Forex News

Rabobank’s RaboResearch Global Economics & Markets FX Strategy team notes that USD net long speculative positions were broadly unchanged, with both longs and shorts rising modestly. The Federal Reserve raised its overnight policy rate by 25bp on September 16, matching expectations. The OIS curve indicates investors still anticipate more than three Fed hikes by the end of next year.

Fed path keeps Dollar supported

"USD net longs are largely unchanged as both long and short positions increased by 2,000 positions, respectively."

"The Fed released its decision to hike the overnight policy rate by 25bp at the September 16 meeting, in line with market expectations."

"The OIS curve suggest investors are still positioned for more than three hikes by the end of next year."

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

• GBP/USD edges higher despite surging Treasury yields and a firmer US Dollar.
• Oil rally strengthens BoE tightening bets as inflation risks rise.
• Yield-curve inversion concerns grow as Fed hike expectations intensify.

The Pound Sterling (GBP) registers modest gains of 0.18% on Monday even as US Treasury yields soar, with the US 10-year T-note rising over 10 basis points, underpinning the Greenback. At the time of writing, the GBP/USD pair trades at 1.3252.

Sterling holds gains as energy shock revives UK tightening expectations

The pair rose as high as 1.3280 on Monday, but as US-Iran peace hopes faded and Oil prices rose, the US Dollar (USD) is recovering ground, as depicted by the US Dollar Index (DXY).

The DXY, which measures the performance of the buck against six currencies, is up 0.15% to 101.18, near a three-day high. As mentioned, West Texas Intermediate (WTI), the US crude benchmark, is up more than 3% at $95.41 per barrel.

Over the weekend, US President Donald Trump declined Iran's proposal to reopen the Strait of Hormuz and bring an end to the Middle East conflict. He warned that attacks could resume after the US midterm elections, pushing Oil prices even higher.

US bond yields are also on the move, with the US 10-year benchmark note rising to 5.261% as investors grow confident the Federal Reserve (Fed) will continue its tightening cycle.

Worth noting, a Bloomberg article, “An inversion of the US yield curve becomes new risk as Fed hikes,” noted that bond traders are demanding a higher premium on the 2-year note, narrowing the yield differential with the 10-year, a prelude to a possible inversion of the curve. This means investors are demanding a higher short-term yield; they are pricing in Fed rate hikes, which would usually slow the economy as the Fed tames high inflation.

Historically, yield inversion has proved to be a good signal for forecasting recessions, dating back to 1960. But this decade failed during the COVID pandemic.

Aside from this, Sterling was boosted as investors saw rising energy prices in the UK as a reason to expect further tightening by the Bank of England. (BoE). Last week, Governor Andrew Bailey said that high energy prices would make the bank work harder to keep interest rates unchanged. Recently, Deputy Governor Dave Ramsden commented that if upside inflation pressures build, it could be grounds for raising rates.

In the meantime, traders are eyeing the release of the UK Autumn Budget on October 28. UK’s finance minister John Healey is set to speak at the Labour Party's annual conference on Monday.

GBP/USD Price Forecast: Technical outlook

In the daily chart, GBP/USD trades at 1.3255, keeping a bearish near‑term bias as spot holds below the cluster of key moving average and trend‑line levels. The 50/100/200-day simple moving average (SMA) pack converging near 1.3462 now acts as overhead resistance, while several previously supportive rising trend lines, broken around 1.3528 and 1.3732, reinforce the notion of a market capped beneath former structural floors. The Relative Strength Index (14) at about 30 suggests the pair is approaching oversold territory, hinting that downside momentum may be stretched even as price remains pressured under these topside barriers.

On the topside, initial resistance aligns with the downtrend line break zone near 1.3322, followed by the more recent descending resistance trend line around 1.3440. Above there, the confluent 50/100/200-day SMAs at roughly 1.3462 form a dense cap, with the higher broken support trend levels at 1.3528 and 1.3732 marking subsequent barriers if a corrective rebound extends. On the downside, the lack of nearby mapped structural supports leaves the pair vulnerable to further slippage, with traders likely to look for a fresh basing pattern or new horizontal lows before considering a more sustained recovery.

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

• Gold falls over 3% as traders weigh rising Oil prices, higher US yields and the prospect of another Fed rate hike.
• Traders look to US PCE inflation, ISM PMI and NFP data due this week for fresh clues on the Fed’s next move.
• XAU/USD trades below its 50-day, 100-day and 200-day moving averages, while the RSI approaches oversold territory.

Gold (XAU/USD) remains under strong selling pressure on Monday, down over 3.5% as elevated Oil prices reinforce expectations of further Federal Reserve (Fed) interest rate hikes. At the time of writing, XAU/USD trades around $4,121, its lowest level since August 5.

Oil prices have remained volatile since late February, when the United States (US) and Israel launched joint strikes on Iran, triggering a war in the Middle East and disrupting supplies through the Strait of Hormuz.

Over the weekend, US President Donald Trump rejected Iran’s latest proposal to reopen the strait within seven days. However, Trump told Axios that he expects US negotiators to hold further talks this week. Reuters also reported, citing a source briefed on the negotiations, that mediators are expected to hold separate talks with US and Iranian officials on Monday or Tuesday. The discussions are set to focus on an amended version of Iran’s seven-day proposal.

Gold has gained little from its traditional role as a safe-haven asset and inflation hedge since the outbreak of the war. The precious metal is down about 27% from its January all-time high near $5,600, with interest-rate expectations remaining the main driver. Elevated Oil prices have pushed global bond yields to multi-year highs, increasing the opportunity cost of holding non-yielding metal. The 10-year US Treasury yield advances to 5.27%, its highest level since 2007.

Traders are pricing in additional monetary policy tightening by the Fed after the central bank delivered a 25-basis-point (bps) hike at its September 15-16 meeting, its first in three years. Following a series of hawkish comments from Fed officials last week, markets see a 70% chance of a rate hike in October, according to CME FedWatch.

The hawkish Fed outlook and rising Treasury yields keep the US Dollar near recent highs, adding further pressure on Gold. The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, trades around 101.22.

A packed US economic calendar could give Gold fresh direction this week. Traders will assess Personal Consumption Expenditures (PCE) inflation due Wednesday, the ISM Purchasing Managers’ Index (PMI) on Thursday and Nonfarm Payrolls (NFP) on Friday, as well as comments from Fed officials, for clues on the central bank’s next move.

Technical Analysis: Bears retain control below key moving averages

On the daily chart, XAU/USD keeps a bearish near-term bias as price holds below the 50-day and 100-day Simple Moving Averages (SMA), while the longer-term 200-day SMA remains further overhead.

Momentum reinforces the downside tone, with the Relative Strength Index (RSI) slipping toward oversold territory at 35 and the Moving Average Convergence Divergence (MACD) indicator firmly below zero, hinting that rallies are likely to be capped by the clustered moving-average resistance.

On the topside, initial resistance aligns with the 100-day SMA at $4,298, followed by the 50-day SMA at $4,320, both capping recovery attempts before the more distant 200-day SMA at $4,540. A higher barrier emerges at the horizontal resistance level at $4,700.

On the downside, with XAU/USD already below $4,150, the next support lies near $4,000. A decisive break below that level could extend the current bearish phase.

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

• Silver slides to its lowest level since early August as the US Dollar and Treasury yields climb.
• XAG/USD remains below its 50-day, 100-day and 200-day SMAs, with all three averages acting as resistance.
• The RSI points to bearish momentum as Silver tests Fibonacci support near $61.

Silver (XAG/USD) falls around 5% on Monday, slipping to its lowest level since early August. A stronger US Dollar (USD) and rising US Treasury yields weigh on the non-yielding metal as the US-Iran stalemate keeps Oil prices elevated, strengthening expectations of further Federal Reserve (Fed) rate hikes. At the time of writing, XAG/USD trades around $61.08.

The US 10-year Treasury yield has risen to 5.27%, its highest level since 2007, while the US Dollar Index (DXY) holds near 101.25, close to a two-month high. Higher yields increase the opportunity cost of holding Silver, while a firmer US Dollar makes the metal more expensive for overseas buyers.

Markets are pricing in a 70% chance of another rate hike in October, according to CME FedWatch, after the central bank raised rates by 25 basis points at its September 15-16 meeting. Traders now turn to a busy week of US data, including the Personal Consumption Expenditures (PCE) inflation report on Wednesday, the ISM Manufacturing Purchasing Managers’ Index (PMI) on Thursday and Nonfarm Payrolls (NFP) on Friday.

Technical Analysis:

On the daily chart, XAG/USD remains under a dense cap of moving averages, with the 50-day Simple Moving Average (SMA) at $63.88, the 100-day SMA at $65.65 and the 200-day SMA at $73.19 all acting as overhead resistance, which maintains a bearish near-term bias.

Price is hovering just above the 61.8% Fibonacci retracement at $61.02, hinting at a fragile pivot area, while the Relative Strength Index (RSI) at 39 leans toward bearish momentum and the Moving Average Convergence Divergence (MACD) stays negative, reinforcing downside pressure.

On the topside, initial resistance emerges at the 50.0% Fibonacci retracement at $62.95, followed by the 50-day SMA at $63.88 and the 38.2% retracement at $64.87, with the 100-day SMA at $65.65 and the 23.6% level at $67.26 marking higher barriers before the $71.12 anchor and the 200-day SMA at $73.19. On the downside, immediate support is found at the 61.8% Fibonacci retracement at $61.02, ahead of the 78.6% level at $58.27 and the prior cycle low near $54.77, where buyers may attempt to stabilize the decline.

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

Rabobank highlights that GBP net short positions have risen over 40%, reaching their highest level since August. The Bank of England kept the Bank Rate unchanged at 3.75% on September 18, in line with expectations. The Pound has weakened in tandem with the recent Oil-driven USD rally, underscoring negative speculative sentiment toward GBP.

Speculative shorts weigh on Pound

"GBP net shorts have also increased by more than 40% to their highest level since August."

"The Bank of England held the Bank Rate at 3.75% at the September 18 meeting, in line with market expectations."

"GBP has weakened in line with the recent oil-driven USD rally."

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

• EUR/USD slides toward June lows as rising Treasury yields and hawkish Fed expectations support the US Dollar.
• The US-Iran stalemate keeps Oil prices elevated, while traders await this week’s US inflation and jobs data.
• ECB President Christine Lagarde flags upside inflation risks and downside growth risks.

EUR/USD trades on the back foot on Monday, pressured by a stronger US Dollar (USD) as the US-Iran stalemate keeps Oil prices elevated, pushing US Treasury yields higher and strengthening expectations of further Federal Reserve (Fed) rate hikes. At the time of writing, the pair trades around 1.1368, down 0.20%, close to levels last seen in June.

Reuters reported on Monday, citing a source briefed on the negotiations, that mediators are expected to hold separate talks with US and Iranian officials on Monday or Tuesday. The discussions will focus on an amended version of Iran’s seven-day proposal to reopen the Strait of Hormuz, which US President Donald Trump rejected over the weekend.

The US 10-year Treasury yield has risen to 5.27%, its highest level since 2007, while the US Dollar Index (DXY), which tracks the Greenback against a basket of six major currencies, holds near 101.22, close to a two-month high. Markets see a 70% chance of another Fed rate hike in October, according to CME FedWatch, after the central bank raised rates by 25 basis points at its September 15–16 meeting.

Recent Fed comments also suggest policymakers remain open to further tightening as they work to bring inflation back to the 2% target. Traders now turn to a packed week of US data, including the Personal Consumption Expenditures (PCE) inflation report on Wednesday, the ISM Manufacturing Purchasing Managers’ Index (PMI) on Thursday and Nonfarm Payrolls (NFP) on Friday.

On the Euro side, expectations that the European Central Bank (ECB) could continue tightening after raising rates twice this year have done little to support the currency. Analysts at HSBC argue that the Euro “remains vulnerable to uncertainty over the European Central Bank’s appetite to raise rates,” especially in light of the Fed’s “more hawkish messaging at its September meeting.” They add that “even if the relative rates story does not drive dramatic moves in EUR-USD, Europe’s greater exposure to elevated energy costs could weigh on growth and the external balance.”

Speaking on Monday, ECB President Christine Lagarde said, “We still see upside risks to inflation and downside risks to growth.” She added that “the outlook continues to be surrounded by high uncertainty” and that “the inflation outlook will be higher in 2027 and 2028 than we expected a few months ago.”

Lagarde said, “We see higher inflation ahead but no signs yet that it is becoming embedded.” She added, “We view a measured response as appropriate to keep inflation in check.” She also said rates were at the upper end of the neutral range, but stressed that the ECB was not setting policy by reference to the neutral rate.

Rabobank points out that AUD net short positions have increased for a second week, reaching their highest level since December 2025. While the Australian Dollar is the second‑best performing G10 currency year‑to‑date, it has weakened against the Dollar this month, falling 3.23% back to 0.70 from recent highs near 0.72.

Australian Dollar performance losing momentum

"AUD net shorts have increased for the second consecutive week to the highest level since December 2025."

"AUD is the second best performing G10 currency year-to-date, but has weakened against USD month-to-date, deteriorating by 3.23%, back to the 0.70 level from recent highs of 0.72."

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

Rabobank’s FX Strategy team observes that CAD net shorts have risen again after a recent collapse. USD/CAD has continued to grind higher, gaining 2.77% from recent lows to 1.414, with the 14‑day RSI indicating overbought conditions. Rabobank expects a short‑lived pullback but ultimately sees USD/CAD trading sideways between 1.41 and 1.42 through year end.

Sideways Dollar-Loonie view into year end

"CAD net shorts have picked up again, after collapsing the prior two weeks."

"USD/CAD continues to grind higher, up 2.77% from recent lows to 1.414."

"The 14D RSI suggests USD/CAD is currently overbought, so we may see a short-lived reversal in the near term."

"Rabobank sees USD/CAD trading sideways between 1.41 and 1.42 through year end."

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

• EUR/GBP edges lower as hawkish BoE remarks lend support to the British Pound.
• BoE Deputy Governor Dave Ramsden says further rate hikes could be warranted if inflation pressures keep building.
• UK growth concerns may limit Pound gains, while expectations of further ECB tightening offer support to the Euro.

EUR/GBP edges lower on Monday as the British Pound (GBP) attracts buyers after recent weakness, with hawkish remarks from Bank of England (BoE) Deputy Governor Dave Ramsden lending it further support. At the time of writing, the cross trades around 0.8564, down 0.40%.

Ramsden said, “Were upside pressures on the inflation outlook to continue to build, there could be a case for increasing Bank Rate.” He said he would focus on external pressures from “energy prices, weather and supply chains,” as well as domestic risks, including “indirect effects, particularly in food prices, and any early signs of second-round effects.” He added that inflation risks, whether external or domestic, “have tilted more to the upside.”

Analysts at HSBC warn that “weak UK labour demand and sluggish private sector momentum could weigh on the GBP in the near term, particularly as the US economy is looking more resilient.” They note that “markets are already pricing around 100bp of tightening from the BoE by July 2027,” but caution that “higher energy prices create a difficult policy mix: inflation risks are rising even as growth momentum faces a challenging outlook.” HSBC adds that “the run-up to the budget update on 28 October may add further pressure, with elevated gilt yields and difficult fiscal choices ahead for the new Chancellor.”

Against this backdrop, gains in the British Pound could remain limited as concerns over UK growth persist. Meanwhile, expectations of further European Central Bank (ECB) tightening after two rate increases this year may support the Euro against the Pound.

ECB President Christine Lagarde said, “We still see upside risks to inflation and downside risks to growth.” She added, “The inflation outlook will be higher in 2027 and 2028 than we expected a few months ago,” but noted, “We see higher inflation ahead but no signs yet that it is becoming embedded.” Lagarde said the ECB considers “a measured response as appropriate to keep inflation in check.”

The focus now shifts to a busy week of central bank speakers and economic data. Traders will follow UK second-quarter Gross Domestic Product (GDP), German preliminary inflation and Retail Sales on Wednesday, before the Eurozone’s preliminary inflation report on Friday.