Forex News

United Overseas Bank’s (UOB) Quek Ser Leang notes that spot gold remains under pressure after breaking an ascending trendline on 22 October and falling below $3,943 to a one-year low near $3,870 on 30 October. Strong downward momentum suggests further downside risk toward $3,700, although the bank sees a low probability of sustained losses below that level.

Gold extends decline toward $3,700

"While spot gold broke the trendline mentioned above on 22 October, there was little follow-through initially."

"Last Friday, however, it broke below $3,943 in a sharp move and dropped to a one-year low of $3,870."

"While the decline is entering oversold territory, strong downward momentum suggests there is scope for gold to decline further to $3,700."

"At this stage, the odds of a continued decline below $3,700 are not high."

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

ING strategists argue that the US Dollar’s reaction to the midterm elections should be short-lived. They see some short-term downside risk if Democrats win both chambers, mainly via regulation concerns and gridlock fears, but stress that the Federal Reserve narrative remains dominant. A split Congress is expected to be neutral to slightly supportive for the Dollar.

Midterm scenarios and Dollar risks

"We don’t expect today’s US midterm results to cause structural shifts in FX, but the dollar may face some short-term pressure should the Democrats secure both the House (widely expected) and the Senate (close call)."

"Our baseline assumption is that markets fully price in a Republican loss of the House, but only partially a Democratic clean sweep. A blue sweep can put some pressure on the dollar. Fears of tougher regulation could weigh on AI stocks (we’ve recently seen how that can hit the greenback), while markets could price in greater risks of decision-making gridlock around issues such as government funding and the debt ceiling."

"Still, we doubt that’s enough to trigger a structural directional shift in the dollar. The greenback continues to respond predominantly to the Fed story, which shouldn’t face an immediate and direct impact from the midterm result. We expect a split Congress (R-S, D-H) to have a neutral or slightly positive USD impact."

"Hopes of a revamp in diplomatic efforts have sent Brent tumbling back below $105/bl, while the dollar has softened slightly alongside commodity currencies. On the macro side, today’s calendar includes US JOLTS job openings."

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

• Gold struggles to extend its recovery as Oil rebounds and Fed expectations remain hawkish.
• Traders focus on US midterm elections and employment data for fresh direction.
• Bearish momentum leaves XAU/USD vulnerable to a retest of the $3,870 yearly low.

Gold (XAU/USD) loses momentum on Tuesday as Oil prices rebound after the Wall Street Journal (WSJ) reported a US strike on Iran’s Qeshm Island. At the time of writing, XAU/USD trades around $3,909, down 0.93% on the day.

Oil prices remain volatile as traders react to shifts in the news flow. West Texas Intermediate (WTI) trades above $97, up 2.45%, after losing nearly 7% on Monday. The decline followed reports that Iran’s President said the Supreme Leader had granted the government more authority over negotiations, helping yellow metal close 1.83% higher.

The link between Oil prices and interest rate expectations has remained a key driver for Gold since the war began in late February. Higher energy costs add to inflationary pressure, prompting central banks, particularly the Federal Reserve (Fed), to keep interest rates elevated or tighten monetary policy further.

Higher borrowing costs tend to weigh on the precious metal by increasing the opportunity cost of holding an asset that offers no yield.

The Fed raised interest rates by 25 basis points (bps) in September before pausing in October, while reaffirming its commitment to restoring price stability. This leaves the door open to additional rate hikes, with the CME FedWatch Tool showing a 75% chance of an increase in December.

Middle East uncertainty, higher Oil prices and a hawkish Fed outlook continue to support demand for the US Dollar (USD), despite its modest retreat from recent highs, adding another headwind for Gold. The US Dollar Index (DXY), which tracks the currency against six major peers, trades around 101.81.

Against this backdrop, Gold has limited scope for recovery without a sustained decline in Oil prices. Such a decline appears uncertain in the near term, given the lack of clarity surrounding US-Iran negotiations.

The metal is also vulnerable to further liquidation, as concerns over AI spending weigh on technology stocks and lead some investors to sell Gold to cover losses and meet margin calls.

Traders now turn to a busy week of US employment data, starting with JOLTS Job Openings on Tuesday and ending with Nonfarm Payrolls (NFP) on Friday. Attention also centres on Tuesday’s US midterm elections, which could influence the direction of the US Dollar and, in turn, Gold.

Dollar outlook tied to US midterm outcome and Iran risk

Commerzbank’s Norman Liebke argues that a scenario in which “the Republicans lose their majorities in both chambers” could see the Dollar “come under greater pressure, as the Trump administration would have less political backing overall.” Even if “only the House of Representatives changes hands, the Dollar would likely face some headwinds as well, albeit to a lesser extent,” whereas “if the Republicans retain control of both chambers, this should instead provide support for the Dollar.”

Liebke also stresses that “what happens immediately after the midterms is also likely to be relevant for the Dollar.” In particular, he warns that “if Trump were indeed to escalate the conflict with Iran again and launch another attack on the country, this would initially point to further increases in energy prices and rising risk aversion.” In such a risk-off environment, “the Dollar could benefit from its role as a safe haven, as it did at the beginning of the Iran war.”

Technical analysis: Weak RSI and negative MACD point to further losses

On the daily chart, XAU/USD maintains a bearish outlook as it trades below the 21-day, 100-day and 200-day Simple Moving Averages (SMAs).

The Relative Strength Index (RSI) at 34 hovers just above oversold territory, while the Moving Average Convergence Divergence (MACD) remains below zero with a negative reading, which together hint that downside momentum is still dominant, even if the sell-off is becoming stretched.

On the upside, immediate resistance lies in the $3,950-$4,000 region, followed by the 21-day SMA at $4,081. Above there, the 100-day SMA at $4,205 and a higher horizontal barrier near $4,400 form a broader supply zone, before the 200-day SMA at $4,480 comes into play as a more distant structural ceiling.

On the downside, Gold remains vulnerable to further losses, with immediate support at Friday's yearly low of $3,870. A break below this level could pave the way for deeper decline.

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

• The British Pound flattens against the US Dollar in the countdown to US Midterm Elections.
• Deutsche Bank sees a 95% chance of Democrats’ victory in the House, and a 79% chance of retaking the Senate.
• The BoE is expected to hike policy rates by 25 bps to 4%, with a 7-2 majority.

The British Pound (GBP) trades almost flat at around 1.3410 against the US Dollar (USD) during the European trading session on Tuesday. The GBP/USD pair consolidates as investors shift their focus to United States (US) Midterm Elections, which will begin later in the North American session.

Democrats are seen winning in both House and Senate

Analysts at Deutsche Bank describe today’s US midterm elections as “the main event,” noting that voters will decide the entire House of Representatives, a third of the Senate, and 36 state Governors.

Deutsche Bank points out that Republicans currently control both chambers of Congress, but that “the incumbent President’s party usually loses ground in midterm votes.” They add that polling averages and prediction markets are “consistently pointing to Democratic gains today,” with Polymarket “giv[ing] the Democrats a 95% chance of victory in the House as of this morning, and a 79% chance of retaking the Senate.”

On the economic front, investors await key US economic releases this week, especially Nonfarm Payrolls (NFP) data for October, which is scheduled for Friday.

Later in the day, financial markets will pay attention to the US JOLTS Job Openings data for September, which will be published at 15:00 GMT. According to estimates, US employers posted 7.13 million fresh jobs, slightly higher than 7.097 million in August.

On the other side of the Atlantic, investors await the Bank of England’s (BoE) monetary policy decision on Thursday. The BoE is almost certain to hike interest rates by 25 basis points (bps) to 4%, with a 7-2 majority.

Strategists at Brown Brothers Harriman (BBH) argue that “firmer UK inflation and economic activity back the move,” after a year on hold. They added that doves Alan Taylor and Swati Dhingra are likely to “supporting a hold”.

GBP/USD Technical Analysis

In the daily chart, GBP/USD trades at 1.3410, extending its recovery above the 20-period exponential moving average (EMA) at 1.3346, which now underpins a bullish near-term bias. The EMA acting as immediate support suggests buyers are regaining control, while the Relative Strength Index (14) at 58.31 stays in positive territory without yet signaling overbought conditions, hinting that upside pressure could persist as long as price holds over the moving average.

On the downside, initial support is located at the 20-period EMA at 1.3346, with the 1.3410 area acting as a near-term pivot that would need to give way to undermine the constructive tone. With no major technical resistance levels immediately overhead in this dataset, the pair appears poised to probe higher levels, though a daily close back below the EMA would weaken the bullish structure and open the door to a deeper corrective slide.

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

Norman Liebke at Commerzbank notes that the Reserve Bank of Australia (RBA) raised rates to 4.85%, but the Australian Dollar fell as markets saw the move as dovish. With growth and labour forecasts softening and inflation driven partly by external Oil shocks, he expects no further hikes and sees the Aussie’s path tied to US and Euro interest rate expectations.

RBA caution and external inflation drivers

"The Australian central bank raised its policy rate by 25 basis points to 4.85% this morning. However, as the move had been widely expected by both the market and the consensus in the Bloomberg survey, the Australian dollar was unable to benefit: AUD/USD fell by around 0.3% in the immediate aftermath."

"In its statement, the RBA highlights that inflation remains well above its 2-3% target range and is unlikely to return to that range until late 2027, around three quarters later than previously expected. This could also be problematic for inflation expectations, as survey-based measures, at least, have risen more sharply of late, both at the short and long end. At first glance, this sounds fairly hawkish. Yet the Australian dollar weakened, and even after today’s rate hike, financial markets are not pricing in any further increase. So why is that?"

"The RBA stresses that the economy has weakened, as reflected, among other things, in falling house prices. With interest rates now higher, weaker residential investment and softer private consumption are expected next year, which should gradually help bring inflation down. The growth outlook has also deteriorated: for the end of 2027, the RBA now expects growth of just 1.3%, compared with 1.6% in its previous forecast."

"The fact that today’s rate hike was approved by only six votes to three further underlines the growing caution within the Board. Overall, the hurdle for another rate hike is therefore likely to be quite high, and we do not expect any further increase in interest rates. In the near term, the Aussie could remain under pressure following the relatively dovish rate hike."

"Further ahead, however, its performance is likely to depend primarily on how interest rate expectations in the US and the euro area evolve. Although our economists expect rate hikes in December, current market expectations for further monetary tightening are likely overdone, which could ultimately benefit the Aussie."

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

Societe Generale strategists note EUR/CHF has broken a short-term uptrend and failed to hold its 200-day moving average, reinforcing downside momentum. The cross is drifting toward the May low near 0.9095, identified as potential support. In spot markets, EUR/CHF has already slumped to a five-month low, with support cited at 0.9097.

Cross grinds lower toward key support

"EUR/CHF has extended its pullback after breaching a short-term ascending trend line last month."

"The pair has failed to defend the 200-DMA (0.9235), highlighting persistent downward momentum."

"EUR/CHF slumps to 5-month low, support 0.9097."

"It is gradually drifting towards the May trough near 0.9095, which could be a potential support."

"If a brief rebound develops, the 200-DMA and the recent pivot high at 0.9235/0.9260 may serve as a resistance zone."

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

• AUD/USD trades sharply lower as RBA’s dovish hike weighs heavily on the Australian Dollar.
• The communication from the RBA signaled that the bar for another interest rate hike is high.
• The outcome of US midterm elections is expected to have a short-term pressure on the US Dollar.

The Australian Dollar (AUD) underperforms its major currency peers on Tuesday, trading 0.45% lower to near 0.6965 against the US Dollar (USD) during the European trading session.

The Australian currency is under immense pressure as the Reserve Bank of Australia (RBA) seems less interested in hiking borrowing costs further after raising the Official Cash Rate (OCR) by 25 basis points (bps) to 4.85% earlier in the day.

Aussie slips as RBA hike comes with dovish signals and softer outlook

Analysts at ING note that the Aussie Dollar “came under pressure this morning after the RBA hiked rates as expected to 4.85%, but delivered some dovish signals.” They highlight that “the 6-3 split suggests lower conviction around today’s decision than in markets, which had almost fully priced in a hike (21bp),” underscoring a less forceful policy stance than investors had anticipated.

ING adds that “the statement dropped its reference to potential further hikes for the first time since June,” while “the economic outlook was revised sharply to the downside, with a focus on falling house prices weighing on consumers and upside risks to unemployment.” At the press conference, Governor Michele Bullock “reinforced the RBA’s wait-and-see approach, stressing that monetary tightening still has to feed through to the economy.”

ING notes that “she left the door open to further tightening, but the bar is clearly higher now,” with the RBA appearing “happy to assess the impact of previous hikes before acting again.” “This is in line with our forecast of no further RBA hikes,” ING added.

The next key trigger for the Australian Dollar will be the Trade Balance data for September, which is scheduled for Thursday.

Meanwhile, the US Dollar trades with caution ahead of United States (US) midterm elections in the late North American trading session.

ING strategists write that “we don’t expect today’s US midterm results to cause structural shifts in FX, but the Dollar may face some short-term pressure should the Democrats secure both the House (widely expected) and the Senate (close call).”

Their baseline is that “markets fully price in a Republican loss of the House, but only partially a Democratic clean sweep,” and that “a blue sweep can put some pressure on the Dollar.”

ING warns that “fears of tougher regulation could weigh on AI stocks (we’ve recently seen how that can hit the greenback), while markets could price in greater risks of decision-making gridlock around issues such as government funding and the debt ceiling.” Even so, they stress that “we doubt that’s enough to trigger a structural directional shift in the Dollar. The greenback continues to respond predominantly to the Fed story, which shouldn’t face an immediate and direct impact from the midterm result. We expect a split Congress (R-S, D-H) to have a neutral or slightly positive USD impact.”

AUD/USD Technical Analysis

On the daily chart, AUD/USD trades at 0.6967, holding a bearish near-term bias as it remains below the 20-day Exponential Moving Average (EMA) at 0.7008. The Relative Strength Index (RSI) near 42 suggests only modest downside momentum rather than outright oversold conditions.

On the downside, initial support aligns with the former break area around 0.6904, before the structural trend-line base near 0.6834. On the topside, the 20-day EMA at 0.7008 is the first resistance to clear; a sustained move above this barrier would be needed to ease bearish pressure and open the way for a more constructive recovery.

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

United Overseas Bank (UOB) analysts Quek Ser Leang and Lee Sue Ann note that USD/JPY remains stuck in a tight range, with intraday expectations for the Dollar to trade between 157.45 and 158.20. Their 1–3 week outlook keeps USD/JPY confined between 157.00 and 158.60, while the 1–3 month view points to further weakness, though a retest of the January low at 152.08 is uncertain.

Dollar seen confined in tight ranges

"24-HOUR VIEW: We indicated yesterday that USD “could trade between 157.60 and 158.20.” USD then traded within a relatively narrow range of 157.43 and 157.99. The price action provides no fresh clues. Today, USD could trade between 157.45 and 158.20."

"1-3 WEEKS VIEW: We have been holding the same view since last Wednesday (28 Oct, spot at 157.85), when we highlighted that USD “has likely entered a range-trading phase, and for the time being, we expect it to trade between 157.00 and 158.60.” We continue to hold the same view."

(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 Tuesday, according to FXStreet data. Silver trades at $48.77 per troy ounce, down 3.39% from the $50.48 it cost on Monday.

Silver prices have decreased by 31.39% 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 79.99 on Tuesday, up from 78.16 on Monday.

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

• Rising crude oil prices support the Canadian Dollar, putting pressure on EUR/CAD.
• Geopolitical developments and ongoing US-Iran talks keep gains in global oil prices constrained.
• Traders await Eurozone October HICP data to gauge future European Central Bank monetary policy.

EUR/CAD depreciates after registering gains the previous day, trading around 1.5620 during European hours on Tuesday. The currency cross is facing challenges as the Canadian Dollar (CAD) receives strong support from rising crude oil prices. As the largest supplier of crude oil to the United States, Canada's economy and currency remain heavily tied to performance in the global energy markets.

However, potential gains in oil prices stay constrained by ongoing geopolitical developments. Crude prices could face further headwinds as Iran confirmed that indirect discussions with the United States aimed at resolving their eight-month conflict are still underway. These talks follow several days of negotiations between Iranian officials and Qatari mediators, which yielded revised proposals without achieving a breakthrough.

Traders are awaiting the preliminary Eurozone Harmonized Index of Consumer Prices (HICP) data for October, scheduled for release on Wednesday. This data is expected to significantly influence expectations around the European Central Bank’s (ECB) upcoming monetary policy decisions.

Market forecasts expect headline HICP growth to accelerate slightly to 3.9% year-on-year, up from 3.8% in September. Meanwhile, core HICP, which excludes volatile components such as food, energy, alcohol, and tobacco, is projected to hold steady at 2.5% year-on-year.

Euro risk premium persists as French spreads stay elevated

Analysts at ING highlight that French government bond spreads “didn’t benefit from lower oil prices yesterday,” suggesting that “levels above 150bp are the new normal now.” They argue that, against this backdrop, “it therefore remains hard for the Euro to shake out the lingering risk premium,” with “much more tangible progress” on the energy front still required “for oil to trade sustainably lower from here.”