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Reserve Bank of Australia (RBA) Governor Michele Bullock is addressing the press conference, explaining the reason behind raising the key interest rate by 25 basis points (bps) to 4.85% from 4.60% in the November policy meeting.

Key quotes from the RBA press conference  

Rate increase was necessary to reduce inflation. 

Growth must stay muted, unemployment to climb more. 

Some hardship now will avoid more pain later. 

Voters favoring pause perceived greater downside risks. 

Those favoring a hold wanted to wait longer for data. 

Inflation is largely set for the next year. 

Not an ideal situation to be in. 

Probably best to pause and assess incoming data. 

This section below was published at 03:30 GMT to cover the Reserve Bank of Australia's monetary policy announcements and the initial market reaction.

The Reserve Bank of Australia (RBA) announced on Tuesday that it raised the Official Cash Rate (OCR) by 25 basis points (bps) to 4.85% from 4.60% after concluding its November monetary policy meeting. The decision aligned with the market expectations.

This is the the RBA fifth interest rate hike of 2026, its highest level in 18 years. 

Summary of the RBA Monetary Policy Statement

Today's decision reached by majority.

With revised inflation outlook and ongoing upside risks, board decides further tightening of financial conditions is necessary to support inflation return to target. 

Cash rate target hikes since start of year have tightened financial conditions. 

AI-related spending fuels sharp rise in tech goods prices, many goods and services see persistent inflation. 

Inflation now expected to stay above 3% for next year with rising risk of entrenched higher inflation expectations. 

Capacity constraints seem slightly tighter than earlier thought, with signs that increased fuel costs are being reflected in prices of other goods and services. 

Forecasts show output growth slowing further over the coming year, easing capacity pressures and aiding inflation return to target. 

Unemployment rate forecast to increase more than expected in August projections. 

Growth in Australia's key trading partners has exceeded expectations as AI investment boost offsets Middle East conflict impact. 

RBA’s Statement on Monetary Policy

RBA forecasts GDP growth of 1.6% in Q4 2026, 1.6% in Q2 2027, 1.3% in Q4 2027, 1.5% in Q4 2028.

RBA forecasts unemployment at 4.7% in Q4 2026, 4.8% in Q2 2027, 4.9% in Q4 2027, 5.1% in Q4 2028.

Cash rate expected above average 4.7% in Q4 2026, 4.9% in Q2 2027, 4.8% in Q4 2027, 4.8% in Q4 2028.

RBA forecasts CPI at 4.5% in Q4 2026, 3.7% in Q2 2027, 2.7% in Q4 2027, 2.4% in Q4 2028.

RBA lifts near-term GDP forecasts on data centre investments, lowers long-term outlook.

Forecasts trimmed mean CPI at 3.6% in Q4 2026, 3.5% in Q2 2027, 2.9% in Q4 2027, 2.6% in Q4 2028.

AUD/USD reaction to the RBA interest rate decision

The Australian Dollar attracts some sellers in an immediate reaction to the RBA’s decision. At the time of writing, the AUD/USD pair is down 0.20% on the day at 0.6980.

This section below was published on October 2 at 23:30 GMT as a preview of the Reserve Bank of Australia's monetary policy announcements.

• The Reserve Bank of Australia is set to raise the interest rate to 4.85% in November.
• RBA Governor Michele Bullock noted upside risks to inflation have materialized.
• The Australian Dollar is weak ahead of the announcement despite a better market mood.

The Reserve Bank of Australia (RBA) will announce its monetary policy decision on Tuesday and is widely anticipated to raise the Official Cash Rate (OCR) by 25 basis points (bps) to 4.85% from 4.6%. If the RBA delivers as expected, it will be the fifth interest rate hike of 2026, and the OCR will hit an 18-year high.

The decision will be announced at 03:30 GMT, accompanied by the Monetary Policy Statement, and followed by RBA Governor Michele Bullock’s press conference at 04:30 GMT.

Ahead of the announcement, the Australian Dollar (AUD) struggles to retain the 0.7000 mark against the US Dollar (USD).

Focus stays on inflation

Continued inflationary pressures are behind rate hikes in 2026, and Australia is no exception. In fact, the RBA hiked the OCR for the first time in February, before the Middle East war hit global energy prices. As previously noted, the central bank already delivered four hikes, yet, according to the latest available data, Australia’s annual inflation rate stood at 3.9% in Q3, well above the central bank’s 2–3% goal. Additionally, the RBA’s preferred gauge, the core Trimmed Mean Consumer Price Index (CPI), accelerated to 3.7% year-on-year, up from 3.6% in Q2.

RBA Governor Bullock recently appeared before Parliament and noted that “Some of the international and domestic upside risks to inflation have materialized or are materializing.”

“It’s important for the economy that inflation does not diverge from the target for too long,” Bullock added, “since that risks it becoming embedded in inflation expectations, which feeds through to price and wage setting decisions.”

Hot inflation, alongside Bullock’s words, pretty much calls for a rate hike at the Board's meeting. Yet, with a rate hike already priced in, the focus will shift to the press conference led by Governor Bullock, and any hint she gives about what’s next in monetary policy. Bullock is likely to retain her hawkish tone and leave the door open for additional hikes, pushing AUD higher.

How will the Reserve Bank of Australia’s decision impact AUD/USD?

If the RBA delivers the anticipated 25 bps rate hike, the Aussie is likely to find near-term support, although gains will depend on how hawkish the accompanying statement and Governor Bullock’s words are. A larger-than-anticipated hike could trigger a near-term AUD rally, supported by a risk-on mood ahead of the announcement and a weaker Greenback. An on-hold decision is unlikely, but such a move would see the AUD plummeting.

Valeria Bednarik, FXStreet Chief Analyst, notes: “From a technical point of view, the AUD/USD pair is at risk of falling. On the daily chart, the pair found resistance at the start of the week around a flat 100-day Simple Moving Average (SMA) at 0.7030, the immediate resistance level. Last week’s peak at 0.7067 comes next, with the 200-day SMA a handful of pips below the level and also attracting sellers. The same chart shows technical indicators turning south, although holding above their midlines, reflecting the ongoing weakness but falling short of anticipating a steeper decline ahead.”

Bednarik adds: “A slide below 0.6990 will likely trigger additional slides as buyers will be more keen to give up. The slide, then, could extend towards the 0.6640 region. On the contrary, steady gains beyond 0.7070 could end with the pair re-conquering the 0.7100 mark.”

Gold prices fell in India on Tuesday, according to data compiled by FXStreet.

The price for Gold stood at 11,956.81 Indian Rupees (INR) per gram, down compared with the INR 12,019.10 it cost on Monday.

The price for Gold decreased to INR 139,458.00 per tola from INR 140,188.40 per tola a day earlier.

FXStreet calculates Gold prices in India by adapting international prices (USD/INR) to the local currency and measurement units. Prices are updated daily based on the market rates taken at the time of publication. Prices are just for reference and local rates could diverge slightly.

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

• Gold drifts lower as Fed hike bets and rebounding US bond yields lend some support to the USD.
• Hope for Iran diplomacy caps the USD as traders remain on the sidelines ahead of the US elections.
• Tuesday’s release of the US JOLTS Job Openings could also provide some impetus to the bullion.

Gold (XAU/USD) attracts fresh sellers during the Asian session on Tuesday, sliding back below $3,950 and eroding a part of the previous day's recovery gains from a one-year trough set last week amid a modest US Dollar (USD) uptick. Data released on Monday showed that business activity in the US manufacturing sector expanded for the 10th straight month in October. In fact, the Institute for Supply Management's (ISM) Manufacturing PMI surpassed consensus estimates and rose to 55.5 in October from 54.5 in the previous month. This, along with hawkish US Federal Reserve (Fed) expectations and recovering US bond yields, assists the USD in building on the overnight bounce from the vicinity of the late October swing low.

The upside for the USD, however, remains capped as traders are demonstrating a widespread hesitancy ahead of US midterm elections that will decide control of Congress. Prediction markets strongly favor Democrats winning control of both the House of Representatives and the Senate. Meanwhile, a Republican sweep would be a larger market surprise, which could lift US Treasury yields and the US Dollar (USD). Moreover, hopes for a potential diplomatic resolution to end the US-Iran war might further hold back USD bulls from placing aggressive bets. In fact, US President Donald Trump said on Monday that Iran wants to make a deal to end the war and that such an agreement could happen. Moreover, Iranian Foreign Minister Abbas Araqchi said that consultations through mediators were very intensive.

However, several days of negotiations between Iranian officials and Qatari mediators failed to make a breakthrough despite Tehran's revised proposals to reopen the strategic Strait of Hormuz for two days, provided that the US fulfills a set of conditions. Moreover, a fresh escalation of tensions between Russia and Ukraine keeps the geopolitical risk premium firmly in play. This should act as a tailwind for the USD, suggesting that the path of least resistance for gold remains to the downside. On the economic data front, traders will take cues from the release of US JOLTS Job Openings data for some impetus later during the North American session. The focus, however, will remain on the key US monthly employment details, popularly known as the Nonfarm Payrolls (NFP) report, due on Friday.

XAU/USD 4-hour chart

Technical Analysis

The XAU/USD pair maintains a bearish near-term bias beneath the 100-period Exponential Moving Average (EMA) on the 4-hour chart. Adding to this, the overnight failure near the late October swing low and the subsequent slide validates the negative outlook despite a mildly positive Moving Average Convergence Divergence (MACD). Meanwhile, the Relative Strength Index (RSI) near 40.0 hints at only tentative recovery from recently oversold conditions.

Bearish traders, however, would now look to Friday's swing low, around the $3,870 area for potential demand zones, which, if broken, should pave the way for an extension of the well-established downward trajectory. On the topside, immediate resistance is defined by the 100-period EMA at $4,053. A sustained break above this level would be needed to ease downside pressure and open the way for a more constructive recovery phase.

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

• The Australian Dollar comes under pressure against its peers after RBA’s policy decision.
• As expected, the RBA has hiked its OCR by 25 bps to 4.85%.
• The RBA has signaled that inflation could remain above 3% in 2027.

The Australian Dollar (AUD) faces selling pressure against its peers after the Reserve Bank of Australia’s (RBA) interest rate decision. Against the US Dollar (USD), the Australian currency is down 0.25% to near 0.6975.

The RBA is hiked its Official Cash Rate (OCR) by 25 basis points (bps) to 4.85%. This is the fifth interest rate hike of 25 bps by the RBA this year.

The Australian central bank was already anticipated to tighten monetary conditions as domestic inflationary pressures have been consistently accelerating. Last week, the Australian Bureau of Statistics reported that the Consumer Price Index (CPI) growth in the third quarter this year was in line with estimates at 1.3%, faster than the previous reading of 0.6%.

The likelihood of the RBA remaining on the monetary tightening path has increased even after raising them five times this year, as it has signaled that risks to inflation remain on the upside. In the monetary policy statement, the RBA has stated, “With revised inflation outlook and ongoing upside risks, board decides further tightening of financial conditions is necessary to support inflation return to target.” The central bank has added, “Inflation now expected to stay above 3% for next year with rising risk of entrenched higher inflation expectations.”

On the US Dollar front, investors await United States (US) Midterm elections and key economic release.

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

AUD/USD Technical Analysis

In the daily chart, AUD/USD trades at 0.6982, maintaining a bearish near-term bias as spot holds beneath the 20-day Exponential Moving Average (EMA) at 0.7009. The pair’s inability to reclaim this short-term trend gauge keeps the upside capped, while the Relative Strength Index (RSI) at 44 remains below neutral, hinting at subdued bullish momentum rather than an outright oversold condition.

On the topside, immediate resistance is defined by the 20-day EMA at 0.7009, and a daily close above this level would be needed to ease the current downside pressure. In the absence of clearly defined nearby structural supports from the provided dataset, the prevailing focus remains on how price reacts to this overhead average, with failure to overcome it likely to prolong the broader consolidative-to-negative tone.

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

• AUD/JPY weakens to near 110.20 in Tuesday’s Asian session.
• RBA raises interest rate by 25 bps to 4.85% at its November policy meeting on Tuesday.
• Traders remain on high alert for currency intervention from Japanese authorities.

The AUD/JPY cross edges lower to around 110.20 during the Asian trading hours on Tuesday. The Australian Dollar (AUD) attracts some sellers against the Japanese Yen (JPY) following the Reserve Bank of Australia (RBA) interest rate decision.

As widely expected, the RBA decided to raise its Official Cash Rate (OCR) by 25 basis points (bps) to 4.85% from 4.60% after concluding its November monetary policy meeting. This is the RBA's fifth interest rate hike of 2026, its highest level in 18 years.

Six members of the Monetary Policy Board voted for the rate hike, while three preferred to keep the OCR unchanged at 4.60%. According to the statement, the board said inflation remains elevated and broadly based and that there is an increasing risk that higher inflation expectations will become embedded.

Traders will take more cues from the RBA Governor Michele Bullock’s press conference at 04:30 GMT. Any hawkish comments from Bullock could lift the Aussie against the JPY in the near term.

An intervention warning from Japanese authorities might cap the upside for the cross. Japan’s Finance Minister Satsuki Katayama said on Monday that it’s crucial to maintain stable foreign exchange markets and the government needs to avoid chaotic fluctuations.

Last week, Katayama also said that the government stood ready to take decisive action in the currency market, indicating that ‌Tokyo has not lowered its guard against persistent weakness in the JPY.

The Bank of Japan (BoJ) left the short-term interest rate unchanged at 1.25% at its latest policy meeting last week. The decision aligned with market expectations.

RBA seen hiking again as inflation surprise boosts Aussie yield appeal

Strategists at Brown Brothers Harriman highlight that the upcoming "RBA policy decision and Statement on Monetary Policy" on Tuesday is expected to deliver a "second straight 25bps hike to 4.85% because inflation is materially worse than the bank assessed in August." They note that "cash rate futures imply 83% probability of a hike," and add that "hawkish guidance would widen AUD’s yield advantage," reinforcing support for the Australian Dollar as the RBA’s stance diverges from its peers.

Technical Analysis: AUD/JPY keeps a bearish vibe below the 100-day SMA

In the daily chart, AUD/JPY retains a bearish near-term bias as spot holds below the Bollinger middle band and the 100-day simple moving average (SMA). The pair is also capped by the Bollinger upper band, reinforcing the downside tone, while the Relative Strength Index (14) around 45 suggests subdued momentum rather than oversold conditions, leaving room for further weakness.

On the topside, initial resistance is located at the Bollinger middle band at 110.45, followed by the Bollinger upper band near 111.40, with the 100-day SMA at 111.90 acting as a deeper hurdle for any recovery attempts. On the downside, the next significant support emerges at the Bollinger lower band around 109.50, where sellers could pause, but a sustained break beneath this floor would likely open the way toward lower levels on the daily horizon.

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

• AUD/NZD depreciates as the Australian Dollar weakens following the widely expected RBA 25-basis-point rate hike in November.
• New Zealand Building Permits fell 7.9% in September, though annual consents rose 17.8% to 41,091 homes.
• Traders fear a December RBNZ rate hike, but falling oil prices limited broader market declines.

AUD/NZD extends its losses for the second successive day, trading around 1.2430 during Asian hours on Tuesday. The currency cross loses ground as the Australian Dollar (AUD) depreciates after the Reserve Bank of Australia (RBA) decided to raise its cash rate to 4.85%, from 4.6%. This is the fifth rate hike in 2026 and the highest level since 2008.

The RBA board reported that inflation remains elevated and broad-based, prompting staff to revise forecasts materially higher. Inflation is now expected to stay above 3% over the coming year and will not return to the top of the 2% to 3% target band until late 2027, around three quarters later than previously projected.

While higher fuel and commodity prices linked to the Middle East conflict have contributed to this outlook, the RBA also highlighted tighter domestic capacity pressures. Firms continue to pass on rising costs to consumers, and several measures of inflation expectations have moved upward. Additionally, surging AI-related investment is driving rapid price growth across technology goods.

Seasonally adjusted Building Permits in New Zealand fell 7.9% month-over-month in September, fully reversing the downwardly revised 5.3% rise recorded in August. Despite the monthly drop, annual activity showed significant growth: in the year ended September 2026, a total of 41,091 new homes were consented, representing a 17.8% increase compared to the year ended September 2025.

Meanwhile, market sentiment reflected ongoing concern over potential monetary policy tightening. Traders remained wary of signals indicating a possible interest rate hike at the Reserve Bank of New Zealand's (RBNZ) upcoming December meeting as the central bank continues its efforts to curb inflation. However, a sharp slump in oil prices helped ease broader inflation worries, ultimately limiting market declines.

RBNZ holds fire as subdued demand tempers inflation rebound

Rabobank’s Jane Foley highlights that the RBNZ struck a cautious tone at its latest policy meeting, noting that “while annual inflation is expected to increase to 4.4% in the December quarter (largely on the back of fuel), … domestic demand remains subdued.” She points out that this assessment of weak underlying demand, even alongside a projected near-term rise in headline inflation, helped justify the central bank’s decision to leave rates unchanged despite market expectations for a hike.

• US Dollar finds support from safe-haven flows following covert US military strikes on Iran's Qeshm Island.
• Traders weigh midterm election uncertainty alongside prediction markets favoring Democratic gains in the Senate.
• High energy prices sustain inflation concerns, keeping December Fed rate hike probabilities near 73%.

The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six major currencies, is holding its position after registering modest losses in the previous day and trading near 101.80 during Asian hours on Tuesday.

The US Dollar holds its ground as traders adopt a cautious stance ahead of the US midterm elections. Political pressure on US President Donald Trump and the Republican Party has mounted due to elevated energy prices linked to ongoing conflicts with Iran. Meanwhile, prediction markets currently reflect a 74% probability of the Democratic Party gaining control of the US Senate, highlighting the elevated political stakes surrounding the vote.

Beyond the election, market participants are keeping a close watch on the upcoming US jobs report scheduled for release later this week. The employment data is expected to offer fresh insights into labor market health and help shape expectations for future monetary policy decisions. The Federal Reserve has maintained a hawkish stance, with the CME FedWatch Tool currently pricing in roughly a 73% chance of a rate hike in December following a policy pause in October.

Additionally, the Greenback continues to draw support from safe-haven demand triggered by escalating military hostilities. A Wall Street Journal report citing US officials revealed that the United States launched an attack on Iran’s Qeshm Island on Monday, the latest in a series of covert, limited strikes carried out by Washington in recent weeks. These military actions occurred shortly after President Trump downplayed the likelihood of a full-scale return to war with Iran following Tuesday's elections.

Dollar softens as Fed patience and AI growth concerns weigh on yields

Strategists at Brown Brothers Harriman note that the Dollar and short-term US rates lost some momentum last week, with “USD and short-term Treasury yields drifted lower” after Fed Chair Kevin Warsh “struck a patient tone despite stalled progress on US inflation.” They add that “concerns about an AI investment slowdown compounded the move, casting doubt on the US growth outlook and dampening Fed rate hike expectations,” reinforcing the softer bias in the currency and front-end yields.

Dollar watchers eye October jobs data for confirmation of stabilizing labor demand

Brown Brothers Harriman’s Elias Haddad highlights Friday’s October nonfarm payrolls release as a key test for the US labor story, noting that consensus expects a “+65k rise in payrolls vs. +29k in September, consistent with stabilizing labor demand.” BBH points out that the “unemployment rate is expected to hold at 4.2%, a tick higher than the FOMC 2026 projection of 4.1%,” underscoring a modestly softer backdrop than the Fed’s longer-term view. Wage dynamics will also be in focus, with “average hourly earnings… forecast to rise 0.3% m/m vs. 0.1% in September, and ease at an annual pace of 2.9% y/y vs. 3.0% in September,” a profile that suggests some ongoing moderation in underlying pay pressures even as monthly gains firm.

• AUD/USD consolidates its recent losses to a two-week low, touched during the Asian session.
• Traders now seem hesitant to place fresh directional bets and opt to wait for the RBA decision.
• The mixed technical setup further warrants some caution before positioning for further losses.

The AUD/USD pair enters a bearish consolidation phase below the 0.7000 psychological mark after touching a fresh two-week low during the Asian session on Tuesday as traders now look to the crucial Reserve Bank of Australia (RBA) rate decision for a fresh impetus.

The Australian central bank is widely expected to deliver a 25-basis-point (bps) interest rate hike, marking its fifth rate increase of the year amid the worsening inflation outlook. Traders will further take cues from the accompanying policy statement and RBA Governor Michele Bullock's comments during the post-meeting press conference to gauge whether this will be the peak of the current tightening cycle or if restrictive policy will need to linger longer. Apart from this, the focus will be on US midterm elections, which might infuse some volatility and produce short-term opportunities around the AUD/USD pair.

From a technical perspective, spot prices retain a near-term bearish tone following the recent failed attempt to build on the strength beyond the 200-day Simple Moving Average (SMA) at 0.7058. Meanwhile, the Moving Average Convergence Divergence (MACD) is slightly positive, and the Relative Strength Index (RSI) sits around 46, hinting at mildly improving momentum. However, the AUD/USD pair's location beneath the key Fibonacci retracement cluster starting at the 38.2% Fibo. level at 0.7027 suggests that rallies are likely to remain vulnerable and that the path of least resistance for spot prices is to the downside.

In the meantime, initial support emerges at the 23.6% retracement at 0.6977, ahead of a more important structural floor around 0.6896, where a break would likely reinstate heavier bearish pressure. On the topside, immediate resistance is located at the 38.2% Fibo. retracement at 0.7027, followed by the 200-day SMA near 0.7058 and the 50.0% retracement at 0.7068, with higher barriers at 0.7108 and 0.7166 before the swing high at 0.7239 comes into play.

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

AUD/USD daily chart

• Silver may fall toward an 11-month low of $48.87 following covert US military strikes on Iran's Qeshm Island.
• Middle East tensions and high energy prices sustain inflation fears, leaving December Fed rate hike odds at 73%.
• Tech equity liquidations and US midterm election uncertainty add further downward pressure on precious metals.

Silver price (XAG/USD) depreciates after registering modest gains in the previous day, trading around $50.30 per troy ounce during Asian hours on Tuesday. Silver prices remain pinned near an 11-month low of $48.87 per ounce, a level hit on October 30, as mounting oil supply fears grip the market following a United States (US) attack on Iran’s Qeshm Island.

According to a Wall Street Journal report citing US officials, the raid on Monday is part of a covert sequence of limited strikes launched by Washington against Iranian targets in recent weeks. The military actions come shortly after US President Donald Trump downplayed expectations of a full-scale return to war with Iran following Tuesday’s midterm elections.

Meanwhile, Iranian state media outlet Press TV reported that Iran’s Islamic Revolutionary Guard Corps (IRGC) intercepted and downed two US MQM-170 drones south of Qeshm Island in the Strait of Hormuz, alongside destroying a 55th US MQ-9 drone east of the strategic waterway.

Precious metals, including Silver, have endured sustained selling pressure throughout the year as ongoing Middle East hostilities drove up energy costs and amplified inflationary risks. In response, central banks have maintained a hawkish monetary policy stance, with the CME FedWatch Tool currently pricing in approximately a 73% chance of a US Federal Reserve rate hike in December.

A broader global sell-off in technology and artificial intelligence equities triggered widespread asset liquidations across global markets. Simultaneously, market participants are monitoring the US midterm elections, where the Trump administration and the Republican Party face growing political scrutiny over elevated energy prices and inflation concerns.

Markets eye US midterms as Democrats gain momentum

Strategists at Brown Brothers Harriman note that attention is turning to the US midterm elections on Tuesday, with political handicapping increasingly favoring the Democratic Party. They point out that “Democrats are widely expected to win the House of Representatives,” while “Senate control is much closer, but the tide favors the Democratic Party,” underscoring expectations for a potential shift in the balance of power in Congress.

• USD/JPY bulls seem hesitant as intervention risks act as a tailwind for the Japanese Yen.
• Monday’s upbeat US ISM Manufacturing PMI and Fed hike bets lend support to the USD.
• Hopes for Iran diplomacy could cap the safe-haven buck ahead of US midterm elections.

The USD/JPY pair struggles to capitalize on the previous day's positive move, consolidating below the 158.00 mark during the Asian session on Tuesday amid mixed fundamental cues.

Traders remain on high alert amid fresh intervention warning from Japan's Finance Minister Satsuki Katayama on Monday, saying that the Joint FX statement with the US persists and that the government is prepared to act to curb excessive or disorderly weakness in the Japanese Yen (JPY). However, the uncertainty over the likely timing of the next rate hike by the Bank of Japan (BoJ) acts as a headwind for the JPY, which, along with a modest US Dollar (USD) uptick, offers some support to the USD/JPY pair.

The Institute for Supply Management (ISM) reported on Monday that its Manufacturing PMI rose from 54.5 in the previous month to 55.5 in October 2026, marking the 10th straight month of expansion. Furthermore, hawkish US Federal Reserve (Fed) expectations help the USD build on the overnight bounce from the late-October swing low. In fact, the CME Group's FedWatch Tool indicates that traders are pricing in over a 70% chance that the US central bank will raise borrowing costs again in December.

The upside for the USD, however, seems limited amid hopes for a potential diplomatic resolution to end the US-Iran war. In fact, US President Donald Trump said on Monday Iran wants to make a deal to end the war and that such an agreement could happen. Moreover, Iranian Foreign Minister Abbas Araqchi said that consultations through mediators were very intensive. Traders also demonstrate a widespread hesitancy ahead of US midterm elections, which could infuse volatility and influence the Greenback.

Meanwhile, the geopolitical risk premium remains in play as several days of negotiations between Iranian officials and Qatari mediators failed to make a major breakthrough despite revised proposals. This, in turn, favors USD bulls, backing the case for the emergence of some dip-buying around the USD/JPY pair. Traders now look to the release of the US JOLTS Job Openings data ahead of the US ISM Services PMI on Wednesday, though the focus will be on the US Nonfarm Payrolls (NFP) report on Friday.

USD/JPY 4-hour chart

Technical Analysis

The USD/JPY pair is consolidating marginally above the 100-period Simple Moving Average (SMA) on the 4-hour chart, which keeps the near-term bias mildly bullish. However, the recent range-bound price action makes it prudent to wait for a sustained break above the 158.60 barrier before positioning for any further gains. On the downside, the 157.00 mark could protect the immediate downside ahead of the trading range support near the 156.35 region. A convincing break below would shift the near-term bias in favor of bearish traders and pave the way for deeper losses.

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