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Brown Brothers Harriman’s (BBH) Elias Haddad highlights that France’s deteriorating public finances are driving a sharp widening in French-German spreads, with the premium already near past crisis highs. Using Italy’s 2018 budget turmoil as a template, Haddad warns that further spread widening could pressure EUR/USD toward 1.1000, while noting that France’s 2027 presidential election may eventually restore confidence if credible deficit reduction is delivered.

French risks weigh on EUR/USD outlook

"French 10-year bond yield premium over Germany is up over 100bps since late February to 175bps, closing in on its 2011 record high of around 190bps. The spread can widen to about 250bps if Italy’s 2018 budget crisis is any guide and drag EUR/USD down to 1.1000."

"France’s widening so far is just over half that size, leaving room for the spread to rise further."

"France’s weaker fiscal backdrop does not mean the crisis will follow Italy’s full course. Euro exit fears played a substantial role in the Italian debt market selloff, whereas those concerns remain muted today. The Sentix euro breakup index stood at 2.4% in September compared with around 13% during Italy’s 2018 crisis."

"In parallel, the ECB’s Transmission Protection Instrument (TPI) introduced in July 2022 reduces the risk of France’s fiscal troubles spilling over to other Eurozone economies. TPI allows the ECB to purchase sovereign bonds with no preset limit, subject to fiscal and debt sustainability checks."

"France’s 2027 presidential election could offer a similar turning point, but only if it produces a government able to deliver credible deficit reduction. Until then, French spreads remain vulnerable to further widening, keeping EUR/USD under pressure."

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

Nordea’s Jan von Gerich expects the ECB to keep rates unchanged at the October Governing Council meeting, with the next 25bp hike still likely in December. He highlights the sharp widening in French government bond spreads and tighter financing conditions, noting that higher French yields affect a large part of the Euro area and could influence the ECB’s policy tone and timing.

ECB holds as markets eye December

"The ECB is set to leave rates unchanged next week, with the next hike still likely in December."

"Anything other than unchanged rates at the Governing Council meeting concluding on 29 October would be a surprise."

"We stick to our baseline of 25bp hikes in December and March 2027, which would take the deposit rate to 3.00%."

"A further significant tightening in financing conditions could leave the ECB on hold for a longer period of time, but such conclusions would be premature at this point."

"However, a clearly disorderly market reaction, spreading well beyond France, could derail a December hike."

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

• Initial Jobless Claims went down to 194K vs. the previous week.
• Continuing Jobless Claims increased to 1.728M.

According to a report from the US Department of Labour (DOL) released on Thursday, the number of US citizens submitting new applications for unemployment insurance decreased to 194K for the week ending October 17. The latest print came in below initial estimates (200K) and was lower than the previous week’s 200K (revised from 199K).

Additionally, the 4-week moving average went down by 1K to 197.75K vs. the previous week’s revised prints (198.75K).

The report also indicated that Continuing Jobless Claims rose by 25K to 1.728M for the week ending October 10.

Market reaction

The Greenback regains fresh upside traction, reversing part of the recent multi-day negative streak and trading with decent gains near 101.80 when tracked by the US Dollar Index (DXY) on Thursday.

Societe Generale’s Kit Juckes highlights the Swiss Franc’s role as a funding currency, with gradual depreciation interrupted by sharp rebounds during periods of market stress. With Swiss inflation subdued and fiscal and external balances stable, he sees little pressure on the SNB to raise rates. However, he cautions against expecting sustained CHF weakness, as falling oil prices and a softer Dollar could eventually support the Franc against higher-yielding currencies.

Low inflation limits SNB tightening as CHF upside risks linger

"How can Switzerland, with a net international investment surplus totalling USD 1.22 trillion (109% of GDP), be a "funding currency"? An answer of sorts is emerging as the Swiss franc develops a pattern of gradual depreciation against both the euro and the dollar, interrupted by sharp corrections as the currency reacts to dramatic events."

“With inflation set to remain below 1% as far into the future as economists dare to look, despite real GDP growth approaching 2% this year, there is currently no pressure on the SNB to raise rates.”

“The current account surplus remains reasonably steady at around 6% of GDP, the budget is close to balance, and there is snow falling in the mountains.”

"Anyone looking for the start of a sustained CHF downtrend risks being disappointed. However, if Swiss CPI data remain as well behaved as they have been so far this year, rising from 0.1% in January to 1.0% in September, there is little pressure to tighten monetary policy in the near term."

“The biggest risk is that, when oil prices eventually fall, a weaker dollar could potentially drag the Swiss franc higher relative to some higher-yielding currencies. The timing of such a move is highly uncertain, however, and the end of the Gulf conflict would initially be a risk-supportive event that is unlikely to benefit the franc.”

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

• WTI Oil climbs toward $100 amid persistent Middle East supply risks.
• The daily chart favours buyers as WTI stays above the 50-day, 100-day and 200-day SMAs.
• A decisive move above $100 could pave the way for further gains toward $105.

West Texas Intermediate (WTI) Oil rebounds on Thursday as ongoing tensions in the Middle East keep supply risks elevated, maintaining a significant geopolitical risk premium in energy markets. At the time of writing, WTI trades around $99, hovering near five-week highs and up more than 1.50% on the day.

According to The New York Times, the United States (US) and Israel are considering renewed strikes on Iran after the US midterm elections, with the country's energy facilities among the potential targets.

Meanwhile, the conflict between Saudi Arabia and the Houthis shows no signs of easing, following reports of attacks on the Shaybah oil field and King Fahd International Airport. The situation has also prompted the US State Department to order non-emergency government staff and their families to leave Saudi Arabia.

Shipping through the Strait of Hormuz remains a major concern. Iran's Islamic Revolutionary Guard Corps (IRGC) claimed that its navy targeted four vessels involved in Oil transfers in the Gulf. Separately, three other ships reportedly caught fire after striking mines near the Strait.

Despite mounting tensions, Middle East Oil exports have recovered to pre-war levels as producers increasingly rely on alternative shipping routes to bypass the Strait of Hormuz. According to data from Kpler cited by the Financial Times, Oil shipments from Gulf producers excluding Iran averaged 24.6 million barrels per day in the week ending October 18, above the pre-war average of 23.3 million barrels per day.

Technical analysis

On the daily chart, WTI US Oil maintains a bullish near-term bias as it holds well above the 50-day Simple Moving Average (SMA) at roughly $91 and the longer-term 100-day and 200-day SMAs clustered just below $85.

The Relative Strength Index (RSI) around 64 stays in positive territory without yet reaching overbought extremes, while the Moving Average Convergence Divergence (MACD) histogram remains positive, together suggesting firm upside momentum backed by a moderately strong trend signaled by an Average Directional Index (ADX) near 27.

On the upside, immediate resistance lies at the $100 psychological mark. If buyers extend the advance, the next barrier emerges at $105. A sustained break above this level could open the door toward $110, followed by the $113 peak reached after the Middle East war erupted.

On the downside, initial support is seen around $95, followed by the 50-day SMA near $91. A deeper pullback could expose the 100-day SMA at $84.67 and the 200-day SMA at $84.11, ahead of the $80 and $75 psychological levels.

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

• The Indian Rupee falls back against the US Dollar after hitting a fresh almost seven-week high.
• Surging oil prices weigh heavily on the Indian Rupee.
• Investors await flash India-US PMI data for October.

The Indian Rupee (INR) fails to extend its winning streak for the eighth trading day against the US Dollar (USD). The USD/INR pair rebounds sharply to near 94.91 after attracting signficant bids at around the seven-week low of 94.33. The Indian currency was outperforming in the past few days; however, a significant jump in oil prices has faded the rally.

As of writing, the MCX Crude Oil contract expiring on November 19 is up 2.8% to near Rs. 9,500. Higher oil prices bode poorly for currencies from economies, such as India, which rely heavily on oil imports to meet their energy needs.

Middle East tensions flare and US clarifies diplomatic pullback

Analysts at Deutsche Bank highlight that “several geopolitical headlines came through overnight that led to mounting concerns about a fresh escalation in the conflict,” prompting them to “start with the oil moves.” They note that this backdrop “dampened hopes for a near-term resolution, and oil prices have continued to rise over the last 24 hours.”

Commerzbank similarly points out that Middle East tensions intensified after “a drone attack on Saudi Arabia's Shaybah oil field killed two people and injured two others.” According to the bank, “oil prices briefly jumped on reports suggesting a wider withdrawal of US diplomatic personnel from the Gulf, but pared gains after Washington clarified that the order was limited to Saudi Arabia,” helping to contain the initial risk-driven spike.

What strengthened INR in the past few days?

Plenty of tailwinds, including active intervention by the Reserve Bank of India (RBI) through spot and Non-Deliverable Forwards (NDFs) markets on several occasions, fresh measures announced to curb US Dollar demand and a significant inflow of foreign funds for the Jio Platforms Initial Public Offering (IPO), are fueling the rally in the Indian currency.

DBS Group Research highlights that the Reserve Bank of India has rolled out a “multi-layered defence strategy to support the rupee this year,” combining “outright intervention in spot/forwards, regulatory action, liquidity steps, administrative measures and moves to curb import-related dollar demand.” According to DBS, the authorities “are likely not done yet and remain ready to take further action, as required,” with RBI Governor Malhotra underlining the central bank’s resolve in a recent Moneycontrol interview on 13 October, stressing that “The RBI is determined to do whatever is necessary to ensure orderly movement in the foreign exchange market.”

Meanwhile, Reliance Industries-backed Jio Platforms has launched its ₹30,213 crore IPO on October 21, 2026, which will remain open until October 23, according to Groww.

India-US flash PMI data awaited

Investors are keenly awaiting October's preliminary private sector Purchasing Managers’ Index (PMI) data for both India and the US, which is due on Friday.

The US S&P Global PMI report will likely show that overall business activity expanded again, but at a moderate pace.

Technical Analysis: USD/INR recovers strongly to near 94.90

On the daily chart, USD/INR trades at 94.91, keeping a bearish near-term tone as it holds below the 20-day Exponential Moving Average (EMA) at 95.44. The moving average now acts as immediate dynamic resistance, suggesting rallies are likely to be sold while price remains capped beneath this gauge.

The Relative Strength Index (RSI) at 38.68 sits near oversold territory, hinting that downside momentum is stretched but not yet signaling a confirmed reversal.

On the topside, initial resistance is located at the 20-day EMA around 95.44, and a daily close above this level would be needed to ease current bearish pressure and open the door to a corrective rebound. Looking down, the June 25 low at 94.15 is the key support level.

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

• EUR/USD hits session lows below 1.1200 after failing to extend its recovery beyond the 1.1250 area.
• Oil price rally and ongoing French debt woes pose a heavy weight for any significant Euro recovery.
• The US Dollar remains depressed, which is keeping the Euro from depreciating further.

The Euro (EUR) pares recent gains against the US Dollar (USD) on Thursday, as escalating French bond yields and higher Oil prices amid growing uncertainty in the Middle East prove a heavy weight for any significant recovery. The EUR/USD pair has hit lows below the 1.1200 level at the US session opening, after being rejected just above 1.1250 earlier in the day.

France’s debt yields have rushed to fresh highs amid investors’ concerns about the government’s inability to restore fiscal stability, while the country braces for further protests next Saturday, with the images of last week’s riots still in everyone’s mind. In this context, the yield of the benchmark 10-year OAT note has jumped to 5.10%, its highest level since 2002.

Moody’s rating agency is expected to review France's credit status on Friday, and markets are anticipating a downgrade, which would add strain on the country’s troubled credit status. Moody’s ranked France’s sovereign debt with an Aa3 rating in April, but the Outlook is negative, and the latest developments have not helped to improve it.

Brent Oil prices add pressure on the Euro

Beyond that, Brent Oil prices have rallied above $108.00, nearing the highest levels in the last five months, clouding the economic outlook of Eurozone economies and boosting inflationary pressures higher, ultimately threatening to tip the region into a stagflationary cycle.

The US Dollar, on the other hand, is not faring much better this week, which keeps the Euro from falling further. US Treasury yields are retreating from recent highs, as investors assume that the  Federal Reserve (Fed) will hit the pause button next week, and ponder the overall scope of the monetary tightening cycle.

Looking ahead, Analysts at ING argue that “until the rock-solid short-end of the US yield curve starts to buckle, it is hard to make the case that the Dollar needs to fall across the board.” In this context, the bank “favour[s] consolidation over correction for the DXY Dollar index, but do[es] not rule out some further softening to the 101.25/30 area,” suggesting any Dollar weakness is likely to be contained rather than the start of a broader downtrend.

Standard Chartered’s Chong Hoon Park expects the Bank of Japan to keep its policy rate at 1.25% at the 29-30 October meeting, maintaining a hawkish tone. The bank notes upside inflation risks and firmer Tokyo CPI and PPI data, but highlights weak domestic demand and subdued consumption. December is seen as a live meeting, while January 2027 remains the base case for the next hike.

BoJ stance and implications for JPY

"We expect the Bank of Japan (BoJ) to keep the policy rate unchanged at 1.25% at its 29-30 October meeting, following September’s 25bps hike."

"However, we expect policy makers to maintain a clearly hawkish tone."

"As a result, the debate is increasingly shifting from whether the BoJ will hike again to when the next hike will occur."

"While December is now a live meeting, January 2027 remains our base case for the next hike."

"At the same time, the BoJ has an incentive to continue policy normalisation to support yield differentials and reduce the risk of renewed JPY weakness, particularly if the Fed resumes tightening or maintains a restrictive policy stance for longer than expected."

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

United Overseas Bank (UOB) strategists Quek Ser Leang and Lee Sue Ann highlight that GBP/USD’s recent sharp gains have left the pair consolidating around 1.3395, with scope for a modest intraday rise within 1.3370–1.3415. Over the coming weeks they maintain a constructive stance, looking for a move toward 1.3440 while raising strong support to 1.3330. Their 1–3 month outlook points to further rebound potential toward 1.3480 as upward momentum builds.

Pound retains constructive technical setup

"24-HOUR VIEW: GBP rose sharply to a high of 1.3409 two days ago. Yesterday, we indicated that “the sharp rise appears to be overdone, and instead of continuing to advance today, GBP is more likely to consolidate between 1.3340 and 1.3410.” GBP then traded within a 1.3369/1.3403 range, closing slightly higher at 1.3394 (+0.11%). The slight increase in upward momentum suggests GBP could edge higher today, but any advance should stay within a 1.3370/1.3415 range."

"1-3 WEEKS VIEW: Tracking our positive GBP view from late last week, we highlighted yesterday (21 Oct, spot at 1.3375) that “there is scope for GBP to rise to 1.3440 next.” We also highlighted that “a breach of 1.3300 (‘strong support’ level) would mean that GBP is not rising further.” We continue to hold the same view, but we are revising the ‘strong support’ level higher to 1.3330."

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

• USD/CHF hits one-month lows near 0.8190 and drops more than 2% in less than two weeks.
• Switzerland's solid fiscal stability has given the CHF a safe-haven status amid the global bond selloff.
• A daily close below the 0.8230 area confirms a Double Top pattern just below 0.8400.

The Swiss Franc (CHF) keeps marching higher against the US Dollar (USD), favoured by Switzerland’s solid fiscal stability and the Greenback's weakness, as traders ponder the depth of the Federal Reserve’s (Fed) monetary tightening cycle. The USD/CHF pair accelerated its downtrend on Thursday, hitting one-month lows below 0.8200, before trimming some losses.

Investors have rushed to the Swiss Franc over the last few weeks, with global bonds tumbling on concerns about the elevated debt levels in the world’s leading economies. US debt climbed to 124% of Gross Domestic Product (GDP) in the second quarter of 2026, France’s to 119%, while Japan’s escalated beyond 200% of the country’s GDP. In contrast, Switzerland’s remains around 15%, which is the main reason behind the 2.3% USD/CHF decline over the last two weeks.

Analysts at Commerzbank highlight that “Switzerland’s public finances are much more solid than those of most other industrialised countries.” They acknowledge domestic debates over whether the country’s “debt brake can always be adhered to in the face of demographic change and additional military expenditure. But these concerns pale in comparison to those in other European countries."

The minutes of the Swiss National Bank’s (SNB) latest monetary policy meeting, released on Thursday, revealed a moderately positive economic forecast for the coming quarters. Regarding inflation, SNB policymakers see no signs of second-round effects as of yet, although they warn that the high energy prices will keep price risks skewed to the upside in the near term. The Swiss Franc appreciated after the release.

Technical Analysis: USD/CHF pierces the neckline of a Double Top pattern

USD/CHF trades at 0.8213 at the time of writing, keeping a bearish near-term tone as it holds below the neckline of a Double Top pattern, in the 0.8230 area, a common figure for trend shifts. Momentum indicators on the 4-hour chart remain negative, with the Relative Strength Index (14) around 34 and a slightly negative Moving Average Convergence Divergence (MACD) reading hinting that sellers still retain the upper hand despite the proximity of support areas.

A daily close below the mentioned 0.8230 area confirms a Double Top pattern just ahead of the 0.8400 level. This would increase pressure on the confluence of the 61.8% Fibonacci retracement of the September-October rally, near 0.8195, which is holding bears for now, and the September 16 and 22 lows around 0.8180. The Double Top's measured target is at the September 9 low, near 0.8070.

A bullish reaction above 0.8230, on the contrary, would shift focus towards Monday's high around 0.8270 ahead of the October 15 high, at the 0.8315 area.

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