Forex News

• EUR/GBP extends its broader bearish trend and tests 16-month lows at 0.8447.
• Concerns about a credit crisis in France are weighing heavily on the Euro.
• The Pound has drawn support from strong UK data and hawkish BoE rhetoric in previous weeks.

The Euro (EUR) has resumed its broader bearish trend against the British Pound (GBP) on Monday after a mild recovery attempt at the end of last week. EUR/GBP bears are testing the 16-month low of 0.8447 hit on Wednesday, as the common currency depreciates against its main peers amid a mix of ballooning debt, a political deadlock and spreading social unrest that is setting all eyes on France.

The spread between the 10-year French Obligations Assimilables du Trésor (OAT) and its equivalent German Bund escalated to 141 basis points on Monday, the highest differential since the financial crisis in 2012. Meanwhile, the student protests extend for the third week, posing an enormous challenge for a cabinet lacking parliamentary support for any significant reforms ahead, at least before the 2027 Presidential elections.

The Pound, on the other hand, is showing one of the best G8 currency performances so far in October. Analysts at Commerzbank argue that “the improved growth outlook should make it easier for the Bank of England to raise rates further in order to lean against inflation,” which increases Sterling's attractiveness among speculative traders.

Technical Analysis: Below 0.8447, bears would target the 0.8415 area

EUR/GBP trades just at 0.8447 as of writing, maintaining a bearish near-term tone after dropping around 1.7% over the previous two weeks. Momentum indicators on the 4-hour chart have reached oversold levels. The Relative Strength Index (14) slipped below the 30 mark, while the Moving Average Convergence Divergence (MACD) holds in negative territory, hinting at persisting downside pressure even as the pair approaches stretched momentum readings.

Below the mentioned 0.8447 pivot (October 7 low), bears might be attracted by the early June 2025 lows, between 0.8405 and 0.8415 ahead of the May 2025 bottom at 0.8355. Upside attempts, on the contrary, are likely to face a cluster of resistances in the area around 0.8485 – which capped gains on Thursday and Friday – the October 6 high, just above 0.8490, and the October 1 low, just above 0.8500.

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

TD Securities economists Robert Both and Emma Lawrence expect the Bank of Canada (BoC) to keep the Overnight Rate at 2.25% through 2026, before lifting it back to a neutral 2.75% in 2027. They argue that, despite markets pricing more tightening after the September meeting, softer growth and uncertain trade conditions should allow the Bank to remain patient on inflation risks.

BoC seen on extended policy hold

"We look for the Bank of Canada to stay on hold at 2.25% through 2026 before a return to neutral (2.75%) next year, with 25bp hikes in January and March 2027."

"Markets have moved to price in more tightening after the Bank expressed more concern over inflation risks at its September policy decision, but without more evidence of higher oil prices broadening into underlying inflation we believe the BoC can remain patient as excess supply is gradually absorbed."

"The near-term growth outlook also looks more uncertain with Section 338 tariffs taking effect in August, which will make it harder for the Canadian economy to sustain its recent momentum."

"We've already seen some evidence of deceleration in the early data for July/August, but renewed trade uncertainty should also give the Bank more reason to keep looking through higher oil prices over Q4."

"The Bank of Canada will hold several public appearances at the IMF/IIF Annual Meetings in Bangkok."

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

• The Indian Rupee gains significantly against the US Dollar due to fresh RBI measures.
• RBI tightens hedging rules and directs OMCs to cater to US Dollar demand through their special window.
• Investors await the US CPI data for September.

The Indian Rupee (INR) trades significantly higher against the US Dollar (USD) on Monday. The USD/INR pair falls 1% to near 95.80 as the Reserve Bank of India’s (RBI) fresh measures to curb US Dollar demand have brought relief for the Indian currency.

Over the weekend, RBI unveiled measures to shore up the Indian Rupee, which include catering to the demand for US Dollars by Public Sector Undertaking (PSU) Oil Marketing Companies (OMCs) through central bank’s special window, easing pressure on the spot market and tightening hedging rules, Reuters report.

RBI steps up support for INR with targeted Dollar measures and tighter FX rules

Analysts at MUFG highlight that the RBI has unveiled a “broad package of measures” to ease pressure on the INR, including “a special dollar window to meet dollar requirements by three state-run oil companies.” They add that the central bank has “stopped the re-booking of any FX derivative contract involving rupee that had been cancelled,” while also “introducing an FX risk reserve requirement on transactions that exceed $2mn,” underscoring a more stringent approach to managing currency risk.

According to analysts at ANZ Bank, "Addressing oil ​companies' dollar requirements removes one of the largest sources of demand from the FX market, which should help reduce volatility but it ​will show up in a depletion of reserves.”

Recovery in Oil prices might cap gains

On the geopolitical front, the sharp recovery in Oil prices on Monday after a weak opening could limit the upside for the Indian currency. Crude traded lower in the opening on the announcement of an energy ceasefire between Russia and Ukraine by US President Donald Trump, a scenario in which both parties should have agreed to refrain from launching attacks on energy infrastructure.

As of writing, the MCX Crude Oil contract expiring on October 19 is up 0.33% to near Rs. 8,910 after recovering over 2% losses. Higher Oil prices bode poorly for currencies from economies such as India, which rely heavily on oil imports to meet their energy needs.

“Effective immediately, there is an ENERGY CEASEFIRE in the War between Russia and Ukraine. Both parties have agreed. Do not break it!” Trump wrote on Truth Social.

India's retail CPI rises more than expected

India’s retail Consumer Price Index (CPI) data for September arrives at 5.54% Year-on-Year (YoY), higher than 5.4% estimates and the previous reading of 4.83%. Inflationary pressures have increased significantly due to a significant growth in food prices, but are still within the RBI's tolerance band of 2%-6%.

A faster-than-expected growth in India's price pressures might support the case of one more interest rate hike by the RBI this year. Last week, the RBI hiked its key rates by 25 basis points (bps) and shifted its policy stance from 'neutral' to 'caliberated tightening'.

This week, investors will also focus on US CPI data for September, which is scheduled for Wednesday. The inflation data is expected to have a significant influence on the Federal Reserve’s (Fed) interest rate expectations. Currently, financial markets are confident that the Fed will deliver at least one more interest rate hike this year.

USD/INR Technical Analysis

On the daily chart, USD/INR trades at 95.76, turning bearish as spot falls below the 20-period Exponential Moving Average (EMA) at 96.10. The 14-period Relative Strength Index (RSI) slides vertically to near 45.00, indicating some overnight change in fundamentals.

On the upside, initial support is located at the 20-day EMA near 96.10. Looking down, the pair could extend its decline towards 95.00.

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

(This story was corrected at 04:10 GMT on Monday to say in the title that USD/INR drops 1% at open as RBI steps up measures to support Indian Rupee, and not rise.)

• NZD/USD pares losses and retreats below 0.5600, drawing closer to the 17-month low at 0.5580.
• The US Dollar has bounced up after a weak opening with investors pondering Friday's downbeat US consumer sentiment report.
• Oil prices remain at high levels, adding pressure on New Zealand's economic growth.
  

The New Zealand Dollar (NZD) retraces previous gains against the US Dollar (USD) on Monday and turns negative on the daily chart, with markets cautious amid the growing tensions in the Middle East and Oil prices at high levels. The NZD/USD pair has pulled back below 0.5600, from session highs at 0.5620, drawing closer to a 17-month high at 0.5580.

The US Dollar opened the week on a modest soft tone, still weighed by the disappointment of the University of Michigan (UoM) Consumer Sentiment Index data released on Friday. The UoM report showed that consumer confidence fell to levels close to historic lows in October as the higher cost of living amid the war in Iran deteriorated economic expectations.

High Oil prices are keeping investors away from risk

Investors, however, remain wary of taking excessive risks on Monday amid news of escalating hostilities in the Gulf, which keeps Oil prices buoyed. These prices put additional pressure on New Zealand's Oil-importing economy and pose significant headwinds for sentiment-linked currencies, like the Kiwi.

A new attack on Saudi Arabia’s King Khalid International Airport by the Iran-backed Houthis has killed one person and injured 11. This strike comes after a Saudi attack on the airport of the Houthi-held Yemeni capital of Sanaa, in a tit-for-tat escalation thst threatens to lead the conflict into an all-out regional war.

Meanwhile, Iran affirmed that the US accepted most of Tehran’s conditions for a deal but that the US response was “inadequate”. Beyond that, Iran’s security chief Mohsen Rezaei accused the US and the United Arab Emirates (UAE) of running an Oil smuggling network in Hormuz. Brent Oil prices, which fell to session lows of $100.65 during the Asian Session, have retraced most losses and returned to the 102.70 area during the European morning session

The calendar is thin today, with markets partially closed in the US for Columbus Day. Cleveland Federal Reserve President Beth Hammack is scheduled to speak later in the day, but the main focus will remain on the inflation reports, due later this week, for further insight into the Fed’s tightening calendar.

In New Zealand, the Reserve Bank of New Zealand’s Governor, Anna Breman, will speak on Thursday, ahead of the release of New Zealand’s Business Purchasing Managers’ Index figures for September.

Chris Turner at ING says EUR/CHF is consolidating after a sharp fall driven by French debt concerns that dampened ECB tightening expectations. Markets still price further rate hikes, and ING sees it as too early to cancel 2027 ECB hikes. The bank flags a possible correction to 0.9230/0.9250, while calmer periods could see EUR/CHF trade back to 0.9350/0.9400.

Range scenarios tied to French spreads

"EUR/CHF is consolidating after its heavy fall just over a week ago. That move was driven by French debt problems being severe enough to curtail European Central Bank tightening expectations."

"However, it is not clear that short-dated euro rates need to fall a lot further from here, unless we see a sharp drop in energy prices."

"Currently, the market prices 22bp of hikes in December (we look for a 25bp hike) and then a further 30-40bp of tightening into next year."

"With eurozone inflation still pushing higher (September eurozone CPI should be confirmed at 3.8% year-on-year this week), it seems too early to expect 2027 hikes from the ECB to be cancelled."

"This all adds up to a mixed picture for EUR/CHF. We cannot rule out a correction to the 0.9230/50 area should the OAT-Bund spread decisively push through the 150bp area, but any brief periods of calm can see EUR/CHF trade back up to 0.9350/9400."

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

MUFG’s Lee Hardman notes the Dollar index is holding just above 102.00 as softer US data and cautious Federal Reserve (Fed) communication have reduced expectations for immediate rate hikes. Markets now price only modest tightening this month. The upcoming US CPI report and comments from Fed Chair Kevin Warsh are seen as key for confirming a likely pause before a potential December hike.

Dollar steadies as markets eye CPI

"The major foreign exchange rates have remained stable overnight with the dollar index continuing to trade close to year-to-date levels at just above the 102.00-level."

"The recent run of softer US data (PCE deflator report for August and NFP report for September) alongside cautious comments over the need for another back-to-back hike from the Fed’s leadership have dampened expectations for another rate hike as soon as this month."

"Market expectations for the Fed to stay on hold this month will be tested by the release on Wednesday of the latest US CPI report for September."

"Unless there is a significant upside surprise for underlying inflation, we expect the Fed to leave rates on hold this month."

"It is likely to be only a temporary pause as the Fed currently plans to hike rates again before the end of this year in December."

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

• The British Pound surrenders gains against the US Dollar and flattens to near 1.3235.
• Investors keenly await the US CPI and the UK monthly GDP data.
• The Fed has signaled concerns regarding elevated inflationary pressures.

The British Pound (GBP) gives back its early gains against the US Dollar (USD), trading flat at around 1.3235 during the European session on Monday. The GBP/USD pair retreats as the US Dollar recovers morning losses and turns positive, with financial markets turning cautious ahead of the United States (US) Consumer Price Index (CPI) data for September on Wednesday.

As of writing, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades 0.15% higher to near 102.38.

According to estimates, the US headline inflation accelerated to 3.7% Year-on-Year (YoY) from the August reading of 3.4%. The core CPI – which excludes volatile food and energy items – is expected to come in at 2.5% YoY, higher than the previous reading of 2.4%. On a monthly basis, the headline CPI grew at a faster pace of 0.6% compared to the prior release of 0.4%.

Investors will pay close attention to the US inflation data as recent comments from Federal Reserve (Fed) officials have signaled that they are highly concerned about elevated inflation levels.

On the geopolitical front, a sharp recovery move in oil prices even as global energy supply risks have slightly diminished, following the energy ceasefire between Ukraine and Russia, has also supported the US Dollar. Analysts at ING said in a note that morning losses in crude were being driven by US President Donald Trump’s announcement this weekend that Russia will export “300kt of diesel immediately, followed by 500kt in November and 1mt in December.” ING notes that the agreement will also see “the US temporarily easing sanctions on Russian diesel,” adding to near‑term product availability and helping to explain why prices are softening despite ongoing geopolitical tensions.

On the British Pound front, investors await the United Kingdom (UK) monthly Gross Domestic Product (GDP) data for August, which will be released on Thursday. The UK economy is expected to have contracted 0.1% after growing by 0.4% in July. Investors will also focus on the Manufacturing and Industrial Production data.

GBP/USD Technical Analysis

In the daily chart, GBP/USD trades at 1.3230, maintaining a bearish near-term tone as spot holds beneath the 20-period Exponential Moving Average (EMA) at 1.3290. The pair’s inability to reclaim this short-term EMA suggests that rallies remain capped for now, while the Relative Strength Index (RSI) near 39 hints at weak but stabilizing downside momentum rather than outright oversold conditions.

On the topside, initial resistance is located at the 20-period EMA at 1.3290, and a daily close above this level would be needed to ease immediate selling pressure and open the way for a stronger corrective bounce. With no clear nearby support levels derived from moving averages or momentum indicators, the pair remains vulnerable to further slippage while it trades under 1.3290, leaving price action driven by how it reacts to this overhead barrier.

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

• WTI Oil gains 1.00% on Monday, trading around $91.90 as geopolitical tensions support prices.
• Houthi attacks on Saudi Arabia and an Oil tanker near Oman raise concerns about potential supply disruptions in the Middle East.
• Trump announces an energy ceasefire between Russia and Ukraine, while OPEC sharply lowers its Oil demand growth forecast for 2026.

West Texas Intermediate (WTI) US Oil rises by 1.00% on Monday, trading around $91.90 at the time of writing. Crude Oil prices are supported by escalating geopolitical tensions in the Middle East, despite prospects of an energy ceasefire between Russia and Ukraine that could ease supply concerns.

The rebound in Oil prices comes amid renewed fears of supply disruptions following attacks by Iran-backed Houthi militants against Saudi Arabia over the weekend. Riyadh's King Khalid International Airport was targeted twice, with the initial strike reportedly killing 12 people and injuring more than 300.

United States (US) President Donald Trump warned that Washington could join Saudi Arabia in retaliatory strikes against the Houthis in Yemen. He also issued a warning to Iran, raising concerns about a broader regional escalation that could threaten energy infrastructure and Oil shipments.

Meanwhile, maritime security risks remain elevated after a drone struck an Oil tanker near the Sohar anchorage off Oman, close to the strategic Strait of Hormuz. The United Kingdom Maritime Trade Operations (UKMTO) confirmed that the incident had been classified as an attack, highlighting the vulnerability of shipping routes in the Persian Gulf.

However, potential progress towards an energy ceasefire between Russia and Ukraine could limit further gains in WTI prices. President Trump announced that both countries had agreed to halt attacks on each other's energy infrastructure, following discussions with Russian President Vladimir Putin.

Ukrainian President Volodymyr Zelenskyy initially indicated that he was unaware of any formal agreement between Moscow and Kyiv. However, he subsequently expressed Ukraine's readiness to sign ceasefire guarantees, while calling on Washington to ensure that Russia respects the proposed agreement.

In parallel, Trump announced an agreement under which Russia would supply diesel to the United States in several stages, beginning with more than 300,000 tons immediately, followed by additional deliveries in the coming months. The prospect of increased Russian energy supplies could help ease market concerns over global fuel availability.

On the demand side, the Organization of the Petroleum Exporting Countries (OPEC) significantly lowered its forecast for global Oil demand growth this year. Secretary General Haitham Al Ghais indicated on Monday that the organization now expects demand to increase by just 400,000 barrels per day (bpd), compared with an initial projection of 1.4 million bpd at the beginning of the year.

Nevertheless, OPEC anticipates that some of this deferred demand will materialize in 2027, potentially supporting Oil consumption next year.

Meanwhile, the US Department of Energy has approved an emergency exchange of up to 4 million barrels of crude Oil from strategic reserves to mitigate supply disruptions caused by Hurricane Isaias.

Looking ahead, investors will monitor the American Petroleum Institute (API) weekly crude Oil inventories report, scheduled for Tuesday.

WTI technical analysis

In the one-hour chart, WTI US Oil trades at $92.03, maintaining a bullish near-term bias as it holds comfortably above both the 100-period simple moving average (SMA) at $89.66 and the 200-period SMA at $89.65, which together underpin the advance. The Relative Strength Index (14) near 64 suggests firm but not yet overbought upside momentum, keeping the focus on buyers while price consolidates just under nearby resistance.

On the topside, immediate resistance is located at the horizontal level of $92.40, where a clear break would open the way to further gains. On the downside, initial support emerges from the clustered 100- and 200-period SMAs around $89.65, with the previously broken trend resistance line near $88.70 now acting as a deeper support zone if a corrective pullback develops.

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

• GBP/JPY appreciates for the second consecutive day and nears 210.00.
• The Yen remains on its back foot with concerns about global government debt growing.
• Weak Japanese Household Spending data highlighted the negative impact of inflation on Japan's domestic demand.

The British Pound (GBP) extends gains for the second consecutive day on Monday, as concerns about the high Japanese public debt and rising Oil prices keep the Japanese Yen (JPY) on its back foot. The GBP/JPY pair is trading a few pips below 210.00, after bouncing from levels near 208.00 last week, with bulls looking at the top of the monthly trading range, at the 211.00 area.

The Yen turned lower across the board on Friday as Japanese data revealed that Household Spending declined for the ninth consecutive month in August, adding to evidence of the negative impact of higher prices on Japan’s domestic demand.

Beyond that, the global government bond crisis is fully affecting the Yen. Japan’s public debt is one of the largest among the world’s major economies, and the government’s plans to support economic growth threaten to further boost spending. Prime Minister Sanae Takaichi came out last week to pledge a “responsive and proactive” fiscal policy but, so far, it has failed to restore market confidence.

Technical Analysis: Pound bulls are looking at the 211.00 area

GBP/JPY trades at 209.91, holding a constructive bullish bias, with key resistance at the top of the monthly range above 211.00. Momentum indicators on the 4-hour chart endorse the positive trend, as the Relative Strength Index (14) advances past the 60 level and the Moving Average Convergence Divergence (MACD) remains moderately positive.

Bulls might find some resistance at the September 25 and October 6 and 7 highs in the area of 210.20 ahead of the mentioned range top; between the September 18 high, at 211.28, and the September 4 highs around 211.80. A break above these levels would confirm a double bottom near 207.00, which is a common figure for trend shifts.

To the downside, initial support is seen at Friday's lows of 209.00, with deeper structural demand layers clustered at the early October lows near 207.60 and the mentioned 207.00 area.

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

United Overseas Bank’s (UOB) Quek Ser Leang and Lee Sue Ann note AUD/USD closed firmly around 0.6981, with underlying momentum continuing to improve. For today, they expect the pair to edge higher but see resistance at 0.7000, with support at 0.6970 and 0.6960. On a 1–3 week view, they maintain a neutral stance, looking for a 0.6935–0.7020 trading band.

Neutral outlook with upside constrained

"24-HOUR VIEW: After AUD traded in a range as we expected last Thursday, we highlighted on Friday that “further range-trading appears likely, though the slightly firmer underlying tone suggests a higher range of 0.6945/0.6985.” AUD subsequently traded between 0.6958 and 0.6989, closing on a firm note at 0.6981 (+0.31%). The underlying momentum continues to firm, and we expect AUD to edge higher today. That said, any advance is unlikely to break above 0.7000. Support is at 0.6970, followed by 0.6960."

"1-3 WEEKS VIEW: We turned neutral on AUD last Wednesday (07 Oct, spot at 0.6980) and indicated that it “is likely to trade between 0.6935 and 0.7020.” There is no change in our view."

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