confidence is good for MXN. Not only does it attract more foreign investment but it may encourage the Bank of Mexico (Banxico) to increase interest rates, particularly if this strength comes together with elevated inflation. However, if economic data is weak, MXN is likely to depreciate.
As an emerging-market currency, the Mexican Peso (MXN) tends to strive during risk-on periods, or when investors perceive that broader market risks are low and thus are eager to engage with investments that carry a higher risk. Conversely, MXN tends to weaken at times of market turbulence or economic uncertainty as investors tend to sell higher-risk assets and flee to the more-stable safe havens.
ING’s Lynn Song highlights Taiwan’s record trade performance, with the September surplus hitting US$23.6bn on a 60.9% year-on-year export surge, largely driven by tech-related machinery and electrical equipment. Despite strong exports, equities and foreign inflows, the Taiwan Dollar has remained relatively subdued, reflecting outward corporate investment, capital outflows due to yield differentials, and active FX stability measures by Taiwan’s central bank.
Record surplus yet muted currency
"Despite the record-breaking trade surpluses and a strong year for the Taiwanese equity market drawing heavy foreign inflows, the Taiwan dollar has not shown the strength that one may expect with these sorts of conditions."
"This is likely tied to two main factors: Taiwanese corporates expanding outward investment as they seek to expand production capacity, and capital outflows thanks to the significant yield spread between Taiwan and developed markets such as the US."
"Against this backdrop, Taiwan's Central Bank of China has also taken measures to ensure FX stability."
"With yesterday's inflation coming in hot at 2.7% YoY and today's strong trade data suggesting growth remains strong, we think there's a solid case for the CBC to hike at its December meeting, though there's still a long way to go between now and then."
"Taiwan continues to be one of the main beneficiaries of higher tech prices globally, with export prices rising 25.8% YoY in September."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
St. Louis Federal Reserve (Fed) President Alberto Musalem said on Thursday that inflation is elevated and that to bring it back to the 2% goal, “more monetary policy firming will be required.”
At an event organized by the Minneapolis Fed, Musalem added that he goes to “all meetings with an open mind” and that contacts within the St. Louis Fed's jurisdiction are worried about inflation rather than jobs. He reiterated that the economy is pretty strong, so the Fed can focus on lowering the cost of living.
Key highlights:
Inflation is elevated and being driven by persistent demand pressures and supply shocks.
Key to bring inflation back to 2% in timely manner and limit second-round effects.
To bring inflation back to target, more monetary policy firming will be required
I go into all meetings with an open mind.
Rates ought to be going up in the next 6 to 9 months
Contacts mostly worried about inflation and does not see job market worries
The economy is pretty strong right now, best thing Fed can do is lower inflation
Job market is overall balanced and stable; there is no need to cool the job market to get inflation down
There is a risk consumer vigor could wane
Nominal yields rising because real yields rising in part due to rate expectations.
Market inflation expectations remain anchored, doesn't see Fed credibility questioned
Real yields up mainly due to policy-rate expectations
AI investment and government deficits are also pressuring yields higher
Hear from investors some fiscal sustainability concerns
Strong demand for capital likely to keep rates higher than they used to be
Demand for capital running 3% to 4% of GDP now
Higher demand for capital is seen continuing 5-10 yrs
The US government has been on an unsustainable fiscal path for years
It's possible government debt levels may eventually create risks
Monetary policy independence is a valuable asset
Important to keep government debt management and monetary policy seperate.
Financial conditions have tightened modestly and orderly.
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.11% | -0.10% | -0.24% | -0.21% | 0.13% | -0.09% | -0.24% | |
| EUR | 0.11% | 0.02% | -0.11% | -0.11% | 0.17% | 0.03% | -0.13% | |
| GBP | 0.10% | -0.02% | -0.13% | -0.12% | 0.16% | 0.02% | -0.13% | |
| JPY | 0.24% | 0.11% | 0.13% | 0.00% | 0.29% | 0.10% | -0.00% | |
| CAD | 0.21% | 0.11% | 0.12% | 0.00% | 0.29% | 0.12% | 0.00% | |
| AUD | -0.13% | -0.17% | -0.16% | -0.29% | -0.29% | -0.14% | -0.29% | |
| NZD | 0.09% | -0.03% | -0.02% | -0.10% | -0.12% | 0.14% | -0.10% | |
| CHF | 0.24% | 0.13% | 0.13% | 0.00% | -0.00% | 0.29% | 0.10% |
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).
A sudden bout of selling pressure has weighed on the US Dollar (USD) on Thursday, motivating it to abandon the area of recent tops, all in response to comments from President Donald Trump and the subsequent pullback in crude Oil prices.
Here is what you need to know on Friday, October 9:
The US Dollar Index (DXY) has partially faded Wednesday’s advance, challenging the 102.00 region while keeping the trade in the upper end of its recent range. The preliminary U-Mich Consumer Sentiment will wrap up the docket alongside the speech by the Fed’s Collins.
EUR/USD had attempted a mild rebound, reclaiming the area beyond 1.1200, up modestly for the day. Absent data releases on the domestic calendar, investors will follow comments from the ECB’s Cipollone and Schnabel.
GBP/USD has traded with decent gains, eventually managing to advance north of the 1.3200 mark following the late knee-jerk in the Greenback. Next on the UK docket is the BRC Retail Sales Monitor release on October 13.
USD/JPY has reversed course, slipping back to three-day lows near 157.70 on the back of the late drop in the US Dollar. The publication of Household Spending figures and Machine Tool Orders will close the docket in the Land of the Rising Sun.
AUD/USD has trimmed some of its earlier losses, bouncing off lows near 0.6930. The RBA Minutes will be the main focus on October 13, followed by the NAB Business Confidence gauge.
USD/CAD has receded from recent peaks near the 1.4300 barrier and is attempting to stabilise in the low 1.4200s amid a marked appreciation of the Canadian Dollar. The labour market report will grab all the attention in Canada at the end of the week.
Front-month WTI futures have reversed Wednesday’s pullback and climbed to weekly highs past the $93.00 mark per barrel amid reignited supply concerns in the Middle East.
Gold has attempted a tepid bounce toward the $4,150 mark per troy ounce, partially setting aside Wednesday’s retracement while maintaining its weekly negative streak well in place.
MUFG’s Lloyd Chan previews Malaysia’s Budget 2027, highlighting that prior fiscal reforms and subsidy rationalization provide a buffer against higher Oil prices. The report argues that disciplined budgeting, targeted household support and protection of development spending should sustain confidence in Malaysian Government Securities and the ringgit, reinforcing the structural case for Malaysian bonds and MYR despite global volatility.
Fiscal reforms support Malaysian assets
"Past fiscal reforms provide a timely buffer against the oil shock. Stronger revenues and RM15.5bn of annual subsidy savings should help cushion higher energy costs, allowing fiscal consolidation to slow rather than reverse."
"Budget 2027 should remain fiscally disciplined, with the focus shifting from new reforms towards execution. On revenue, stronger tax collection and SST broadening reduce the need for another major tax overhaul, putting greater emphasis on compliance and collection efficiency. On spending, consolidation should rely more on better targeting and efficiency than broad austerity."
"Household relief will remain necessary, but a return to blanket subsidies is unlikely. We expect support to remain targeted through BUDI MADANI, STR/SARA and other measures, cushioning the cost-of-living shock without structurally raising expenditure."
"Protecting development spending will be key to turning the investment boom into a productivity upcycle. We expect Budget 2027 to maintain or increase development spending, with priorities around human capital, connectivity, digital and industrial infrastructure, and energy capacity, helping translate investment into domestic value-add, productivity and higher real wages."
"Fiscal credibility should provide an anchor for MGS and MYR amid global volatility. If higher subsidies remain a temporary response to the oil shock while fiscal reform and productive investment stay on track, the Budget should reinforce the structural case for Malaysian bonds and the ringgit."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- The Japanese Yen finds some relief as a pullback in US Treasury yields tempers the Greenback’s advance.
- Trump’s comments ease fears of immediate US strikes on Iran.
- The BoJ’s gradual rate hikes offer limited support while interest rate differentials remain wide.
USD/JPY edges lower on Thursday as a pullback in US Treasury yields pauses the Greenback’s advance, giving the Japanese Yen (JPY) some breathing room. Traders assess fresh Middle East developments and central bank signals. At the time of writing, the pair trades around 157.71, down 0.24% on the day.
The benchmark 10-year US Treasury yield eases toward 5.23% after reaching 5.36% on Wednesday, its highest level since 2002. The retreat gathers pace as Oil prices trim part of their intraday gains following comments from US President Donald Trump that ease concerns over an immediate escalation with Iran, after earlier reports suggested Washington was preparing for possible renewed strikes.
In a Truth Social post, Trump said, “We are having productive conversations with Iran.” He added, “We won't be attacking Iran at any time before the midterms,” while reiterating that Iran would not be allowed to acquire a nuclear weapon.
In reaction, the US Dollar also gives up earlier gains. The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, trades around 102.09 after reaching 102.53 earlier this week, its highest level since April 2025.
However, the scope for a deeper slide in the US Dollar and yields appears limited as Oil prices remain elevated, fuelling inflation concerns and reinforcing expectations of additional interest rate hikes by the Federal Reserve (Fed).
Fed Governor Christopher Waller said on Thursday that more rate hikes are needed, but he remains “flexible about the pace.” He added, “Inflation is too high, with AI buildout, ongoing energy shock among a range of persistent inflationary forces.”
Minutes from the Fed’s September monetary policy meeting, released on Wednesday, also indicated that most participants considered another rate increase likely appropriate by year-end. Officials remain focused on bringing inflation back to the central bank’s 2% target, although future decisions will depend on incoming data.
On the Japanese side, the Yen continues to face headwinds from the wide interest rate gap with the United States and fiscal concerns linked to Japan’s high debt-to-GDP ratio. Elevated Oil prices add further pressure by increasing import costs for the energy-dependent economy.
The Bank of Japan (BoJ) remains on a gradual tightening path. However, with other major central banks also maintaining a hawkish stance, rising Japanese interest rates offer limited relief to the Yen.
Speaking on Tuesday, BoJ Governor Kazuo Ueda said, “We're to keep raising rates in response to the economy and inflation.” However, he added that the “pace and timing of future policy adjustment will be decided based on the likelihood of our baseline projections materialising, as well as risks.”
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.15% | -0.12% | -0.24% | -0.21% | 0.11% | -0.13% | -0.26% | |
| EUR | 0.15% | 0.03% | -0.09% | -0.07% | 0.20% | 0.02% | -0.11% | |
| GBP | 0.12% | -0.03% | -0.08% | -0.10% | 0.16% | 0.00% | -0.12% | |
| JPY | 0.24% | 0.09% | 0.08% | 0.00% | 0.27% | 0.07% | -0.01% | |
| CAD | 0.21% | 0.07% | 0.10% | -0.01% | 0.26% | 0.08% | -0.01% | |
| AUD | -0.11% | -0.20% | -0.16% | -0.27% | -0.26% | -0.16% | -0.28% | |
| NZD | 0.13% | -0.02% | 0.00% | -0.07% | -0.08% | 0.16% | -0.07% | |
| CHF | 0.26% | 0.11% | 0.12% | 0.01% | 0.01% | 0.28% | 0.07% |
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).
UOB strategists Quek Ser Leang and Lee Sue Ann note that USD/SGD rebounded to 1.2810 before closing at 1.2797. While upward momentum is rebuilding, it remains insufficient to signal a sustained advance. The pair could edge above 1.2810, but the major resistance at 1.2835 is unlikely to be reached. A break below 1.2765 would point to renewed range-trading.
Dollar firm but capped below 1.2835
"24-HOUR VIEW: USD eased to a low of 1.2769 two days ago. When it was at 1.2780 yesterday, we highlighted that “the slight increase in downward momentum suggests USD could continue to ease today, but any decline should stay within a 1.2765/1.2795 range.” However, USD rebounded from 1.2775 to 1.2810 and then closed 0.10% higher at 1.2797. The increase in upward momentum is insufficient to suggest a sustained rise. However, there is a chance for USD to edge above 1.2810. We do not expect the major resistance at 1.2835 to come into view. Support is at 1.2785, followed by 1.2775."
"1-3 WEEKS VIEW: Last Friday (02 Oct, spot at 1.2800), we highlighted that “momentum is building again, and USD is likely to rise toward 1.2835.” After USD retreated to 1.2769, we highlighted yesterday (07 Oct, spot at 1.2780) that USD “has likely entered a range-trading phase between 1.2740 and 1.2810.” We did not expect USD to test the top of our expected range so soon as it rose to a high of 1.2810 during the NY session. While upward momentum is building again, it is weaker than before, and USD is unlikely to reach 1.2835. On the downside, a breach of 1.2765 (‘strong support’ level) would indicate a period of range-trading."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
US President Donald Trump posted on his Truth Social account that discussions with Iran continue and that the US will not attack Iran at any time prior to the midterm elections, held on November 3.
US President Trump's full post on Truth Social: “We are having productive discussions with the Islamic Republic of Iran. I want to make it clear to everybody that, while Iran is in very bad condition, both Economically and Militarily, and while the Blockade will remain in full force and effect, with Oil flowing in Record Numbers of Barrels through the Hormuz Strait (22 Million Barrels, last night alone, with not one barrel coming from, or going to, Iran!), we will not be attacking Iran at any time prior to the Midterm Elections to be held in the United States on November 3rd. IRAN WILL NOT HAVE A NUCLEAR WEAPON! President DONALD J. TRUMP”
Market reaction:
- West Texas Intermediate, the US crude Oil benchmark, fell from around $92.70 to $90.50. As of writing, it trades above $91.00 but is gaining only 2.4% instead of 4% before Trump’s post.
- The S&P 500 trimmed some of its earlier losses of 0.58%; it is now down 0.19% at 7,784.
Risk sentiment FAQs
In the world of financial jargon the two widely used terms “risk-on” and “risk off'' refer to the level of risk that investors are willing to stomach during the period referenced. In a “risk-on” market, investors are optimistic about the future and more willing to buy risky assets. In a “risk-off” market investors start to ‘play it safe’ because they are worried about the future, and therefore buy less risky assets that are more certain of bringing a return, even if it is relatively modest.
Typically, during periods of “risk-on”, stock markets will rise, most commodities – except Gold – will also gain in value, since they benefit from a positive growth outlook. The currencies of nations that are heavy commodity exporters strengthen because of increased demand, and Cryptocurrencies rise. In a “risk-off” market, Bonds go up – especially major government Bonds – Gold shines, and safe-haven currencies such as the Japanese Yen, Swiss Franc and US Dollar all benefit.
The Australian Dollar (AUD), the Canadian Dollar (CAD), the New Zealand Dollar (NZD) and minor FX like the Ruble (RUB) and the South African Rand (ZAR), all tend to rise in markets that are “risk-on”. This is because the economies of these currencies are heavily reliant on commodity exports for growth, and commodities tend to rise in price during risk-on periods. This is because investors foresee greater demand for raw materials in the future due to heightened economic activity.
The major currencies that tend to rise during periods of “risk-off” are the US Dollar (USD), the Japanese Yen (JPY) and the Swiss Franc (CHF). The US Dollar, because it is the world’s reserve currency, and because in times of crisis investors buy US government debt, which is seen as safe because the largest economy in the world is unlikely to default. The Yen, from increased demand for Japanese government bonds, because a high proportion are held by domestic investors who are unlikely to dump them – even in a crisis. The Swiss Franc, because strict Swiss banking laws offer investors enhanced capital protection.
- DXY flatlines under 102.50, its third stall in four sessions, as Fed Governor Waller speaks.
- Futures price an October hike near one in five and December near 80%.
- Each of the three highs came with the Euro just above 1.1150, near a 17-month low.
102.50 has stopped the Dollar Index on Monday, Wednesday and Thursday, and a call for more rate hikes from Fed Governor Waller on Thursday didn't get it any further. The index trades near 102.30, inside the range it has held since October 1. A 10-year Treasury yield near 5.30% and another round of selling in European government bonds left it there too.
Fed Governor Waller asks for the hikes already priced
The Fed raised its rate to 3.75%-4.00% on September 16 in a unanimous vote, and minutes released on Wednesday showed most policymakers expect another increase by year-end and nearly all see the risks to inflation tilted higher. In Istanbul on Thursday, Governor Waller said more hikes are likely needed to get inflation back to 2% sooner, and that they don't need to come at consecutive meetings.
Governor Waller also said inflation has run above the Fed's target for close to five and a half years, and that he isn't greatly concerned higher rates will slow the economy much. He named higher technology prices from the artificial intelligence build-out and the threat of new tariffs as the pressures still pushing inflation up. The two-year Treasury yield, the one most tied to the Fed's next moves, is near 4.80%, about 0.80 points above the top of the Fed's range.
Futures price about a one-in-five chance of a hike at the October 27-28 meeting and close to 80% for December 8-9, which is the path he described. The index rose toward 102.50 after he spoke, stopped short of Monday's high, and later dipped to just above 102.00 before climbing back. More hikes at no particular meeting describes what futures already price rather than changing it.
The index's ceiling is the Euro's floor
The Euro makes up 57.6% of the Dollar Index, and the index's highs on Monday, Wednesday and Thursday each came in the same quarter-hour as the Euro's low against the Dollar, every time just above 1.1150. That is the Euro's weakest level since May 2025, so a Euro break below it is what would take the index through 102.50. Below 1.1150, the next level the Euro has traded is its May 2025 low just above 1.1050.
French government debt is what keeps the Euro near that floor. France's 10-year yield is near 4.90%, against 3.50% in Germany and close to the two-decade high above 5% it reached earlier in October. The selling has spread to Italian and Greek bonds ahead of France's 2027 presidential election.
The government's 2027 budget aims to cut the deficit to 5% of national output, and France's fiscal watchdog called its economic assumptions optimistic. Unions have called another strike for October 13, and German Finance Minister Klingbeil said on Thursday he is in touch with his French counterparts on bonds.
The European Central Bank (ECB) is now expected to raise rates twice more by March 2027, which limits how far the gap between US and euro-area rates can widen. Brent is heading for its largest daily gain in a month, and the Euro, the currency of a bloc that buys nearly all of its Crude Oil abroad, has stayed inside its range.
Governor Waller's worry is on Friday's calendar
The worry Governor Waller named on Thursday is that the recent pickup in inflation could raise what households and businesses expect it to be. The University of Michigan (UoM) survey on Friday at 14:00 GMT carries that measure, with one-year inflation expectations at 4.6% in September and five-year expectations at 3.4%.
The New York Fed's own survey, published on Wednesday, put one-year expectations at 3.9% in September, up from 3.6% in August. Jobless claims came in at 197K on Thursday against a 200K forecast, which fits his view that the labour market is stable and leaves inflation as the only case for an earlier hike.
A one-year reading above 4.6% is the result that could take the index through 102.50, and a softer one leaves December as the only meeting priced. It's possible one survey of household expectations pulls the next hike forward six weeks, from December 9 to October 28. Futures give that one chance in five, and nothing in Thursday's speech raised it.
Levels and bias
Resistance: 102.50 stopped the index on Monday, Wednesday and Thursday, and Monday's high just above it is the highest since April 2025. 103.00 is the next round level above.
Support: Buyers stepped in just above 102.00 on Thursday's dip. Every low since October 1 has held above 101.50, where the late-September range topped out.
Bias: The lean is short while 102.50 caps, aiming first at 102.00 and then at 101.50. On the daily chart the Stochastic Relative Strength Index (Stoch RSI) reads about 92 and is falling from the top of its range. The short is wrong on a daily close above 102.50, which would put 103.00 in play.
DXY daily 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.
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