Forex News

UOB strategists Quek Ser Leang and Lee Sue Ann report that GBP/USD surged as Sterling outperformed major peers, though short-term conditions are now overbought. Intraday, they expect consolidation within a tight band, but the 1–3 week view still allows for further gains toward higher resistance, with downside invalidation only on a break of revised strong support levels.

Sterling advance pauses but trend intact

"24-HOUR VIEW: We did not expect the sharp rise that sent GBP to a high of 1.3409 (we had expected range-trading). The sharp rise appears to be overdone, and instead of continuing to advance today, GBP is more likely to consolidate between 1.3340 and 1.3410."

"1-3 WEEKS VIEW: Last Friday (16 Oct, spot at 1.3270), we indicated that GBP “could edge higher toward 1.3315.” After GBP soared to a high of 1.3371, we highlighted on Monday (19 Oct, spot at 1.3325) that “upward momentum continues to increase, and GBP could rise toward 1.3405 next.” While our directional view was correct, we did not quite expect GBP to reach 1.3405 so soon, as it soared to a high of 1.3409 during the NY session yesterday. Short-term conditions are overbought after the rapid rise, but there is scope for GBP to rise to 1.3440 next. Overall, only a breach of 1.3300 (‘strong support’ level previously at 1.3260) would mean that GBP is not rising further."

(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 US Dollar is trading modestly weaker as US housing data disappoints and markets scale back expectations for an October Fed hike. Despite softer housing indicators, MUFG still expects one more Fed rate increase in December. Meanwhile, reduced near-term tightening signals have dampened the Dollar’s upward momentum even as further hikes remain likely.

Fed repricing weighs on Dollar

"The major FX rates have remained relatively stable overnight with the US dollar continuing to trade at modestly weaker levels."

"The scaling back of October Fed rate hike expectations has helped to dampen the US dollar’s upward momentum in the near-term although further hikes remain likely."

"The negative impact on US dollar from housing market weakness should remain muted though given it is not a major policy focus for the Fed who setting policy to bring inflation back towards their goal in a more timely manner."

"We still expect the Fed to hike rates one more time this year in December and can’t completely rule out the probability of another back-to-back hike this month after the stronger US inflation data for September."

"At the same time, rate hike expectations have been increasing for other G10 central banks including the BoC, BoE and RBA."

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

ING’s Frantisek Taborsky reports Hungary’s new fiscal path projects the deficit falling to 2.8% by 2030, aligned with Euro adoption plans, while the National Bank of Hungary keeps rates at 5.50% and stresses caution amid global uncertainties. EUR/HUF trades in a tight 362–364 range, with positioning corrections and future direction seen hinging on global developments and energy prices.

Fiscal path and EUR/HUF range

"Yesterday, Hungary unveiled a full fiscal path plan, under which the deficit is projected to decline from 4.9% next year to 2.8% by 2030. According to the prime minister, Hungary aims to adopt the euro as soon as possible. The National Bank of Hungary kept interest rates unchanged at 5.50% yesterday and reiterated previous statements regarding euro adoption, noting that the fiscal path aligns with the euro adoption plan."

"At the same time, the governor pointed out that rising core yields, uncertainty, and inflationary risks necessitate a cautious monetary policy."

"In our view, this accurately captures the current situation: while the domestic narrative is evolving positively – to the market's satisfaction – the global environment remains unfavourable. Our economists see a possibility of a rate cut toward the end of the year, provided that the global situation, particularly energy prices, stabilises."

"Following the release of the budget plan for next year on Monday, the market is undergoing a correction after a rally in previous weeks. As we have discussed, long positions on Hungary had become overly crowded; the "buy the rumour, sell the fact" scenario has fully played out, and we are likely to see further profit-taking."

"Over the past two weeks, EUR/HUF has remained within a tight range of 362-364, and its next direction will likely depend more on global developments. Yesterday’s signs of a potential easing of tensions between the US and Iran could provide a positive boost, helping the pair move toward the lower end of its current range."

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

Societe Generale notes EUR/RON trading below 5.35 and 10-year RONGB yields under 7% after parliament approved the Niculescu government, ending a political deadlock. The bank highlights fragile political stability and a commitment to reduce the deficit below 3% by 2030. Moody’s warns that maintaining the Baa3 rating requires passing the budget before year-end.

Credit rating tied to fiscal discipline

"EUR/RON settled below 5.35 and the 10y RONGB yield stayed below 7% as the Romanian parliament approved the new government led by PM Niculescu, ending the political deadlock."

"Political stability remains fragile and conditional on the support of the Liberals and the ethnic Hungarians."

"In his governing program, Niculescu committed to stick to the plan agreed with Brussels to shrink the deficit to below 3% by 2030."

"Moody’s warned that political stability and credible budget are essential to maintain the country credit rating (Baa3). Avoiding a downgrade to junk means passing the budget before year-end."

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

MUFG’s Lee Hardman highlights rising rate hike expectations for the RBA as Australian inflation risks are seen as “materially worse” than earlier forecasts. Markets now price close to a 50:50 chance of another RBA hike next month, with higher domestic yields having supported the Australian Dollar this year, even though it has recently underperformed alongside AI-related trade weakness.

Hawkish RBA repricing in focus

"The Australian rate market has moved overnight to price in a higher probability of another RBA rate hike before the end of this year after hawkish comments from RBA Deputy Governor Andrew Hauser who stated that the inflation outlook looks “materially worse” than forecast by the RBA back in August."

"He added that “we’re seeing higher AI prices, tech prices feeding through into CPI…and we’re having a boom in data centre construction here in Australia as well, so that’s upside too, and then on domestic capacity pressure”."

"He displayed concern that “inflation has been high for a very long time now, and we are beginning to see some signs that people in the community are not sure if we’re going to bring inflation back to target, or certainly not for an extended period”."

"The hawkish comments have encouraged market participants to price in closer to a 50:50 probability of another RBA hike next month."

"Higher yields in Australia have encouraged a stronger Australin dollar this year although it’s has underperformed recently alongside the wobble for AI-related trades."

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

UOB strategists Quek Ser Leang and Lee Sue Ann note that USD/JPY slipped modestly as the Japanese Yen (JPY) strengthened, with intraday price action confined to a narrow band. They see the pair locked in a short-term range between nearby support and resistance, while the 1–3 month view warns that rapid downward momentum could drive further weakness, though reaching the January low remains uncertain.

Dollar-Yen stuck in band, medium-term risk lower

"24-HOUR VIEW: We expected USD to “edge higher to 158.80” yesterday. However, after rising to a high of 158.59, USD declined sharply to a low of 157.81 before rebounding to close at 158.16 (-0.20%). There has been no shift in directional momentum, and today, USD is likely to range-trade between 157.90 and 158.65."

"1-3 WEEKS VIEW: In our most recent narrative from last Wednesday (14 Oct, spot at 158.35), we highlighted that USD “has likely moved into a range-trading phase between 157.50 and 159.05.” Since then, USD has traded within the range, and 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.)

• GBP(USD extends gains for the second consecutive day to test resistance at the 1.3400 area.
• UK CPI data added pressure on the BoE to hike interest rates in November.
• Above 1.3400, the next upside target is a previous support area near 1.3480.

The British Pound (GBP) extends gains against the US Dollar (USD) on Wednesday after some hesitation in the early European session, as the positive impact from the hot consumer inflation figures was offset by the increment in public borrowing. GBP/USD bulls are pushing against the resistance area at 1.3400 after rallying nearly 2% from last week’s lows. 

UK Consumer Price Index (CPI) figures released earlier in the day revealed that inflation accelerated beyond expectations in September, fuelled by high energy prices. These figures have cemented expectations that the Bank of England will finally hike interest rates at its November 4 meeting.

The Pound, however, hesitated immediately after the news release, as the UK’s Public Sector Net Borrowing figures, released at the same time, showed that government debt increased at the highest pace in more than five years in September, mainly due to debt interest. These figures might have stirred old concerns about the UK’s public finances as Chancellor John Healey prepares the budget, which is due to be released next week.  

Technical Analysis: Above 1.3400, the next target is 1.3480

GBP/USD trades at 1.3389, maintaining a constructive bullish tone after confirming above the previous two weeks' horizontal range earlier this week. The 4-hour Relative Strength Index (14), at 69.14, hovers just below overbought territory, while the Moving Average Convergence Divergence (MACD) histogram remains modestly positive, together suggesting that upside momentum is strong although increasingly stretched in the near term.

Above 1.3400, bulls will aim for the August 13 and September 3 lows in the 1.3470 area, which is also the 61.8% Fibonacci retracement of the August-October bearish cycle. Further up, the September 9 high, near 1.3670, would come next.

Immediate support is at the 1.3300 area, Monday and Tuesday's lows and the top of the previous two weeks' channel. A clear break of that level puts bears back in control and brings the year-to-date lows, around 1.3140, back into focus.

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

• The Indian Rupee gains sharply against the US Dollar after the Tuesday holiday.
• Concerns regarding AI growth and Fed repricing weigh on the US Dollar.
• The RBI continues to defend the Indian currency.

The Indian Rupee (INR) trades sharply higher against the US Dollar (USD) on Wednesday after a holiday the previous day. The USD/INR pair posts a fresh six-week low near 96.40 amid continued underperformance of the US Dollar.

As of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades almost flat at around 101.77, but is close to its nearly three-week low of 101.50 posted the previous day.

The US Dollar has been under pressure due to weakness in United States (US) Artificial Intelligence (AI)-related stocks and US bond yields being in a corrective phase amid Federal Reserve (Fed) repricing. Financial market participants see further downfall in the US Dollar on the back of these headwinds.

USD slide seen extending as Fed risks reprice and tech jitters build

Strategists at Scotiabank observe that “broad USD weakness looks poised to extend in the short run as markets reassess near-term Fed tightening risks,” pointing to last week’s “heavy net losses for the DXY” as evidence that the “Sep/Oct rally in the index is poised to correct or reverse, potentially towards the 100.80/101.30 area at least.” They add that “a deeper shake out in tech stocks could become a further headwind for the USD, given the dominance of the AI build out in the US growth/inflation narrative,” suggesting that renewed pressure on the sector may reinforce the current Dollar downtrend.

According to the CME FedWatch tool, the Fed is almost certain to leave interest rates unchanged at the policy meeting later this month. A month ago, the tool was showing a meaningful chance that the central bank could hike rates in October meeting too. Traders repriced hawkish Fed bets as several officials indicated no urgency for an another interest rate hike.

RBI doubles down on multi-layered defence to steady the rupee

Economists at DBS Group Research highlight that the Reserve Bank of India (RBI) has adopted a “multi-layered defence strategy to support the rupee this year,” combining “outright intervention in spot/forwards, regulatory action, liquidity steps, administrative measures and moves to curb import-related dollar demand.” According to DBS, the authorities are “likely not done yet and remain ready to take further action, as required,” with RBI Governor Malhotra underscoring the central bank’s resolve in a recent interview, stressing that “The RBI is determined to do whatever is necessary to ensure orderly movement in the foreign exchange market.”

However, DBS doubts sustained INR’s appreciation due to multiple headwinds. DBS says that even after recent policy efforts to shore up the Rupee, “we see limited room for sustained INR appreciation on grounds of manufacturing/trade competitiveness." They add that “a challenging portfolio flows outlook leaves the door open to further gradual rupee depreciation subject to global developments,” noting the currency’s “high sensitivity to oil price movements and risk sentiments.”

Technical Analysis: USD/INR stays below 20-day EMA

In the daily chart, USD/INR trades at 94.40, keeping a bearish near-term tone as spot holds well below the 20-period Exponential Moving Average (EMA) at 95.49.

The pair has unwound sharply from its recent highs, and while the Relative Strength Index (RSI) at 27 sits in oversold territory, this momentum reading only hints at stretched downside conditions rather than a clear recovery, leaving price action still capped by overhead trend resistance.

On the topside, immediate resistance is located at the 20-period EMA near 95.49, where any rebound would likely face renewed selling pressure. On the downside, the June 25 low at 94.15 is the key supprt level.

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