Forex News

Societe Generale’s Kenneth Broux flags that a surprise upside in Czech inflation to 2.5% has reinforced the Czech National Bank’s hawkish stance. With policymakers signalling a possible hold or hike, attention turns to core and services inflation data that could justify a November rate increase. The higher probability of additional tightening is seen as supportive for the Koruna, raising the risk of EUR/CZK moving sustainably below 24.50.

Inflation surprise boosts tightening odds

"In CEE, Czech inflation data this morning surprised on the upside, accelerating from 1.9% in August to 2.5% in September. The release reinforces the increasingly hawkish policy stance of the CNB."

"Policymakers have repeatedly signalled that the next move could be either a hold or a hike. Attention now turns to the data breakdown on October 13th where core and services inflation will determine whether underlying price pressures remain uncomfortably strong."

"Markets will be watching whether core inflation rises above the 3.0% level of August and whether services creep above 4.5%, a threshold the CNB has explicitly highlighted as inconsistent with medium-term price stability."

"The higher probability of additional tightening should remain supportive for the koruna, increasing the risk of EUR/CZK moving sustainably below 24.50."

"A further pick-up in these components would strengthen the case for a November rate hike and cement the status of the CNB' as the most hawkish central bank in the region."

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

OCBC strategists Sim Moh Siong and Christopher Wong highlight EUR/USD caught between French political-fiscal risks and a potentially capped US Dollar. European bond turbulence is feeding expectations of a more dovish ECB, while US yields rise on economic resilience. Markets still price over three Fed hikes despite softer labour data, but OCBC expects only a moderate USD rally into year-end.

Euro weighed by bonds and Fed repricing

"The EUR remains under pressure as turbulence in European bond markets fuels expectations of a more dovish ECB path. However, the sharp safe-haven demand that supported the CHF late last week appears to be fading."

"Markets continue to price slightly more than three Fed hikes over the next 12 months, a path that looks too aggressive. Recent labour market data point to softer hiring and moderating wage growth, suggesting inflation pressures from the labour market are easing. If upcoming inflation releases confirm that underlying price pressures remain contained, markets may gradually scale back expectations for additional tightening."

"EUR/USD remains the key focus. Unless volatility in European bond markets escalates significantly, our base case is still for a moderate rather than aggressive USD rally into year-end."

"Expectations for an October Fed rate hike have fallen sharply after several Fed officials signalled there is little urgency to tighten policy further and stressed the need to assess incoming data before making another move. Recent comments from senior Fed officials have pushed markets to favour a pause in October, with any further tightening more likely deferred until later in the year."

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

EUR/USD has slipped to fresh 17-month lows near 1.1160, weighed down by escalating political and fiscal uncertainties across the Eurozone. While Spain’s call for a snap election on November 29 introduces near-term political noise, market attention remains heavily concentrated on France’s deepening budget crisis and its spillover into broader European sovereign bond markets. With widening yield spreads against German Bunds tightening Euro area financial conditions and complicating potential European Central Bank (ECB) intervention, the US Dollar (USD) continues to capitalize on relative stability and yield backing. Institutional strategists are evaluating whether technical support near 1.1200 and 1.1111 can hold or if European fiscal contagion will push EUR/USD toward deeper downside targets.

French bond contagion overshadows Spanish snap election risks

Lee Hardman at MUFG emphasizes that while Spanish Prime Minister Pedro Sanchez’s call for a November 29 snap election adds near-term political headlines, the primary threat to EUR/USD stems from the French government bond market sell-off. Contagion across Eurozone debt markets remains the main driver of Euro (EUR) performance into year-end.

"The latest opinion polls have been indicating that the centre-right People’s Party are well positioned to become the biggest party after the election although would require support from other parties without a majority... While the snap election adds to political uncertainty in the euro-zone in the near-term, we do not expect the outcome to materially add to downside risks for the euro... The performance of the euro heading into year-end will depend more on the fallout from the French government bond market sell-off including evidence of contagion and how policymakers react with risks currently skewed towards further weakness."

Slowing downward momentum leaves scope to test 1.1145

Quek Ser Leang and Lee Sue Ann at UOB track the technical breakdown in EUR/USD, noting that while the pair touched a low of 1.1160 before recovering toward 1.1220, the broader 1-to-3 week trend remains negative. Unless spot prices reclaim key resistance at 1.1285, the currency pair remains vulnerable to testing further support at 1.1145.

"Yesterday, EUR broke below 1.1180, touching a low of 1.1160 before rebounding. Downward momentum is showing early signs of slowing, but only a breach of 1.1285 (‘strong resistance’ level previously at 1.1315) would indicate that the decline is stabilising. Until then, there is a chance for EUR to test 1.1145 next."

French budget crisis and ECB constraints risk deeper sell-off toward 1.1111

Elias Haddad at Brown Brothers Harriman (BBH) highlights that France's fiscal crisis is spreading to other Eurozone sovereign bond markets, driving yield spreads wider and tightening financial conditions. With France's fiscal trajectory complicating the activation of the ECB's Transmission Protection Instrument (TPI), the Euro faces combined headwinds from fiscal distress and expectations of a shallower ECB policy path, putting key support at 1.1111 in view.

"France’s budget crisis is spilling into other Eurozone sovereign bond markets, widening yield spreads to Germany... The ECB’s Transmission Protection Instrument (TPI) provides a backstop against disorderly spread widening, but activation is contingent on EU member state pursuing “sound and sustainable fiscal and macroeconomic policies.”... Meanwhile, ECB Chief Economist Philip Lane highlighted the “increase in long-term interest rates constitutes a material tightening of financial conditions... Immediate support levels for EUR/USD are offered at 1.1200... and 1.1111..."

The Takeaway

The Euro's descent to 17-month lows against the US Dollar reflects deep-seated fiscal vulnerabilities in core Eurozone bond markets that outweigh localized political noise like Spain's snap election. While UOB cautions that downside momentum may be slowing near-term within a 1.1180–1.1255 range, MUFG and BBH warn that widening French sovereign yield spreads and legal constraints on ECB intervention could force a shallower European tightening path, leaving EUR/USD exposed to further downside tests toward 1.1145 and 1.1111.

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

• The Indian Rupee weakens further against the US Dollar due to multiple headwinds.
• FIIs are trimming their stake in Indian stock markets due to higher bond yields.
• Analysts at MUFG expects the RBI to leave its Repo Rate steady on Wednesday.

The Indian Rupee (INR) trades lower against the US Dollar (USD) on Tuesday due to the continuous surge in global bond yields. The USD/INR pair rises to near 96.43, the highest level seen in over two months.

As of writing, 10-year United States (US) Treasury Yields are up 0.24% to near 5.32. On Monday, US bond yields posted a fresh two-decade high near 5.35%. Generally, higher bond yields lead to a risk-off environment, a scenario that diminishes the appeal of riskier assets, such as the Indian Rupee.

Apart from rallying bond yields, the continuous outflow of foreign funds from the Indian stock market is also weighing on the Indian currency.

In the first two trading days of October, Foreign Institutional Investors (FIIs) have offloaded their stake worth Rs. 14,183.36 crore.

What has strengthened US bond yields?

Yields on US-backed securities are rallying significantly for months. Fears of persistent global inflationary pressures due to energy supply shocks induced by the Middle East war are supporting the rally.

The advance in the US Treasury Yields seems not taking a pause even as soft United States (US) Nonfarm Payrolls (NFP) data for September has forced traders to scale back hawkish Federal Reserve (Fed) interest rate expectations.

According to analysts at Societe Generale, though the softer US payrolls report has reinforced the recent pullback in expectations for near‑term Fed tightening, the bank stresses that it is “not a game changer for the hawkish predisposition of the Fed – inflation is the bogeyman.” In their view, the latest jobs print instead “justifies caution over cadence and quantity of future policy adjustments.

RBI’s policy announcement awaited

Going forward, the major trigger for the Indian Rupee will be the Reserve Bank of India’s (RBI) monetary policy announcement.

Analysts at MUFG/BTMU reiterate that they are “officially forecasting RBI to keep rates on hold,” but emphasize that “more importantly we have already been calling for the central bank to start its hiking cycle from December so ultimately we think it’s just a matter of time before policy rates move higher.” They “see a good chance RBI will also move its stance away from neutral to signal a tightening bias,” underscoring a shift in the policy signal even if the near-term decision is unchanged.

In terms of the projected magnitude, MUFG/BTMU note that “we have 50bps of rate hikes in our forecast profile, and have mentioned that there could be a risk of 75bps in total this cycle,” pointing to a backdrop where “growth is strong, liquidity is abundant, credit growth is picking up, fiscal policy is supportive, while higher commodity prices and adverse weather conditions lend inflation risk to the upside in India.” They add that “we are forecasting RBI to hike rates by 50bps this cycle with some risk of 75bps, although we note pricing in the rates market is quite rich already,” suggesting that markets may already be pricing in a relatively aggressive tightening path.

Technical Analysis: USD/INR aims to revisit all-time high near 97.00

In the daily chart, USD/INR trades at 96.42, extending its advance above the 20-period exponential moving average (EMA) at 95.91 and keeping a near-term bullish bias intact. The pair is supported by this rising EMA, while the Relative Strength Index (14) at 68.07 hovers just under overbought territory, suggesting strong but increasingly stretched upside momentum.

On the downside, initial support is seen at the 20-period EMA around 95.91, where a pullback could attract fresh buying interest as long as the level holds. With no nearby technical resistance levels from the current dataset, further gains would likely be driven by momentum until new highs begin to establish fresh topside reference points.

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

United Overseas Bank (UOB) strategists Quek Ser Leang and Lee Sue Ann highlight that GBP/USD traded sideways on Monday, closing slightly lower near 1.3225, with intraday price action lacking clear momentum. They expect near-term range trading to persist. On a 1–3 week basis, they maintain a mildly negative Pound view, looking for a drift toward the major 1.3140 support, while longer-term technicals still point to further downside risk toward prior lows.

Pound range but downside risk

"24-HOUR VIEW: GBP dipped to 1.3184 and then rebounded to a high of 1.3256 last Friday. When it was at 1.3245 yesterday, we indicated that “while there is scope for the rebound to extend, given that there has been no clear increase in upward momentum, any advance is likely to remain within a 1.3215/1.3265 range.” The subsequent price movements did not unfold as expected. GBP fluctuated between 1.3191 and 1.3242 before closing modestly lower by 0.11% at 1.3224. There has been no clear shift in either downward or upward momentum. Today, GBP is likely to range-trade between 1.3195 and 1.3245."

"1-3 WEEKS VIEW: We turned slightly negative on GBP last Friday (02 Oct, spot at 1.3195). We indicated that “while downward momentum is building again, it is not strong for now.” We were of the view that GBP “is likely to edge lower toward the major support at 1.3140.” After GBP rebounded to 1.3256, we highlighted yesterday that “while the buildup has eased somewhat with the subsequent rebound in GBP, we will continue to hold the same view as long as the ‘strong resistance’ at 1.3265 is not breached.” There is no change in our view."

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

• Silver price recovers to near $61.00 as the US Dollar retreats.
• BBH sees the US Dollar outperforming as strong US business data supports hawkish Fed bets.
• Investors keenly await FOMC minutes of the September policy meeting.

Silver price (XAG/USD) holds its recovery move seen in the early European trade from $60.30 to near $61.00 ahead of the opening of United States (US) markets on Tuesday. The white metal bounces back as the US Dollar Index (DXY) retreats after hitting a fresh annual high near 102.54 on Monday to near 101.95, at press time.

Technically, some correction in the US Dollar (USD) offers relief to the Silver price.

However, market experts see the US Dollar outperforming amid the US economic resilience.

Strategists at Brown Brothers Harriman (BBH) argue that the latest US business surveys continue to underpin the Federal Reserve’s (Fed) hawkish stance and the Dollar. They note that the "US September ISM indexes back the Fed’s tightening bias and is USD supportive," with the headline services and manufacturing readings "point[ing] to resilient growth" while the "Prices Paid indexes signal inflation pressures are intensifying."

In the BBH view, this backdrop is reflected in market pricing, as "Fed funds futures continue to price in a full 25bps hike to 4.00-4.25% in December."

For fresh cues regarding the US interest rate outlook, investors await Federal Open Market Committee (FOMC) minutes of the September policy meeting, which will be released on Wednesday. In the policy meeting, the Fed hiked policy rates by 25 basis points (bps) to the 3.75%-4.00% and signaled at least one more this year.

Silver Technical Analysis

In the daily chart, XAG/USD trades at $61.21, holding a bearish near-term bias as it remains below the 20-day exponential moving average (EMA) at $62.99. The pair has retreated from recent highs and is now capped by this short-term trend indicator, while the Relative Strength Index (RSI) at 42.27 stays in a subdued, mildly bearish territory that hints at persistent downside pressure rather than outright oversold conditions.

On the topside, immediate resistance is located at the 20-day EMA at $62.99, and a sustained break above this barrier would be needed to ease the current bearish tone and open the way for a more constructive recovery. On the downside, momentum conditions reflected by the RSI suggest sellers retain control, leaving XAG/USD vulnerable to further slippage as long as price trades beneath the $62.99 cap.

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

Elias Haddad at Brown Brothers Harriman highlights that the Dollar has trimmed some recent gains but retains support from strong US data and Fed expectations. September ISM services and manufacturing indexes point to resilient growth, while Prices Paid suggest intensifying inflation. Fed funds futures still discount a full 25 bps hike to 4.00–4.25% in December, underpinning the Dollar outlook.

ISM data backs Fed tightening bias

"The US September ISM indexes back the Fed’s tightening bias and is USD supportive. The headline services and manufacturing indexes point to resilient growth and the Prices Paid indexes signal inflation pressures are intensifying. Fed funds futures continue to price in a full 25bps hike to 4.00-4.25% in December."

"The Atlanta Fed GDPNow model estimates annualized real GDP growth of 3.7% in Q3. Sustaining that pace alongside fiscal consolidation could help the US grow its way to a lower debt burden."

"But that’s highly unlikely. US real GDP growth has average 2.5% in the past 10 years and the Congressional Budget Office projects the primary budget deficit (overall budget balance excluding interest expense) to average -2.1% over the next ten years, pushing federal debt to a record 120% of GDP by 2036."

"US August trade balance which will feed into the Atlanta Fed’s updated GDPNow estimate. Fed speakers include: Fed New York Fed President John Williams, St. Louis Fed President Alberto Musalem (non-voter), Fed Vice Chair Michelle Bowman, and Kansas City Fed President Jeffrey Schmid (non-voter)."

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

• Gold rebounds from a two-month low as US Treasury yields and the US Dollar ease.
• High-for-longer Fed expectations and elevated borrowing costs continue to cap the upside.
• The technical setup remains fragile, with $4,100 providing the first line of support.

Gold (XAU/USD) rebounds on Tuesday as a modest pullback in US Treasury yields weighs on the US Dollar (USD), helping the metal recover after falling to a two-month low of $4,104 during Asian trading hours. At the time of writing, XAU/USD trades around $4,156, up 0.41% on the day.

The benchmark 10-year US Treasury yield eases to around 5.269% after touching 5.349% on Monday, its highest level since 2002. Meanwhile, the US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, retreats toward 102.00 after reaching a fresh year-to-date high of 102.53 the previous day.

The pullback gives Gold some breathing room, although the rebound leaves its recent consolidation intact. The metal remains largely confined between $4,100 and $4,200, with buyers struggling to build a sustained recovery as yields hold near multi-year highs.

Elevated yields increase the opportunity cost of holding non-yielding metal and help keep demand for the US Dollar firm. Sticky inflation and a resilient US growth outlook reinforce expectations that interest rates will stay high for longer, while growing fiscal and government debt concerns add further upward pressure on borrowing costs.

However, recent US employment figures and the Federal Reserve’s (Fed) preferred inflation measure have shown signs of cooling, reducing pressure on the central bank to raise interest rates again at the October 27-28 meeting. The CME FedWatch Tool shows an 80% chance of a hold.

A pause in October offers near-term support for the yellow metal, but a broader recovery may remain difficult as markets anticipate further tightening. The Fed’s commitment to bringing inflation back toward its 2% target keeps the door open to a December rate hike.

The stalemate between the United States and Iran keeps energy-driven inflation risks elevated as Oil prices remain above pre-war levels. However, recovering Gulf exports and emergency reserve releases are weighing on Oil prices, with West Texas Intermediate (WTI) trading around $87, near one-month lows.

Against this backdrop, a stronger recovery in Gold would likely require a meaningful shift toward a less restrictive Fed outlook, accompanied by a sustained decline in Treasury yields and the US Dollar. Wednesday’s Federal Open Market Committee (FOMC) minutes could offer fresh insight into how officials view the need for further rate hikes.

Over the longer term, Gold remains supported as the same debt and fiscal concerns pushing borrowing costs higher also strengthen its appeal as a store of value. Meanwhile, strong central-bank demand and inflows into Gold-backed exchange-traded funds further underpin demand for the metal.

Technical analysis: XAU/USD remains bearish below mid-Bollinger SMA

On the daily chart, XAU/USD maintains a bearish near-term tone as it holds below the 20‑day Bollinger simple moving average (SMA) at $4,263. Momentum is soft, with the Relative Strength Index (RSI) hovering around 40, while the Moving Average Convergence Divergence (MACD) remains in negative territory, hinting that recent downside pressure is not yet exhausted despite a modest stabilization above nearby support.

On the downside, initial demand is seen near the psychological $4,100 level, closely aligned with the lower Bollinger Band around $4,087. A break below this area could expose the deeper horizontal support zone around $4,000-$3,950.

On the topside, a first cap emerges at the mid‑Bollinger SMA at $4,263, ahead of the upper band resistance near $4,439 and the charted horizontal barriers at $4,500 and $4,700, which together define a dense supply zone that gold would need to clear to shift the bias back to constructive.

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

• EUR/USD edges up to the mid-1.1200s after bouncing from 17-month lows at 1.1160 on Monday.
• Eurozone Retail sales missed expectations, and German Factory Orders plunged in August.
• Oil prices have declined about 5% from last week's highs amid news that exports from Gulf countries are recovering.

The Euro (EUR) posts a mild recovery against the US Dollar (USD) on Tuesday, with the EUR/USD pair trading a few pips below 1.1250 at the time of writing, extending its rebound from the 17-month low, near 1.1160, hit on Monday. Eurozone Retail Sales and German Factory Orders data have disappointed, but a broader US Dollar pullback and a further decline in Crude Oil prices are providing some respite to the ailing single currency.

Eurozone Retail Sales bounced up 0.1% in August, after a 0.6% contraction in July, undershooting market expectations of a 0.2% gain, according to figures released by Eurostat earlier in the day. Year-over-year, retail consumption increased 0.8%, above the previous month’s 0.4% reading but also below the 1% market forecast. 

Before that, data released by Destatis revealed that German Factory Orders plunged 10.6% in August, following a 3.2% increase in July, largely exceeding the 1% decline seen in the previous month. The report highlights the decline in sales of transport equipment, such as aircraft, ships, trains and military vehicles, which fell 61% on seasonally adjusted terms after having doubled in July as the main reason for August's decline. Excluding large-scale orders, sales of all other items fell a mere 0.1%.

The Euro, however, is drawing some support from a reversal in Oil prices. Brent Crude has extended its decline below $98.00, nearly 5% below last week’s highs. Reports that Oil flows from Gulf countries have recovered sharply over the last few weeks have eased concerns about supply disruptions and provided some relief to the Eurozone's oil-importing economies.

Growing debt concerns and political uncertainty likely to limit Euro rallies

The Euro remains under pressure amid rising concerns about public finances, with the gap between France’s OAT yield and the German Bund at levels unseen since the 2009 crisis. France is also facing a political gridlock that discards any significant savings plan, at least until the presidential elections in 2027, and to make things worse, Spanish President Pedro Sanchez announced a snap election in November. If we add to this the fragility of Frederich Merz's cabinet in Germany, we obtain the picture of the uncertain political scenario that is keeping investors away from the Euro.

Against this backdrop, the European Central Bank (ECB) remains between a rock and a hard place, having to fine-tune its monetary policy. Further monetary tightening might add fuel to the government bonds sell-off. Inflation, on the other hand, is running at levels well above the 2% target and does not seem to retreat unless the Middle East improves radically, which adds a layer of uncertainty to the Eurozone's economic outcome.

In the US, ISM Services Purchasing Managers Index data released on Monday showed that business activity slowed down beyond expectations in September, as prices paid by businesses increase with demand still at high levels. The US Dollar, however, remains drawing support from the high US Treasury yields, which hit fresh multi-decade highs.

Deutsche Bank strategists highlight broad resilience across global equities, led by record-setting US tech stocks and steady gains in Europe. Asian markets are also mostly firmer, while mainland Chinese markets remain closed for the Golden Week holidays and US and European equity futures point to further modest gains.

Stocks hold up against bond selloff

"Once again, US tech stocks helped power the equity resilience, with the S&P 500 (+0.66%) closing within half a percent of its record high, whilst the NASDAQ (+1.05%) and the Mag 7 (+1.23%) both hit new records."

"And for Europe there was also a fair amount of resilience, with the STOXX 600 (+0.36%) ending the day around 4% beneath its own record high from August. Indeed, apart from France there was a steady performance, with gains for the FTSE 100 (+0.34%), the DAX (+0.09%) and the FTSE MIB (+0.66%)."

"Meanwhile, China’s onshore financial markets remain shut for the National Day and Golden Week holidays and will resume trading on Thursday. US equity futures are up around a tenth of a percent with European equivalents up four-tenths."

"Asian equities are broadly firmer this morning, with the Hang Seng (+0.77%), the Nikkei (+0.82%) and the S&P/ASX 200 (+0.51%) all trading moderately higher but with the KOSPI (-1.44%) turning lower after opening higher. The index was closed yesterday for holidays."

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