Forex News

• The European Central Bank is expected to leave its benchmark interest rate steady at 2.50% after two rate hikes so far in 2026. 
• ECB President Lagarde is likely to hint at further monetary tightening, amid high price pressures.
• The Euro risk remains skewed to the downside amid high Oil prices and France jitters.

The European Central Bank (ECB) concludes its two-day monetary policy meeting on Thursday and will announce its decision at 13:15 GMT. The bank is widely expected to leave the interest rate on the Main Refinancing Operations (MRO) and the Deposit Facility unchanged at 2.65% and 2.50%, respectively, after having raised both of them by 25 basis points (bps) in September.

Alongside the decision, the bank will release its Monetary Policy Statement, although the main focus of the event will be the press conference of ECB President Christine Lagarde, due at 13:45 GMT. Her comments to journalists will be carefully analysed to confirm market expectations of a third rate hike in December.

The Euro (EUR) is likely to draw some support from an unequivocally hawkish ECB message on Thursday, but the risk is strongly skewed to the downside. High Oil prices and investors’ concerns about France’s fiscal health are a heavy burden for the common currency, which might suffer a significant blow if Lagarde cools market hopes of a December hike.

What to expect from the ECB interest rate decision?

Markets are practically fully pricing in a monetary policy pause by the European Central Bank on Thursday. The ECB hiked rates by a quarter-point in September, following a previous hike in June, and they will want to assess the impact of the latest move before raising borrowing costs again – although the hot inflation pressures rule out any accommodative gesture.

Eurozone consumer inflation accelerated to a 3.8% year-on-year rate in September, the highest level in three years, up from 3.2% in August, fuelled by a nearly 19% yearly increase in energy prices. Oil, the main inflation driver, is about 50% above July lows and is likely to remain at high levels for some time, considering the uncertain and volatile situation in the Middle East. 

Core inflation, on the other hand, has remained steady, providing some leeway for the ECB. The bank has also denied evidence of strong second-round inflationary effects, which adds to the case for a pause, but the steep increase in headline inflation must have set policymakers on alert.

Yet inflation will not be the only topic at the ECB’s committee on Thursday. France’s surging borrowing costs have raised all the alarms in bond markets, pushing the spread with the German Bund to levels not seen since the 2009-2011 financial crisis. Against this backdrop, speculation about a bond-buying toolkit from the ECB, namely the Transmission Protection Instrument (TPI), has arisen, although the chances of it being activated this week are remote

All things considered, ECB President Christine Lagarde will have to fine-tune its language to make everybody happy. Keeping inflation anchored is the bank’s main target, and, in that sense, she will be forced to hint at further interest rate hikes in the coming months. That said, recent Eurozone data suggests that economic growth remains frail, while surging bond yields are already tightening financial conditions and easing pressure to raise interest rates immediately.

Analysts at Brown Brothers Harriman point out that October's ECB survey “showed a further net tightening of credit standards and weaker loan demand in Q3,” a combination that “is a headwind to Eurozone economic activity and challenges the nearly 75bps of ECB hikes priced by markets over the next twelve months.”

With futures markets pricing in more than 80% odds of a quarter-point rate hike in December, the risk is on a too-dovish Lagarde, which might further undermine speculative support for an already weak Euro.

How could the ECB meeting impact EUR/USD?

The Euro has been falling against its main peers over the last few weeks. Concerns about the potential consequences of Oil prices above $100 for a protracted period of time, coupled with France’s debt problems and social unrest spreading through the country, have spooked investors away from the common currency in October.

The EUR/USD pair has dropped nearly 5% over the last two months, hitting 17-month lows just above 1.1100; the EUR/GBP depreciated about 2.8% in the same period, while the EUR/JPY lost about 6% of its value.

These figures highlight the importance of a hawkish ECB stance at Thursday’s meeting. Monetary policy expectations are unlikely to lift the Euro on their own, but they might help to ease bearish pressure, especially if they are accompanied by a clear commitment to support France.

From a technical perspective, Guillermo Alcalá, FX Analyst at FXStreet, sees the Euro’s bearish cycle as overstretched, but observes that “the EUR/USD pair’s inability to return to the upper range of the 1.1200s keeps the negative trend fully in play.”

The daily chart shows early signs that bearish momentum is losing strength, but the Relative Strength Index (RSI) remains below 40, suggesting that bulls are absent, although the Moving Average Convergence Divergence (MACD) histogram has popped up above zero.

“Bulls should break the resistance area at 1.1255, which has been holding upside attempts in October, and shift the focus to the late-June lows, near 1.1325 to confirm a trend reversal,” says Alcalá.

Failure to do so, according to the FXStreet expert, would increase pressure towards the year-to-date low at 1.1113, and the 61.8% Fibonacci retracement of the June-August rally, at 1.1095, ahead of the late May 2025 lows at 1.1050.

• EUR/USD pulls back to the 1.1130 area but remains contained within Wednesday's range.
• A string of mixed Eurozone sentiment indicators has failed to ease pressure on the Euro.
• Investors are awaiting the ECB for confirmation of a December rate hike.

The Euro (EUR) trades lower against the US Dollar (USD) on Thursday, with price action contained within Wednesday’s range, as investors bide their time ahead of the European Central Bank’s (ECB) monetary policy decision. The EUR/USD pair edges down to the 1.1130 area from highs near 1.1170 on Wednesday, with bears looking at the 17-month low at 1.1113.

Sentiment data released by the European Commission on Thursday was mixed. Business Climate picked up to 0.09 in October from -0.05 in September, reaching positive figures for the first time in the last three years, while Consumer Confidence remained unchanged at -17.9, and the Economic Sentiment Index declined to 96.9 against market expectations of a steady 97.5 reading.

France poses an additional challenge for the ECB

Later in the day, the ECB is widely expected to leave its Deposit Facility rate unchanged at 2.5% and, highly likely, to hint at further monetary tightening ahead, as the high Oil prices stemming from the Middle East war are boosting consumer inflation at levels well above the ECB’s target.

The main topic at the meeting, however, is likely to be France’s debt, which has reached concerning levels, boosting French Treasury yields to 24-year highs and throwing a spanner in the works for the central bank’s monetary policy plans.

Commerzbank analysts warn that “every interest rate hike by the ECB naturally also raises yields and thus exacerbates France’s problem of getting its public debt under control due to rising interest payments.” This might prompt the ECB to adopt a more cautious approach on future rate hikes, and erode one of the few Euro supports as of now.

The ECB Governing Council announced earlier in the day that President Christine Lagarde will step down in February 2027, without giving any clue about who will replace her. The impact on the Euro was minimal.

In the US, the Federal Reserve (Fed) met expectations and left rates unchanged on Wednesday. Chairman Kevin Warsh’s comments, however, were considered dovishly tilted, especially his confidence that the “monetary medicine is starting to work”, which suggests that the bank might not have to hike rates as much as the market expects. The US Dollar eased moderately following the Fed’s press release.

Societe Generale analysts see scope for a relief rally in GBP/USD following the UK Budget and ahead of a potentially hawkish Bank of England hike. They argue the UK is on track for the fastest fiscal consolidation in the G7, which could eventually support Gilts and Sterling. Key cable levels are identified at 1.3250 support and 1.3430 resistance.

Fiscal consolidation and BoE backdrop

The UK budget (decisions on welfare and defense spending postponed, bank profit surcharge tax raised to cut household energy hills), the modest increase in DMO issuance, tailored towards the front-end, was well received by Gilts.

"Though spending risks remain, our economists note that UK is likely to remain the fastest fiscal consolidation among the G7."

"Conditional on the BoE getting inflation under control, the fiscal outlook and successful EU reset could lead investors to turn more bullish on UK fixed income and sterling over the medium term."

"Run of four days of profit taking ends in cable, green light for post-Budget relief rally."

"Hawkish BoE hike next week could add to short covering. Support 1.3250, resistance 1.3430."

"Support EUR/GBP 0.8355/30 into ECB."

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

MUFG’s Lee Hardman notes the US Dollar is trading modestly weaker after the FOMC left rates unchanged but signalled more caution on further hikes. Despite two hawkish dissenters, the overall tone and recognition of tighter financial conditions support MUFG’s view of only one more Fed hike. However, the Dollar still benefits from higher energy prices and euro area risks.

Fed tone tempers Dollar strength

"The US dollar has continued to trade at modestly weaker levels overnight after yesterday’s FOMC meeting. The US dollar has been undermined by the scaling back of Fed rate hike expectations with the 2-year US Treasury yield remaining around 9bps lower than prior to yesterday’s FOMC policy update. The Fed decided to leave rates on hold as expected overnight although there were two hawkish dissenters: Fed Governor Lisa Cook and Cleveland Fed President Beth Hammack who both favoured raising rates by 0.25 point."

"However, the overall tone of the updated policy statement and comments from Fed Chair Kevin Warsh in the press conference suggested more caution over delivering further rate hikes. The statement noted that “the accumulation of more information will help the Committee determine the policy stance appropriate to ensure a timely return of inflation” to their inflation target. At the same time, it described economic activity as expanding at a “strong pace” supported by “strong” productivity growth and “robust” capital investment."

"Overall, the comments push back against expectations for more aggressive Fed rate hikes by acknowledging the recent tightening in financial conditions and stronger productivity growth. It supports our forecast that the Fed may deliver only one further hike. While the scaling back of Fed rate hike expectations will put a dampener on the US dollar’s upward momentum, it is still deriving support from negative developments overseas including higher energy prices and heightened fiscal and political risks in the euro area."

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

• Silver falls to a fresh 11-month low near $52.60 as US hyperscalers signal acceleration in AI spending.
• Alphabet said on Wednesday that it expects capex to increase significantly in 2027.
• The Federal Reserve is almost certain to raise interest rates in December.

Silver price (XAG/USD) posts a fresh 11-month low near $52.60 during the European trading session on Thursday. The white metal faces intense selling pressure due to multiple headwinds, including hawkish Federal Reserve (Fed) expectations for the December meeting, risks of fresh escalation in Middle East conflicts, and a fresh upgrade in Alphabet’s Artificial Intelligence (AI) spending plans.

A view on Fed’s outlook

Analysts at MUFG/BTMU note that the Fed left the fed funds rate unchanged at 3.75–4.00%, a widely anticipated pause following September’s hike, but stress that the decision "included two dissents in favour of another rate increase," underscoring lingering hawkishness on the committee. They highlight that Fed Chair Kevin Warsh "reiterated the Fed’s commitment to returning inflation to 2%".

MUFG/BTMU add that "markets continue to price around an 87% probability of a December rate hike," indicating that investors still expect further action this year.

Technically, higher interest rates by the Fed bode poorly for non-yielding assets, such as Silver.

However, financial markets have been confident about the central bank’s December rate hike for weeks, which defies the likelihood of an immediate negative impact on the Silver price.

US-Israel prepares for fresh attacks on Iran

Strategists at Deutsche Bank said in a note that "the Wall Street Journal (WSJ) reported the United States (US) President Donald Trump’s 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, Israel Prime Minister (PM) Benjamin Netanyahu raised the prospects of “renewed joint action with President Trump against Iran”.

Fears of fresh escalation in Middle East risks have bolstered hopes of a bullish oil price outlook. However, the WTI Oil price is 0.5% down at the time of writing to near $100.74, ruling out expectations of an immediate bearish impact on Silver.

Upgraded AI capex plans by hyperscalers seem to be hurting Silver price in real time

On Wednesday, Alphabet maintained its full-year capital expenditures forecast after lifting guidance to between $195 billion and $205 billion during the second quarter (Q2) from $190 billion in its Q3 earnings call. Annual capex is expected to top $200 billion before exceeding $300 billion in 2027. “We continue to expect our capex to increase significantly in 2027, and will provide further details on our Q4 call,” Alphabet finance chief Anat Ashkenazi told analysts during an earnings call, CNBC reported.

An upgrade to AI spending plans by US hyperscalers will likely improve yields on government-backed securities. Such a scenario would diminish the appeal of non-yielding assets, like Silver.

Last week, Meta also reiterated significant spending plans for AI infrastructure. Deutsche Bank said in a note that Meta has “slightly boosted its 2026 capex plan from a $130bn-145bn range to $135bn-145bn,” underscoring its continued commitment to AI-related investment.

Silver Technical Analysis

On the daily chart, XAG/USD trades at $52.91, extending a bearish near-term bias as spot remains clearly below the 20-day Exponential Moving Average (EMA) at $57.10. The location of the price under this short-term trend gauge suggests rallies are still likely to be capped, while the Relative Strength Index (RSI) at 30.01 slips into oversold territory, hinting that downside momentum is stretched but not yet reversed.

On the topside, initial resistance is located at the 20-day EMA at $57.10, where any recovery is likely to face selling pressure unless buyers can secure a sustained daily close above this barrier. On the downside, as previously mentioned, the RSI hovering near 30 signals an oversold condition that could provide some temporary cushioning to the bearish trend, but until XAG/USD reclaims the $57 area, the technical tone will continue to favor further weakness on corrective bounces.

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

Rabobank's Senior FX StrategistJane Foley discusses EUR/USD, noting that the European Central Bank (ECB) is expected to keep rates unchanged, with another hike likely in December. Foley highlights widening French OAT–Bund spreads, easing ECB hike expectations, and rising far-right political risks in France and Germany as key factors keeping the Euro and EUR/USD under pressure, with a lower 3‑month forecast.

Euro pressured by politics and rates

"Economists appear to be mostly agreed that the ECB will leave rates unchanged at today’s policy meeting. Inflation risks remain in evidence but have not increased meaningfully. In any case, the recent rise in long term interest rates suggests that monetary conditions have tightened while higher energy prices are likely to be a drag on growth potential, despite the surprising resilience of the Eurozone economy this year."

"It is RaboResearch’s view, and that of many others, that the ECB will hike rates again in December. The Fed is also widely expected to raise rates again in December, having opted for steady policy yesterday, in line with market expectations.

"The tightening in monetary conditions implied by the rise in long-term interest rates in the Eurozone can be linked with an easing in market expectations for ECB rate hikes. At the start of this month, many market economists were of the view that another rate hike would be forthcoming this month. A drop in October rate hike expectation has weighed on the EUR, which is the worst performing G10 currency in the month to date."

"Political uncertainties for Europe, fears over the impact of high energy prices and elevated concerns about Russian hybrid warfare all suggest a difficult outlook for the EUR. While the single currency is likely to see some short-term relief if a French budget is passed this year, we see limited scope for a sustained recovery. We have revised down our 3-month EUR/USD forecast to 1.10 from 1.13."

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

Silver prices (XAG/USD) fell on Thursday, according to FXStreet data. Silver trades at $52.69 per troy ounce, down 2.39% from the $53.98 it cost on Wednesday.

Silver prices have decreased by 25.88% since the beginning of the year.

The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, stood at 76.41 on Thursday, up from 75.35 on Wednesday.

(An automation tool was used in creating this post.)

• US Dollar Index remains stronger after the Fed maintained rates at 3.75%–4.00% as widely anticipated.
• Fed paused rate hikes to gather data on elevated price pressures despite steady job and economic growth.
• Fed decision saw two dissents, with officials favoring an immediate hike, while Chair Warsh reaffirmed the 2% inflation target.

The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six major currencies, is holding ground after posting modest losses the previous day and trading near 102.30 during European hours on Thursday.

The Greenback moved sideways after the Federal Reserve (Fed) kept interest rates unchanged as widely expected, while providing limited clarity on its next policy move. Traders are now awaiting the upcoming US Personal Consumption Expenditures (PCE) price index, the Federal Reserve’s preferred inflation metric, for clearer signals on the future trajectory of monetary policy.

The Fed held rates steady at 3.75%–4.00% and noted that economic activity continues to expand. In its official statement, the central bank highlighted resilient domestic spending, robust capital investment, and strong productivity growth. Regarding its labor market mandate, the Fed observed that job gains have kept pace with workforce growth while the unemployment rate has shown little change.

The Fed acknowledged that price pressures remain elevated, but it chose to pause further rate hikes to gather additional data and assess the appropriate monetary policy stance going forward. The decision was not unanimous: Fed Governor Lisa Cook and Cleveland Fed President Beth Hammack dissented, voting instead in favor of an immediate rate increase.

Fed Chair Kevin Warsh reaffirmed the Federal Open Market Committee's commitment to delivering price stability and achieving its 2% inflation target, emphasizing that the underlying economy remains strong. He also outlined the central bank's upcoming schedule, noting that the Fed will hold eight meetings next year—including one without a formal vote—and that he anticipates six policy-setting meetings in 2028.

Technical Analysis:

In the daily chart, Dollar Index Spot trades at 102.30. The near-term bias is bullish as price holds above both the nine- and 50-day Exponential Moving Averages (EMAs), suggesting a constructive underlying trend. The 14-day Relative Strength Index (RSI) at 60.01 stays comfortably above the neutral 50 line, hinting that upward momentum remains in place even after the latest consolidation.

On the downside, immediate support is located at the nine-day EMA around 102.06, with a deeper technical floor at the 50-day EMA near 101.20. On the topside, resistance is referenced by the FXS Fed Sentiment Index at 141.89, though the wide gap implies that, in the near term, the Dollar Index could continue to grind higher while the short-term EMAs act as a dynamic base.

Fed holds steady as FOMC signals December hike still in play

Analysts at Rabobank observe that the Fed opted to leave US monetary policy unchanged at its latest meeting, with the decision coming in “slightly less hawkish” than they had anticipated. They highlight that “just two FOMC members dissented to vote for a hike,” underscoring a modestly softer tilt in the committee’s stance. Nonetheless, Rabobank notes that “FOMC Chair Warsh did prepare markets for another hike in December,” keeping the prospect of further tightening firmly on the table despite the pause.

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

ING’s Frantisek Taborsky notes the Czech National Bank is likely to deliver a 25bp hike to 4.00%, but stresses that CEE markets are primarily driven by energy prices. While a softer EUR/USD and firmer equities may offer short-term support to CEE currencies, surging TTF gas prices above €100 underpin ING’s bearish medium-term outlook for regional FX.

Energy prices weigh on CEE currencies

"The CNB’s "blackout period" begins today in the Czech Republic, and the market is returning following yesterday’s public holiday. On Tuesday, another board member, Jakub Seidler, confirmed his intention to vote for a rate hike at next week’s meeting. Given that he has consistently voted in line with the board majority, we believe a 25bp rate hike – bringing the rate to 4.00% – is a done deal."

" In our CNB preview published yesterday, we noted that the market is primarily driven by energy prices, with the CNB having relatively little impact. As the Czech market resumes trading after yesterday’s holiday, we expect a catch-up with PLN rates, likely resulting in an upward move of roughly 8bp."

"Yesterday’s Fed meeting has only limited implications for the CEE market. Some relief in the EUR/USD pair, combined with a return of optimism to equity markets, offers a chance for CEE currencies to stabilise today."

"In the medium term, however, TTF gas prices surpassed €100 yesterday, a factor fuelling further sell-offs across the CEE region – and the rationale behind our bearish outlook on CEE currencies remains intact."

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

• WTI Oil eases from highs near $103.00 but remains within its recent range, above $100.
• Early signs of de-escalation between the US and Iran have boosted hopes of a new round of negotiations.
• Ongoing attacks on vessels attempting to cross the Srtrair of Hormuz are keeping Oil prices from dropping further.

Oil edges lower on Thursday, as comments from US and Iranian officials hint at some efforts to de-escalate tensions, although dips remain limited so far. The US benchmark West Texas Intermediate (WTI) barrel is trading at $100.80 at the time of writing, down from Wednesday’s high near $103.00 but still above the key $100.00 level.

US media reported earlier on Thursday that Vice President JD Vance reached out to Mohsen Rezaei, the Secretary of Iran’s National Security Council, to reactivate peace negotiations. President Donald Trump, however, denied it and said that the contact was related to Iran’s need for medical supplies.

Iran's foreign minister, Abbas Araghchi, affirmed that Tehran remains in close contact with mediators to implement their seven-day roadmap to reopen the Strait of Hormuz. There is no real evidence of any progress towards a peace deal, but the de-escalation in rhetoric has already triggered cautious hopes that the rivals might return to the negotiating table. 

Attacks in the Strait of Hormuz, however, continue, keeping Oil prices from falling further. The UK Maritime Trade Organisation (UKMTO) reported that a vessel was on fire 9 nautical miles north of Khasab, in Oman, and Iranian officials affirmed that the waterway will remain closed for traffic until their seven-day plan is accepted.

On Wednesday, data released by the US Energy Information Administration (EIA) revealed that Crude Oil stocks declined by 1.46 million barrels in the week of October 23, well beyond the 300K drop forecasted by market analysts, and following a 3.06 million-barrel drawdown in the previous week. These figures add to the evidence of the quick depletion of Oil inventories and are contributing to keeping prices steady at high levels.