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OCBC strategists Sim Moh Siong and Christopher Wong note the US Dollar (USD) stayed broadly steady as AI-related risk appetite returned and Oil prices eased. They expect the Federal Reserve (Fed) to hold rates in October, with focus shifting to December. Hawkish Fed risks, US midterms, AI policy and Iran conflict are seen keeping the Dollar supported but with more two-way volatility.

Fed stance and politics shape Dollar

"The USD was broadly steady overnight as appetite for AI-related risk returned and oil prices eased. The AI tailwind could fade in 2027, but we think it is still too early to position for a weaker USD on an AI downturn. For now, hawkish Fed risk should keep the USD supported, although the trade is becoming less one-way."

"We expect the Federal Reserve to stay on hold in October, with the focus shifting quickly to December. September CPI surprised to the upside, while most FOMC participants had already indicated that another hike could be appropriate by year-end."

"Beyond the Fed, the US midterms are the next major political risk for the USD. Republicans retaining unified control would probably deliver the clearest USD-positive surprise, given that markets currently strongly favour Democrats taking the House and see them as modest favourites for the Senate."

"A divided government would likely constrain further fiscal expansion and could therefore be broadly neutral for the USD. Beyond the immediate election outcome, the bigger question is how policy shifts on AI and the Iran conflict affect US growth, inflation and risk sentiment. These forces can pull the USD in different directions, reinforcing our view that the dollar remains supported but is no longer a one-way trade."

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

• EUR/GBP recovers modestly as investors reduce Sterling exposure ahead of the UK Budget.
• The BoE is expected to raise rates in November, while the ECB is seen holding steady on Thursday.
• The technical outlook remains bearish, although oversold RSI conditions suggest selling pressure could ease.

EUR/GBP bears take a breather on Wednesday, pausing a two-day losing streak as traders trim their exposure to the British Pound ahead of the UK Autumn Budget at 12:30 GMT. At the time of writing, the cross trades around 0.8375, up 0.17% on the day, but remains near its lowest levels since May 2025.

UK budget seen as key driver for GBP and gilts

Strategists at Brown Brothers Harriman stress that “GBP and gilts will take their cue from today’s UK budget,” with market attention centred on whether the government “preserves the planned fiscal tightening and keeps gilt issuance in check.” They argue that “maintaining or increasing the fiscal squeeze should support gilts by easing inflation pressure and tempering BoE hike expectations.” However, for the Pound, they caution that “stronger fiscal credibility would compete with lower rate support and limit upside,” whereas “fiscal slippage and heavier gilt issuance can drive gilt yields up and GBP down.”

The BoE announces its interest rate decision on November 5, with traders fully pricing in a 25 bps hike. The central bank has kept rates unchanged so far this year as policymakers saw limited signs of higher energy costs spreading into broader prices and wages. However, the latest rise in inflation, alongside steady labour market and growth figures, has strengthened expectations of an increase.

On the Euro side, concerns over France’s public finances keep sentiment fragile. Separately, attention turns to the European Central Bank’s (ECB) policy decision on Thursday. The ECB is widely expected to leave its deposit rate unchanged at 2.50%, having already raised rates by a cumulative 50 bps this year to counter inflation pressures from higher energy costs. Traders will look for clues on whether policymakers are leaning towards another hike in December.

Technical Analysis

On the daily chart, EUR/GBP extends a bearish bias as spot holds well below the 50-day, 100-day and 200-day Simple Moving Averages (SMAs) clustered from roughly 0.8520 up to 0.8611. The pair is pressurized by this dense overhead supply, while the Relative Strength Index (RSI) around 24 signals oversold conditions that could slow immediate downside, but the negative Moving Average Convergence Divergence (MACD) histogram still hints at persistent selling pressure.

On the topside, initial resistance is seen at the nearby 0.8400 horizontal level, followed by 0.8450 and 0.8500, ahead of the 50-day SMA at 0.8520 and the 100-day SMA at 0.8545, with the 200-day SMA at 0.8611 acting as a more distant cap.

On the downside, immediate support is located at the 0.8360 horizontal line. A clear break below this floor would open the way for an extension of the downtrend, while holding above it could encourage a corrective bounce toward the mentioned resistance band.

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

The US Dollar (USD) capitalized on an unexpected monetary policy pause by the Reserve Bank of New Zealand (RBNZ), which held its Official Cash Rate (OCR) at 2.75% in a narrow 4–3 vote despite widespread market expectations for a 25-basis-points (bps) rate hike. The decision sent the New Zealand Dollar sliding by up to 1.6% against the Greenback, dragging NZD/USD toward the lower boundary of its critical multi-month support area at 0.5560/0.5550. With the RBNZ signaling that further tightening may still be necessary to combat rising fourth-quarter inflation, market attention is focused on whether US Dollar strength will push NZD/USD into a deeper technical breakdown or whether overstretched Fed interest rate expectations will cap further USD gains.

Societe Generale warns NZD/USD breakdown below 0.5560 risks fall toward 0.5480

Analysts at Societe Generale highlight that the RBNZ's decision to leave the OCR unchanged at 2.75% has put severe pressure on the New Zealand Dollar, driving NZD/USD directly into the lower boundary of its multi-month trading range. If buyers fail to defend the critical 0.5560/0.5550 support zone, the pair faces a higher risk of an extended downtrend targeting multi-year lows.

"NZD/USD is challenging the lower boundary of its multi-month range at 0.5560/0.5550, a crucial support zone... A short-term rebound cannot be ruled out; however, the recent pivot high at 0.5710 could act as resistance... If the pair fails to defend the support at 0.5560/0.5550, the risk of a deeper downtrend would increase... In such a scenario, the next objectives could be located at the April 2025 low near 0.5480 and projections at 0.5420."

Commerzbank projects NZD weakness on dovish RBNZ repricing but sees limits to USD gains

Norman Liebke at Commerzbank notes that while the RBNZ surprised markets with a 4–3 vote to pause rates at 2.75%, high headline inflation will likely force a December rate hike. However, with money markets pricing in roughly four rate increases by next September, Liebke sees limited medium-term upside for the Kiwi as those expectations are scaled back, though overextended Fed pricing should prevent an unchecked US Dollar rally.

"The Reserve Bank of New Zealand left its policy rate unchanged at 2.75%, contrary to market expectations... The Kiwi temporarily fell by 1.6% against the USD to almost 0.56. Over the medium term, however, we do not see much upside for the NZD either, given what we consider overly hawkish market expectations... While we continue to expect a rate hike in December, we are more sceptical than the market about the medium-term outlook. As rate-hike expectations are pared back, the Kiwi is therefore likely to weaken. At the same time, we also consider current expectations for the Fed to be too hawkish, which should limit the extent of any NZD depreciation."

Key Takeaway

The RBNZ's unexpected rate pause has reinforced the US Dollar's relative dominance, driving NZD/USD to test pivotal support zone at 0.5560/0.5550. While Societe Generale warns that a failure to hold this area risks opening a technical path down to 0.5480, Commerzbank projects that dovish repricing of RBNZ rate hikes will weigh on the Kiwi but, in the Fed’s case, the bank argues that overstretched hawkish pricing will ultimately constrain the US Dollar's capacity to extend gains significantly further.

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

Brown Brothers Harriman’s Elias Haddad notes USD/CAD is holding above 1.4000 ahead of the Bank of Canada decision, where an 80% priced 25 bps hike to 2.50% would mark the start of a new tightening phase. The bank is likely to raise its inflation and real Gross Domestic Product (GDP) forecasts after upside surprises in Consumer Price Index (CPI) and growth, which would underpin the Canadian Dollar and reinforce expectations for further hikes.

BoC hike and forecast shift eyed

"USD/CAD is holding above key support at 1.4000 ahead of the Bank of Canada (BoC) policy decision and Monetary Policy Report (1:45pm London, 9:45am New York)."

"The BoC will likely raise its inflation and real GDP forecast, which can underpin CAD. September headline CPI printed at 3.1% y/y, exceeding the bank’s 2.5% Q3 projection, while Q2 real GDP grew 3.3% annualized vs. the bank’s 2.5% projection."

"The average of CPI trim and median was 1.85% y/y in September, tracking just below the BoC’s 2.0% Q3 projection. But the pick-up in firm’s one- and two-year inflation expectations could lift the core CPI outlook, reinforcing the case for further hikes."

"The BoC is expected to start tightening with a 25bps hike to 2.50% (80% priced in), after holding rates steady since December 2025. BoC Governor Tiff Macklem’s warned recently that “the risk that inflation broadens and becomes more persistent has gone up”."

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

• The Indian Rupee trades lower against the US Dollar ahead of the Fed’s policy announcement.
• The Fed is seen leaving interest rates steady.
• Higher oil prices have weakened the Indian Rupee.

The Indian Rupee (INR) gives back its opening gains and turns negative against the US Dollar (USD) on Wednesday. The USD/INR pair rises up to near 95.22 as the Indian currency underperforms due to multiple headwinds, such as the oil price recovery and caution ahead of the Federal Reserve’s (Fed) monetary policy announcement.

In the opening trade, the MCX Crude Oil contract expiring on November 19 is up 2% to near Rs. 9,700, closer to its recent highs of Rs. 9,828.

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

Oil prices gain as Houthis attack Saudi’s biggest refinery

On Tuesday, a military spokesperson from Yemen's Iran-aligned Houthis said that they launched a ballistic missile toward the Ras Tanura oil refinery in eastern Saudi Arabia, the kingdom’s largest refinery, Reuters reported.

The incident has reinforced fears of further acceleration in energy supply risks, prompting oil prices to rise.

Higher oil prices have also lent support to United States (US) Treasury Yields. Such a case diminishes the appeal of riskier currencies, like the Indian Rupee. As of writing, 10-year US bond yields are up 0.46% to near 5.02%.

Fed’s policy decision awaited

Later in the day, the Fed’s monetary policy announcement will be the key trigger for global markets. According to the CME FedWatch tool, the Fed is expected to leave interest rates unchanged in the 3.75%-4.00%.

In the September policy meeting, the Fed hiked interest rates by quarter-to-a-percent and signaled at least one more this year through the dot plot.

Financial markets were confident after the September policy announcement that the Fed will hike again in October; however, they pared hawkish bets as several policymakers signaled no urgency for another interest rate hike, while supporting their need in future to contain high price pressures.

Waller flags more hikes but slower pace, keeping Dollar bulls on alert

Fed’s Waller delivered a distinctly hawkish message, with an 8/10 FXS Speechtracker score that is firmer relative to the historical average of 7.2/10, underscoring a bias toward further tightening. The insistence that “more hikes [are] needed” while allowing that they “do not need to come at consecutive meetings” signals a higher terminal rate but a more flexible path, a mix that supports the Dollar via expectations of prolonged restrictive policy rather than an aggressive near-term hiking cadence. Emphasis on persistent inflation drivers such as AI-related investment, ongoing energy shocks, and a still “solid and stable” labor market reinforces the risk that inflation expectations could de-anchor after nearly 5½ years above-target inflation, keeping the policy skew clearly on the hawkish side.

The FXS Fed Sentiment Index rose by 0.42 points to 138.34, confirming that the speech pushed the policy tone deeper into hawkish territory well above the neutral 100 mark. This elevated index level, aligned with the above-baseline FXS Speechtracker score, should underpin Dollar support as markets price in a longer period of restrictive rates even if individual meetings do not always deliver consecutive hikes.

Technical Analysis: USD/INR recovers to near 20-day EMA

In the daily chart, USD/INR trades at 95.22, keeping a bearish near-term tone as spot remains below the 20-period exponential moving average (EMA) at 95.34. The pair’s inability to reclaim this short-term EMA suggests rallies are being sold into, while the Relative Strength Index (RSI) at around 46 stays in neutral-to-soft territory, hinting at a lack of upside momentum rather than outright oversold conditions.

On the topside, initial resistance is aligned with the 20-day EMA at 95.34, and a sustained break above this barrier would be needed to ease immediate downside pressure and open the way for a more meaningful recovery. Looking down, the June 25 low at 94.16 is the critical support zone.

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

ABN AMRO economists Bill Diviney and Adrian Quinn expect the United Kingdom (UK) to maintain its fiscal consolidation progress, supported by resilient economic growth. They forecast GDP growth of 1.4% in both 2026 and 2027, see limited macroeconomic implications from a fiscally neutral Budget, and expect two further Bank of England (BoE) rate hikes, taking Bank Rate to 4.25% by February 2027 as inflation pressures persist.

Resilient backdrop and further BoE hikes

"Following the Liz Truss debacle of 2022, The UK has emerged as something of a model student on fiscal consolidation. The primary deficit is expected to narrow from 4.0% of GDP in 2024 to 1.2% in 2026, an improvement of almost 3 percentage points in just two years. This has been driven by the withdrawal of temporary support measures following the 2022-23 energy crisis, frozen personal tax thresholds and last year’s increase in employer National Insurance contributions."

"Despite facing the same challenges that many of its global counterparts are experiencing – surging bond yields, prolonged inflation, and fiscal tightening – the UK economy has been remarkably resilient this year. On the output side, services, particularly professional and ICT, have been important contributors to growth. Added to solid growth in investment (we suspect linked to AI capex) and an uptick in private consumption – reflecting a decline in consumer caution – we expect the economy to expand by 1.4% this year, and by the same amount in 2027."

"Our base case of a cautious and fiscally neutral Budget means that its macro implications are likely to be limited. Targeted household support will aim to cushion the real-income impact of the energy shock, while selective and modest revenue measures are unlikely to have a dampening impact on an economy with solid growth momentum. Inflation is expected to stay elevated – we see a peak above 4% by early 2027 – but the budget is likely to be neutral on that front."

"As for rates, we continue to expect the BoE to hike twice over the coming months to get ahead of a de-anchoring of inflation expectations, ultimately taking Bank Rate to 4.25% by February."

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

• NZD/USD retreats beyond 1.3% on Wednesday and nears 1-month lows at 0.5565.
• The Kiwi plummeted after the RBNZ left interest rates on hold, against market expectations of a rate hike.
• Failure to extend gains above 0.5700 leaves the broader bearish trend in play.

The New Zealand Dollar (NZD) sells off across the board on Wednesday and dives more than 1.3% against the US Dollar (USD) following the Reserve Bank of New Zealand’s (RBNZ) monetary policy decision. The NZD/USD pair trades at 0.5600 after hitting two-week lows at 0.5584, with bears still focused on the 18-month low at 0.5564.

The RBNZ left its Official Cash Rate (OCR) unchanged at 2.75% earlier on Wednesday, disappointing investors who were nearly fully pricing in a quarter-point rate hike. The Kiwi tanked after the decision, and trimmed some losses afterwards, as Governor Anna Breman hinted at further monetary tightening in December.

The focus now is on the US Federal Reserve, which will release its monetary policy decision at 18:00 GMT. The bank is widely expected to leave rates unchanged, and investors will be looking at Chairman Warsh’s press release to confirm expectations of a further rate hike in December.

Technical Analysis: NZD/USD remains vulnerable while below 0.5700

NZD/USD trades at 0.5607, keeping a bearish near-term tone as spot holds beneath a previous support area around 0.5700. Momentum indicators in the daily chart are mixed, with the Relative Strength Index (14) below 40, after coming up from oversold territory but still pointing to subdued demand. The Moving Average Convergence Divergence (MACD), on the other hand, is just above zero, hinting at only tentative upside attempts within a broader capped environment.

Bears are focusing on the October 14 low at 0.8564. Further down, the 127.2% Fibonacci retracement of the June-August rally, near 0.5530, might provide some support ahead of the April 2026 low at 0.5485.

On the topside, the 0.5700 area has proved a meaningful barrier over the last week, closing the path towartds the September 18 high at 0.5787, and the mid-August and early-September supports between 0.5800 and 0.5820.

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

(This story was corrected on October 28 at 09:43 GMT to say that bears are still focused on the 18-month, in the first paragraph, and not bulls, as previously reported.)

Commerzbank’s Volkmar Baur notes that EUR/USD slid to its lowest level since May 2025, but recent Eurozone data and the ECB Bank Lending Survey may be overshadowed by the upcoming Fed decision. With markets expecting a December hike and two more next year, the Dollar is seen staying firm as long as those expectations are not challenged.

Dollar strength tied to Fed expectations

"After expressing some surprise late last week that the euro had not weakened more significantly against the US dollar, EUR/USD fell all day in yesterday’s session and eventually closed at 1.1120, its lowest level since May 2025. However, the usual suspects of recent weeks, the Franco-German interest-rate differential and oil prices, were not behind yesterday’s move. At least not directly."

"The euro came under considerably greater pressure at 10 a.m., however, when the ECB published its Bank Lending Survey. In particular, firms reported a marked decline in demand for new loans, citing, among other factors, weaker investment plans. Households also remained cautious about taking out mortgages in the wake of higher interest rates. All in all, this does not bode well for the euro-area economy."

"This does not change the expectations, however. Rates are likely to remain unchanged tonight, and if Kevin Warsh sticks to his usual line, as seems likely, the press conference should contain few, if any, clues about December. For the dollar, though, that may be enough. The market expects a rate hike in December and two more next year. As long as nothing is said to dampen those expectations, the US dollar is likely to remain firm."

"Today, however, all of this is likely to take a back seat for EUR/USD, as the focus shifts to the Fed. The rate decision will be announced at 6:00 p.m. GMT, followed 30 minutes later by Kevin Warsh’s press conference. While Europe has already switched back to standard time, the US will not do so until this weekend, meaning that we are currently only five hours ahead of the US East Coast."

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

• The Oil price jumps to near $100 as energy supply risks heighten further.
• The US and Israel signal that they are prepared for fresh attacks on Iran.
• Iran-backed Houthis attacks Saudi’s biggest oil refinery.

West Texas Intermediate (WTI), futures on NYMEX, are up 1.42% to near $101.00 during the European trade on Wednesday. The oil prices strengthen as warnings from the United States (US) and Israel that they prepared for attacking Iran again post elections in their respective economies have prompted fears of fresh escalation in Middle East conflicts.

Brent climbs as Iran risk comes back into focus

Strategists at Deutsche Bank point out that Brent crude is extending its recent gains, noting that it is “+1.48% higher again overnight as the WSJ reported the Trump administration warning Gulf states to be prepared for a new operation against Iran after the midterms.” Adding to the geopolitical bid, Danske Bank’s research team highlights that, in his post-election speech, “Netanyahu raised the prospects of renewed joint action with President Trump against Iran.”

Meanwhile, Deutsche Bank has also highlighted that tighter energy supply in the US has also lend strength to the oil price. “The API data showed a decline in US crude inventories of around 2 million barrels last week, pointing to continued tighter supply,” bank wrote in a note.

Additionally, rising tensions between Saudi Arabia and Yemen’s Iran-aligned Houthis have also triggered energy supply risks.

On Tuesday, a military spokesperson from Yemen's Iran-aligned Houthis said that it launched a ballistic missile toward the Ras Tanura oil refinery in eastern Saudi Arabia, the kingdom’s largest refinery, Reuters report.

WTI Technical Analysis

In the daily chart, WTI US Oil trades near $101, maintaining a bullish near-term bias as price holds decisively above the 20-day Exponential Moving Average (EMA) at $96.52. The short-term trend structure remains constructive while spot stays above this dynamic support, with the Relative Strength Index (RSI) near 63 hinting at firm, but not yet overbought, upside momentum.

On the downside, immediate support is seen at the 20-day EMA near $96.52, where a daily close below would signal fading bullish control and expose a deeper corrective phase. Looking up, the October 23 high at $103.28 is the immediate hurdle before the crucial barrier of May 18 high at $104.74.

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

• Gold pauses its two-day rebound as traders await the Fed’s interest rate decision.
• The Fed is expected to hold rates steady, with traders looking for clues on a December hike.
• XAU/USD remains below key daily moving averages, with immediate support at $4,000-$3,950.

Gold (XAU/USD) stalls its rebound on Wednesday as investors await the Federal Reserve’s (Fed) monetary policy announcement, due at 18:00 GMT. A modest pullback in Oil prices helped bullion recover from its lowest levels since July over the past two days. However, renewed gains in Oil prices and a steady US Dollar (USD) are limiting further upside.

At the time of writing, XAU/USD trades around $4,045, down 0.37% on the day. The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, is little changed around 102.40, near two-week highs.

Oil prices rebound after the Wall Street Journal reported that Washington had warned Gulf states of a possible military operation against Iran after the US midterms. West Texas Intermediate (WTI) trades around $101 a barrel, up 1.50% on the day.

Higher energy costs have kept inflation pressures elevated since the Middle East war erupted in late February, prompting major central banks, particularly the Fed, to tighten monetary policy. The US central bank raised interest rates by 25 basis points (bps) in September and signalled another increase before year-end, reaffirming its commitment to returning inflation to its 2% target.

Policymakers are widely expected to keep interest rates unchanged at 3.75%-4.00% at the October meeting, while traders price in an 85% probability of a hike in December, according to the CME FedWatch Tool.

Analysts at ABN Amro argue that recent US economic data give the Fed room to pause for now. They note that, “combined with the recent softer PCE readings, the labour data remove much of the pressure to hike immediately,” allowing policymakers to “afford another six weeks to assess whether the latest inflation strength represents persistent pressure or another temporary bump.”

In their view, “the mix of persistent near-term inflation risk and a cooling labour market argues for patience rather than complacency.” As a result, ABN Amro expects the Fed “to hold in October, deliver one final 25bp hike in December, and then keep rates unchanged for an extended period.”

With a pause largely anticipated, guidance on the policy outlook could trigger a stronger market reaction than the decision itself. If policymakers signal that further rate hikes remain on the table, the US Dollar could strengthen, putting Gold’s $4,000 support level at risk. Higher interest rates increase the opportunity cost of holding the non-yielding metal. Conversely, a less hawkish tone could weigh on the Greenback and give bullion room for a short-term relief rally.

Technical analysis: XAU/USD remains bearish below key daily SMAs

On the daily chart, XAU/USD maintains a bearish near-term bias as it trades below the 50-day, 100-day and 200-day Simple Moving Averages (SMAs), keeping sellers in control. The Relative Strength Index (RSI) at 39 points to weak buying momentum, while the Moving Average Convergence Divergence (MACD) remains in negative territory, suggesting that downside pressure persists.

On the upside, initial resistance stands at the 100-day SMA near $4,218, followed by the 50-day SMA at $4,279. A stronger recovery could bring the horizontal resistance at $4,400 into focus, ahead of the 200-day SMA around $4,500.

On the downside, the $4,000-$3,950 zone offers immediate support. A break would open the door to a deeper retracement, while recovery attempts are likely to struggle as long as price trades below the clustered daily moving averages.

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