Forex News
- GBP/USD recovers toward 1.3300 following the Fed's widely expected hold.
- Cook and Hammack dissent, favoring a 25-basis-point rate hike.
- Fed acknowledges resilient growth and employment but warns inflation remains elevated.
The Pound Sterling recovers some ground after the Federal Reserve held rates unchanged, as markets expected, in a 10–2 vote, with two dissenters voting for a rate increase. The GBP/USD trades near 1.3300.
GBP/USD recovers toward 1.3300 as the Fed pauses despite two dissenters favoring higher rates
The Fed acknowledged that economic activity is expanding, that domestic spending “has been resilient, that productivity growth is strong and that capital investment is robust. Regarding its mandate on employment, the Fed noted that “Job gains have kept pace with the workforce, and the unemployment rate has changed little.”
Regarding inflation, the central bank said it remains elevated but decided to skip rate hikes to gather more information and better assess an appropriate policy stance.
The two dissenters in the meeting were Governor Lisa Cook and Cleveland Fed President Beth Hammack, who supported a 25-basis-point rate hike.
GBP/USD reaction to Fed’s decision
Price action was muted, as the outcome was expected. GBP/USD hovers near 1.3305, with the next resistance seen at 1.3312, the high of the day (HOD), while the first support is the low of the day at 1.3272.
Pound Sterling Price Today
The table below shows the percentage change of British Pound (GBP) against listed major currencies today. British Pound was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.11% | 0.02% | 0.21% | -0.08% | -0.15% | 1.12% | 0.11% | |
| EUR | 0.11% | 0.13% | 0.32% | 0.04% | -0.05% | 1.23% | 0.21% | |
| GBP | -0.02% | -0.13% | 0.19% | -0.10% | -0.18% | 1.08% | 0.08% | |
| JPY | -0.21% | -0.32% | -0.19% | -0.31% | -0.36% | 0.92% | -0.11% | |
| CAD | 0.08% | -0.04% | 0.10% | 0.31% | -0.05% | 1.22% | 0.20% | |
| AUD | 0.15% | 0.05% | 0.18% | 0.36% | 0.05% | 1.27% | 0.26% | |
| NZD | -1.12% | -1.23% | -1.08% | -0.92% | -1.22% | -1.27% | -1.02% | |
| CHF | -0.11% | -0.21% | -0.08% | 0.11% | -0.20% | -0.26% | 1.02% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).
- WTI barely moves on the Fed hold and stays near $102.00, up from below $100.00.
- US Crude Oil stocks fell 1.9 million barrels, and gasoline gained 3.9 million.
- Iran is expected to answer a Qatari draft deal to end the war by Friday.
The Fed's hold matters less to Crude Oil than a Qatari draft deal to end the war, which Iran is expected to answer before the weekend. WTI barely moved on the statement and is trading near $102.00, below a session high short of $103.00 from before the decision.
Qatari mediators gave Iran the draft, and an official told Reuters on Wednesday that Tehran is considering it. The Wall Street Journal reported that Washington has told Gulf states to prepare for a possible renewed US campaign against Iran after the November 3 midterms. Either outcome changes how much Gulf Crude Oil reaches buyers, the supply WTI is priced against.
The Energy Information Administration (EIA) said US Crude Oil stocks, the barrels behind WTI, fell 1.9 million in the week to October 23 while gasoline stocks rose 3.9 million. The World Bank expects global supply to fall 5.2% in 2026, the most in over four decades outside 2020. On the same Wednesday, Abu Dhabi National Oil Company (ADNOC) told customers its pipeline around the Strait of Hormuz starts in early 2027.
On the calendar
Tehran's reply to the Qatari draft is expected before the weekend, with no day set. Thursday's 12:30 GMT advance estimate of third-quarter US Gross Domestic Product (GDP) is the week's main read on the US demand behind WTI.
Fed Chair Warsh's Wednesday press conference, at 18:30 GMT, is his first public comment since Fed officials went quiet on October 17. He called inflation uncomfortably high the day before. Whether he blames energy costs spreading into other prices bears on a December hike, which would fall on that same US demand.
On the charts
WTI started Wednesday just under $100.00 and has climbed for most of the session, with one of its larger steps in the bars after the EIA report. It gave back more than half of the climb since that report in a single five-minute bar before the decision. Intraday momentum has turned up from near oversold.
WTI spot 5-minute chart
Interest rates FAQs
Interest rates are charged by financial institutions on loans to borrowers and are paid as interest to savers and depositors. They are influenced by base lending rates, which are set by central banks in response to changes in the economy. Central banks normally have a mandate to ensure price stability, which in most cases means targeting a core inflation rate of around 2%. If inflation falls below target the central bank may cut base lending rates, with a view to stimulating lending and boosting the economy. If inflation rises substantially above 2% it normally results in the central bank raising base lending rates in an attempt to lower inflation.
Higher interest rates generally help strengthen a country’s currency as they make it a more attractive place for global investors to park their money.
Higher interest rates overall weigh on the price of Gold because they increase the opportunity cost of holding Gold instead of investing in an interest-bearing asset or placing cash in the bank. If interest rates are high that usually pushes up the price of the US Dollar (USD), and since Gold is priced in Dollars, this has the effect of lowering the price of Gold.
The Fed funds rate is the overnight rate at which US banks lend to each other. It is the oft-quoted headline rate set by the Federal Reserve at its FOMC meetings. It is set as a range, for example 4.75%-5.00%, though the upper limit (in that case 5.00%) is the quoted figure. Market expectations for future Fed funds rate are tracked by the CME FedWatch tool, which shapes how many financial markets behave in anticipation of future Federal Reserve monetary policy decisions.
- USD/CAD swings around 1.4050 on the BoC hike and barely moves on the Fed hold.
- The BoC's first rate rise since July 2023 takes it to 2.50% from 2.25%.
- Canada's August GDP is out Friday, against Statistics Canada's 0.2% estimate.
The Bank of Canada (BoC) raised its rate to 2.50% on Wednesday and the Fed held at 3.75%-4.00%, so the Fed's lead shrank by a quarter-point in one session. USD/CAD went through 1.4050 in both directions in the five-minute bar on the BoC release, and its dip on the Fed's statement stopped above the low it set before either decision. It's trading below 1.4050.
It's the BoC's first increase since July 2023, made to stop high energy prices spreading into other prices, and it leaves the Fed's lead at 1.25-1.50 points. The Monetary Policy Report (MPR) raised the 2027 inflation forecast to 3.1% from 2.0% and doesn't have inflation back near 2% until mid-2028. BoC Senior Deputy Governor Rogers said policymakers broadly agreed that inflation risks had risen.
BoC Governor Macklem said the rate is still low enough not to restrain growth, and the same report raised the 2026 growth forecast to 1.0% from 0.7%. The BoC said it may need to raise again but will proceed carefully. TD Economics expects one more, to 2.75%, which would cut the Fed's current lead to 1.00-1.25 points.
On the calendar
Statistics Canada publishes August Gross Domestic Product (GDP) at 12:30 GMT on Friday, against its own advance estimate of a 0.2% rise. US third-quarter growth and the Personal Consumption Expenditures Price Index (PCE) for September land a day earlier, also at 12:30 GMT. Both feed the next decisions, which the Fed and the BoC both announce on December 9.
Fed Chair Warsh faces reporters from 18:30 GMT on Wednesday, after the BoC has already moved. He told the International Monetary Fund (IMF) meetings on October 16 that other central banks share his worry about high inflation. What he says about December bears on whether the Fed's lead over the BoC widens again on December 9.
On the charts
The pair has traded between just above 1.4000 and short of 1.4100 on Wednesday, with the high set before the slide that preceded the BoC release. Since that release it has held the lower half of the range, and intraday momentum climbed toward overbought into the Fed decision.
USD/CAD 5-minute chart
Interest rates FAQs
Interest rates are charged by financial institutions on loans to borrowers and are paid as interest to savers and depositors. They are influenced by base lending rates, which are set by central banks in response to changes in the economy. Central banks normally have a mandate to ensure price stability, which in most cases means targeting a core inflation rate of around 2%. If inflation falls below target the central bank may cut base lending rates, with a view to stimulating lending and boosting the economy. If inflation rises substantially above 2% it normally results in the central bank raising base lending rates in an attempt to lower inflation.
Higher interest rates generally help strengthen a country’s currency as they make it a more attractive place for global investors to park their money.
Higher interest rates overall weigh on the price of Gold because they increase the opportunity cost of holding Gold instead of investing in an interest-bearing asset or placing cash in the bank. If interest rates are high that usually pushes up the price of the US Dollar (USD), and since Gold is priced in Dollars, this has the effect of lowering the price of Gold.
The Fed funds rate is the overnight rate at which US banks lend to each other. It is the oft-quoted headline rate set by the Federal Reserve at its FOMC meetings. It is set as a range, for example 4.75%-5.00%, though the upper limit (in that case 5.00%) is the quoted figure. Market expectations for future Fed funds rate are tracked by the CME FedWatch tool, which shapes how many financial markets behave in anticipation of future Federal Reserve monetary policy decisions.
- EUR/USD edges up on the Fed's hold but stays below its high just above 1.1150.
- The Fed's rate stays 1.25-1.50 points above the ECB's 2.50% deposit rate.
- The ECB decides Thursday, with a hold expected there as well before December.
After the Fed's hold, Thursday's decision from the European Central Bank (ECB) is the week's last chance to change EUR/USD's rate gap, and a hold is expected there too. The pair rose on the statement and won back part of a slide from the session high just above 1.1150. It's trading below that high, in the upper half of Wednesday's range.
The ECB decided on September 10 to raise its deposit rate to 2.50%, its second increase this year. The rise took effect on September 16, the day the Fed went to 3.75%-4.00%. Neither has moved since, so the Fed's rate is still 1.25-1.50 points above the ECB's, the gap EUR/USD has traded on since mid-September.
Most economists expect the ECB to hold on Thursday and raise in December, the month traders had given a Fed hike about an 80% chance before the decision. If both raise by a quarter-point, the gap EUR/USD trades on ends the year exactly where it has been since September 16.
On the calendar
September's Personal Consumption Expenditures Price Index (PCE) and US third-quarter Gross Domestic Product (GDP) are due at 12:30 GMT on Thursday. ECB President Lagarde's press conference follows the ECB's 13:15 GMT decision at 13:45 GMT. The euro area's first estimate of third-quarter GDP comes at 10:00 GMT on Friday, so both sides of EUR/USD's gap report growth before the weekend.
Fed Chair Warsh takes questions on Wednesday at 18:30 GMT, the last word on US rates before the ECB decides. He said on October 16 that hotter inflation hadn't changed his view of the economy, and anything he adds about December reaches EUR/USD through the US side of the gap.
On the charts
EUR/USD has climbed from a session low just above 1.1100, reached after a slide from where it started the day, and gave back almost half of that climb in the bars before the statement. The decision bar landed on intraday momentum that was already oversold.
EUR/USD 5-minute chart
Fed FAQs
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.
- DXY dips to just above 101.90 on the Fed's hold and recovers to near 102.00.
- Sixteen of 18 Fed officials projected another hike this year in September.
- Fed Chair Warsh takes questions Wednesday, and US GDP and PCE come Thursday.
The Fed held at 3.75%-4.00% on Wednesday with two votes for a hike, which leaves December as the last meeting this year for the increase most officials projected. The Dollar Index dipped to just above 101.90 in the statement's five-minute bar and recovered inside it, short of the session low near 101.85 from before the decision. It's trading just under 102.00.
Fed Governor Cook and Cleveland Fed President Hammack voted to raise by a quarter-point, the kind of dissent MUFG had said would firm up bets on a December hike. The statement says inflation remains elevated and gives no timing for the next move, only that more information will help set the policy stance. The Dollar Index came out of it inside the range it traded before the decision.
In September, 16 of the Fed's 18 officials projected at least one more hike this year, and four pencilled in two. With October gone, December is the only meeting left for either, and two hikes there would take a half-point move, last made by the Fed in December 2022. Traders had a December hike near 80% priced before the decision, a bet on the 16 rather than the four.
On the calendar
Third-quarter Gross Domestic Product (GDP) and the September Personal Consumption Expenditures Price Index (PCE) come out on Thursday at 12:30 GMT. They're the first US figures since the hold to bear on December. The European Central Bank (ECB) decides at 13:15 GMT the same day and the Bank of Japan (BoJ) on Friday, for the Euro and Yen that make up about 71% of the index.
Fed Chair Warsh's press conference starts at 18:30 GMT on Wednesday. In Bangkok on October 16 he said he doesn't pre-judge meetings, and with two of his colleagues already voting to hike, his answers on December go straight to the pricing behind the Dollar Index.
On the charts
The index set its session high just above 102.15 in the first half of Wednesday, then fell to the low and won back about half of that drop before the statement. The decision bar's dip and recovery left it below where it started the day. Intraday momentum reached overbought on the climb into the decision.
DXY 5-minute chart
Fed FAQs
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.
- WTI rebounds above $100, reversing two-day losses as Middle East tensions fuel supply concerns.
- A claimed Saudi refinery strike and reports of possible US action against Iran keep geopolitical risks elevated.
- Iran signals openness to diplomacy, while traders await Sunday’s OPEC+ meeting.
West Texas Intermediate (WTI) rebounds on Wednesday, reversing losses recorded over the previous two days as persistent Middle East tensions keep a geopolitical risk premium embedded in Oil prices. At the time of writing, the US crude benchmark trades around $102.25 a barrel, up more than 2.50% on the day.
The advance comes after Yemen’s Iran-aligned Houthis said they had struck Saudi Arabia’s largest Oil refinery with a missile on Tuesday. Saudi authorities had not immediately confirmed the claimed attack on the 550,000-barrel-per-day facility.
Adding to those fears, the Wall Street Journal reported that Washington had warned Gulf states to prepare for a possible short, intense military campaign against Iran after the US midterm elections on November 3. US President Donald Trump said on Wednesday that “anything is possible” when reporters asked about a potential attack on Iran after the elections.
Diplomatic efforts nevertheless continue. Iranian Foreign Minister Abbas Araghchi said in a post on X that Iran “continues to give diplomacy a chance to succeed” and remains in close contact with intermediaries over ideas to implement its seven-day plan in less than a week. The proposal calls for reopening the Strait of Hormuz and restarting talks if the US agrees to Iran’s demands.
Earlier on Wednesday, Reuters reported that Qatari mediators had presented Iran with a new draft agreement in Tehran on Sunday. Iran was reviewing the proposal and was expected to respond by the end of the week. However, an Iranian official dismissed the proposal as unacceptable.
The World Bank’s latest outlook also highlighted the strain on global supplies. It forecasts a 5.2% decline in Oil supply in 2026, the largest drop in more than four decades outside the 2020 recession, and a 32% rise in energy prices to a four-year high. The bank warned that renewed Middle East escalation or continued damage to Russian Oil infrastructure could push energy prices higher.
On the data front, US crude Oil inventories fell by 1.462 million barrels, according to the Energy Information Administration (EIA), exceeding expectations for a 300,000-barrel draw. This followed a 3.061 million-barrel decline the previous week.
Attention now turns to Sunday’s OPEC+ meeting, where producers are expected to keep December output targets unchanged, according to sources cited by Reuters.
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
At its October meeting, the Federal Reserve (Fed) kept its Fed Funds Target Range (FFTR) unchanged at 3.75%–4.00%, right in line with what markets were expecting.
Highlights from the FOMC statement
The Fed leaves key overnight interest rates unchanged in the 3.75%-4.00% range, saying the accumulation of more information will help determine the appropriate policy stance.
Economic activity is expanding at a strong pace.
Inflation remains elevated.
Job gains have kept pace with the workforce, while the unemployment rate has changed little.
Domestic spending has been resilient despite elevated uncertainty.
Productivity growth is strong, and capital investment is robust.
The vote in favour of the policy was 10-2, with Governor Lisa Cook and Cleveland Fed President Beth Hammack dissenting in favour of a 25-basis-point hike.
Market reaction to Fed policy announcements
The US Dollar (USD) remains practically muted following the Fed’s interest rate decision on Wednesday, with the US Dollar Index (DXY) navigating the low 102.00s amid marginal losses.
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.15% | -0.00% | 0.17% | -0.11% | -0.18% | 1.06% | 0.05% | |
| EUR | 0.15% | 0.14% | 0.32% | 0.04% | -0.03% | 1.22% | 0.20% | |
| GBP | 0.00% | -0.14% | 0.17% | -0.12% | -0.18% | 1.07% | 0.06% | |
| JPY | -0.17% | -0.32% | -0.17% | -0.28% | -0.35% | 0.90% | -0.13% | |
| CAD | 0.11% | -0.04% | 0.12% | 0.28% | -0.07% | 1.18% | 0.16% | |
| AUD | 0.18% | 0.03% | 0.18% | 0.35% | 0.07% | 1.26% | 0.24% | |
| NZD | -1.06% | -1.22% | -1.07% | -0.90% | -1.18% | -1.26% | -1.02% | |
| CHF | -0.05% | -0.20% | -0.06% | 0.13% | -0.16% | -0.24% | 1.02% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
This section below was published at 14:00 GMT as a preview of the Federal Reserve's policy announcements.
- The US Federal Reserve is widely expected to keep interest rates unchanged after the October meeting.
- Markets see a strong probability of a rate hike in December.
- Fed Chair Warsh’s remarks at the press conference could lift US Dollar volatility.
The United States (US) Federal Reserve (Fed) announces its Interest Rate Decision on Wednesday, following another pivotal meeting that could provide key insights into the bank’s monetary policy outlook heading into the end of the year.
Markets widely expect the Federal Open Market Committee (FOMC) to leave the policy rate unchanged in the range of 3.75%-4% following the 25 basis points (bps) hike announced in September.
This decision is almost fully priced in, with the CME FedWatch Tool pointing to about only a 9% chance of an increase in borrowing costs. Hence, Fed Chair Kevin Warsh’s comments in the post-meeting press conference could offer important clues on the rate outlook and drive the US Dollar’s (USD) valuation.
While speaking at an International Monetary Fund (IMF) event earlier in the month, Warsh reiterated that they remain focused on delivering price stability but added that he doesn’t believe in “pre-judging meetings.” This particular comment caused investors to effectively dismiss the possibility of a rate hike in October even though the US Consumer Price Index (CPI) for September came in hotter than expected, with the headline annual inflation rate rising to 3.7% from 3.4%.
Economists at Deutsche Bank note that with a rate move largely off the table at the upcoming meeting, market attention will pivot to the communication tone, noting that “the interest will therefore be in Chair Warsh’s press conference and how the Fed balances still-elevated inflation and solid growth against the recent tightening in financial conditions.” They suggest the policy message will be judged on how convincingly the Fed acknowledges persistent price pressures and robust activity while also addressing the impact of more restrictive market conditions on the broader outlook.
When will the Fed announce its interest rate decision and how could it affect EUR/USD?
The Fed is scheduled to announce its Interest Rate Decision and publish the Monetary Policy Statement on Wednesday at 18:00 GMT. This will be followed by Fed Chair Kevin Warsh’s press conference starting at 18:30 GMT.
In September, the revised Summary of Economic Projections (SEP) showed that 12 of 18 officials penciled in one more 25-basis-point (bps) rate hike this year, while four members saw two hikes and two projected no more hikes.
In June, the dot plot, the component of the SEP that shows policymakers’ interest rate forecasts, highlighted that policymakers’ projections implied only a 25 bps increase in 2026, followed by a 25 bps rate cut in 2027 and another 25 bps cut in 2028.
According to the CME FedWatch Tool, there is only about a 17% chance the policy rate will remain unchanged at the end of the year. This market positioning suggests there is room for renewed USD strength in case Warsh goes against his prior comments at the IMF event and hints at an interest rate increase in December, citing persistently high inflation. In this scenario, EUR/USD could come under bearish pressure in the immediate reaction. It is worth noting, however, that the European Central Bank (ECB) will also announce its policy decision on Thursday. Thus, a potential decline in the currency pair on a hawkish Fed tone could pause heading into the ECB event.
Analysts at MUFG/BTMU highlight that “the final FOMC meeting of the year is not until 9th December,” and note that “the signs of tightening financial conditions continue to build,” leaving “certainly a chance that Fed rate hike expectations for December could ease.” In their view, “the willingness of Warsh to signal the Fed remains on the path highlighted by the dots will be important.” MUFG/BTMU add that “in circumstances of tightening financial conditions and bond market volatility in Europe we would assume the Dollar will remain underpinned, and the risks remain skewed to the upside.”
Conversely, the Greenback could weaken against its major currency rivals if Fed Chair Warsh downplays the inflation developments and refrains from signalling a rate hike in December. In case Warsh repeats that he won’t pre-judge the outcome of the last meeting of the year, investors could refrain from fully pricing in a rate hike and help EUR/USD edge higher. Still, market participants are unlikely to dismiss this probability unless they see a significant improvement in inflation data or a horrible employment report.
Commerzbank’s Thu Lan Nguyen points out that the recent resilience in EUR/USD masks a more troubling underlying dynamic for the single currency. She notes that “short-term inflation expectations have risen more strongly in the Euro Area than in the US,” yet “higher inflation expectations are currently not being offset by a corresponding shift in relative interest-rate expectations.” According to Commerzbank, this disconnect “is, in principle, a negative signal for the Euro,” as it suggests that markets are not pricing in sufficient policy tightening to counter the pickup in Euro Area inflation expectations, potentially leaving the currency vulnerable if sentiment turns.
Eren Sengezer, FXStreet European Session Lead Analyst, provides a short-term technical outlook for EUR/USD:
“The near-term technical outlook for EUR/USD highlights a bearish bias as the pair remains in the lower half of the Bollinger Band on the daily chart and the Relative Strength Index stays well below 40. On the downside, 1.1130-1.1100 (lower limit of the Bollinger Band, static level) aligns as the immediate support level ahead of 1.1000 (psychological level, static level). If this latter support fails, a deeper pullback toward 1.0750 (static level) could be witnessed. If the daily RSI falls into the oversold territory below 30 and EUR/USD stays below the lower limit of the Bollinger Band, investors could wait for a technical correction before committing to an extended decline.”
“Looking north, an interim resistance area could be spotted at 1.1260 - 1.1300 (static level, upper limit of the Bollinger Band). In case the pair manages to stabilize above this region, the 50-day and the 100-day Simple Moving Averages in the 1.1420-1.1440 area could become the next difficult hurdle to clear.”
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
- XAG/USD slides toward $53.60 after failing to reclaim $55.00 resistance.
- RSI approaches oversold territory at 31.58, reinforcing the bearish outlook.
- Break below $53.50 exposes $53.00, $52.67 and potentially $50.00.
Silver (XAG/USD) tumbles over 1.45% on Wednesday, diving to $53.60 per troy ounce and remaining within familiar levels as investors await the Federal Reserve’s (Fed) decision. Bearish momentum seems to have paused, though the market structure remains tilted to the downside.
XAG/USD Price Forecast: Technical outlook
During the week, Silver reached a weekly high of $54.55, but buyers remain unable to crack the $55.00 area, which would clear the path for a recovery to the October 22 high of $58.02, a 6% gain for XAG/USD.
The Relative Strength Index (RSI) is bearish, with the index at 31.58 and closing into oversold territory. Hence, the path of least resistance is tilted downward.
The first support for XAG/USD is $53.50; once cleared, it paves the way for a fall to $53.00. Below lies the October 27 year-to-date (YTD) low of $52.67, before sellers set their sights on the psychological $50.00.
XAG/USD Price Chart – Daily
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
- Gold falls 0.50% to $4,039 as US Treasury yields reach 5.040%.
- WTI surges near $103 amid escalating Middle East supply risks.
- December Fed hike odds stand at 85% ahead of FOMC decision.
Gold (XAU/USD) price retreats 0.50% on Wednesday as the US-Iran conflict seems far from ending while investors await the Federal Reserve’s (Fed) monetary policy decision at 18:00 GMT. The XAU/USD pair trades at $4,039 at the time of writing.
XAU/USD retreats as rising Treasury yields and renewed inflation risks weigh ahead of Warsh's press conference
Traders remain cautious ahead of the Fed. US equity markets are subdued, US Treasury yields edge higher, and Oil prices remain underpinned by the Middle East conflict.
Bullion remains on the defensive as the US 10-year Treasury yield rises three basis points to 5.040%. Meanwhile, the Greenback cools off ahead of the FOMC’s decision, with the US Dollar Index (DXY), which measures the performance of the American currency against six other currencies, down 0.09% to 102.27.
The focus is on the Fed’s decision. Money markets had almost fully priced in that the Fed funds rate will be unchanged at 3.75%-4%, though questions will arise at Fed Chair Kevin Warsh press conference about why not raise rates today, when West Texas Intermediate (WTI), the US Oil benchmark, is close to $103 per barrel, up more than 3%, and gasoline prices are $1.20 higher than a year ago at $4.24, according to AAA Fuel Prices.
Also, in the last Summary of Economic Projections (SEP), the majority of the board penciled in at least another interest rate increase this year. Along with this, traders would look for hints from Warsh about the future of interest rates, even though he doesn’t like to forward-guide the markets.
Tensions between the Houthis and Saudi Arabia remain high, following an attack by the Iran-backed group in Yemen on a Saudi refinery, which pushed energy prices higher on concerns of supply disruptions.
After the Fed’s meeting, Gold traders will also eye the release of the Core Personal Consumption Expenditures (PCE) Price Index, the Fed’s preferred inflation measure, on Thursday. A hot reading, along with strong Gross Domestic Product (GDP) figures, will cement the case for another rate hike at the December meeting.
The swaps market had priced in 21 basis points of tightening, or an 85% chance that the Fed will hike in the December meeting, according to Prime Terminal.
Meanwhile, higher interest rates are negative for Gold prices, despite its appeal as an inflation hedge.
Of note, analysts polled by Reuters revised their forecasts for Gold downward toward the end of 2026.
XAU/USD technical analysis: Gold consolidates within $4,000-$4,100
Even though Gold formed a ‘bullish harami’ candle pattern, price action on Wednesday puts in doubt the validity of the pattern. If the candle closes the day near current prices, it could open the door to some consolidation.
Momentum has shifted negatively. The Relative Strength Index (RSI) is bearish, pointing downwards, aligned with price action. Given the mixed signals, price action will remain at around familiar levels until the Fed’s decision.
On the upside, the next area of interest is a resistance trendline drawn from the September highs near $4,100. A breach of this level will expose $4,200. The next key resistance levels are the 100-day Simple Moving Average (SMA) at $4,218 and the 50-day SMA at $4,278.
If XAU/USD falls below $4,000, it could test last Friday’s low of $3,975. The next key support levels are the July 17 low of $3,959 and the year-to-date (YTD) low of $3,941.
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
- The New Zealand Dollar falls sharply on Wednesday, losing nearly 1% following an unexpected monetary policy decision.
- The Reserve Bank of New Zealand kept its benchmark interest rate unchanged at 2.75%, against market expectations of a 25-basis-point hike.
- The US Dollar extends its gains ahead of the Federal Reserve's monetary policy announcement.
NZD/USD falls sharply on Wednesday, losing 0.98% on the day to trade around 0.5625 at the time of writing. The New Zealand Dollar (NZD) faces significant selling pressure after the Reserve Bank of New Zealand (RBNZ) unexpectedly left its benchmark interest rate unchanged.
The RBNZ announced on Wednesday that it is keeping its Official Cash Rate (OCR) unchanged at 2.75%, surprising investors who had widely anticipated a 25-basis-point (bps) increase to 3.00%. The decision triggered a sharp decline in the Kiwi, as markets had already priced in further monetary tightening in October.
However, despite holding rates steady, the New Zealand central bank maintained a hawkish stance. In its monetary policy statement, the RBNZ indicated that further interest rate increases are likely to be necessary, although their timing and magnitude will depend on the economic outlook.
Investors now turn their attention to the Federal Reserve's (Fed) monetary policy announcement, scheduled for later on Wednesday. Markets widely expect the central bank to leave interest rates unchanged within the 3.75%-4.00% range, following the 25-basis-point increase delivered in September.
According to the CME FedWatch tool, the chance of another rate hike at this meeting stands at just 9%. Investors are therefore focusing primarily on remarks from Fed Chair Kevin Warsh, which could provide fresh clues about the trajectory of US interest rates through the end of the year.
Against this backdrop, a hawkish message from the Fed could provide additional support to the US Dollar (USD) and extend the downward pressure on NZD/USD, while expectations of further monetary tightening in New Zealand could help limit the Kiwi's losses.
NZD/USD technical analysis
In the four-hour chart, NZD/USD trades at 0.5622, holding a bearish near-term bias as it remains capped beneath the 100-period simple moving average (SMA) at 0.5643 and the 200-period SMA at 0.5666. The pair is also trading just under a nearby horizontal cap at 0.5630, reinforcing overhead supply, while the Relative Strength Index (14) has recovered from oversold territory toward the low-30s, hinting that downside momentum is easing but not yet reversing.
On the topside, immediate resistance aligns at 0.5630, followed by the 100-period SMA at 0.5643 and then the 200-period SMA at 0.5666, with a stronger barrier emerging at 0.5710 if buyers extend a corrective bounce. On the downside, the next notable support is the prior horizontal floor at 0.5564, where a break would reopen the broader decline and expose further weakness in the kiwi.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
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