Forex News
- EUR/JPY flatlines near 177.30 in Friday’s early European session.
- BoJ’s Koeda says the central bank should not become overly cautious about raising interest rates.
- The cross maintains a negative tone below the 100-day SMA, with bearish RSI momentum.
- The first upside barrier emerges at 178.20; the initial support level to watch is 175.65.
The EUR/JPY cross trades on a flat note around 177.30 during the early European trading hours on Friday. Traders remain on high alert for currency intervention from Japanese authorities to prop up the Japanese Yen (JPY).
Furthermore, hawkish comments from a Bank of Japan (BoJ) policymaker could provide some support to the JPY and act as a headwind for the cross. BoJ policy board member Junko Koeda said that there is no need to be excessively cautious about rate hikes given that upside inflation risks remain substantial.
Koeda further stated that the Japanese central bank should adjust its policy rate in a timely manner while keeping in mind the estimated range of the neutral interest rate.
On the Euro front, Citi analysts believe French debt concerns could prompt the European Central Bank (ECB) to pause interest rate hikes after December, or earlier if financial stress spreads across the Eurozone. The ECB is likely to leave its deposit rate unchanged at 2.50% in October but raise it by 25 basis points (bps) in December as inflation runs nearly double its 2% target, according to a Reuters poll.
Japan flows highlight shifting confidence in JGBs and rising Yen headwinds from NISA-driven foreign equity buying
Analysts at MUFG note that September was “a month of turmoil in global bond markets,” reflected in “the selling of foreign bonds by Japanese investors.” In contrast, they highlight that “foreign investors did not show the same aversion to fixed income” and instead recorded “a notable JPY 3,091bn worth of purchases of Japanese bonds.” With September also marking another BoJ rate increase, MUFG suggests this inflow “could be indicative of improved confidence in JGBs after three consecutive months of selling through to August.”
The bank also points to Japan Investment Trust data as “telling,” with “foreign equity purchases totalling JPY 1,360bn in September.” MUFG stresses that “the buying has picked up,” noting that “the 3mth sum of foreign equity purchases totalled JPY 3,949bn, a new record over a 3mth period.” They emphasise that this Investment Trust flow “captures households buying of foreign securities via NISA accounts” and that “the expanded NISA limits adopted in January 2024 continues to have a notable impact.” MUFG calculates that “annualising this 3mth flow implies an outflow of close to JPY 16trn (USD 100bn) and is an increasing negative yen factor.”
Looking ahead, MUFG argues that “providing tax-free opportunities to hold JGBs could well have an impact on the flows to foreign equity markets that is so evident today and given the scale of foreign equity purchases currently would be viewed as a clear yen positive.” Such a move “would be one policy initiative that would help the government reach a target of 40% of household financial assets being invested in domestic securities.” At present, MUFG notes that “nearly half of all household savings are parked in cash deposits and large portions of pensions and investment trusts are invested in foreign securities,” underscoring the potential for policy tweaks to redirect savings back toward domestic markets.
Technical Analysis: Negative outlookf of EUR/JPY remains intact below the 100-day SMA
In the daily chart, EUR/JPY keeps a bearish near-term bias as spot holds beneath the 20-day Bollinger simple moving average (SMA) and well below the 100-day moving average. Price action sits in the lower half of the Bollinger envelope, while the Relative Strength Index (14) around 39 suggests subdued upside momentum and favors continued downside pressure unless resistance levels above are reclaimed.
On the topside, initial resistance level emerges at the 20-day Bollinger SMA near 178.20, en route to the 180.00 psychological level. Sustained trading above this level could pave the way to the upper boundary of Bollinger band at 180.75, with a more significant barrier at the 100-day moving average around 182.90.
On the downside, the lower limit of Bollinger band at 175.65 offers the next notable support. A clear break below this floor would open the door toward the October 20 low, 2025 of 175.34, followed by the October 2, 2025 low of 172.27.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Japanese Yen FAQs
The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.
One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.
Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.
The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.
Bank of Canada (BoC) Governor Tiff Macklem spoke during a panel discussion at the annual meetings of the IMF and World Bank in Bangkok. Macklem said that Canada has not hikes interest rates yet but the longer elevated energy prices go, the harder that gets, Reuters reported on Friday.
"We haven't raise our rates yet. We've been looking through the increase in energy prices, but the longer this goes, the harder that gets,” said Macklem.
Market reaction
At the time of writing, the USD/CAD pair is down 0.07% on the day at 1.4175.
Canadian Dollar FAQs
The key factors driving the Canadian Dollar (CAD) are the level of interest rates set by the Bank of Canada (BoC), the price of Oil, Canada’s largest export, the health of its economy, inflation and the Trade Balance, which is the difference between the value of Canada’s exports versus its imports. Other factors include market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – with risk-on being CAD-positive. As its largest trading partner, the health of the US economy is also a key factor influencing the Canadian Dollar.
The Bank of Canada (BoC) has a significant influence on the Canadian Dollar by setting the level of interest rates that banks can lend to one another. This influences the level of interest rates for everyone. The main goal of the BoC is to maintain inflation at 1-3% by adjusting interest rates up or down. Relatively higher interest rates tend to be positive for the CAD. The Bank of Canada can also use quantitative easing and tightening to influence credit conditions, with the former CAD-negative and the latter CAD-positive.
The price of Oil is a key factor impacting the value of the Canadian Dollar. Petroleum is Canada’s biggest export, so Oil price tends to have an immediate impact on the CAD value. Generally, if Oil price rises CAD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Oil falls. Higher Oil prices also tend to result in a greater likelihood of a positive Trade Balance, which is also supportive of the CAD.
While inflation had always traditionally been thought of as a negative factor for a currency since it lowers the value of money, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Higher inflation tends to lead central banks to put up interest rates which attracts more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in Canada’s case is the Canadian Dollar.
Macroeconomic data releases gauge the health of the economy and can have an impact on the Canadian Dollar. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the CAD. A strong economy is good for the Canadian Dollar. Not only does it attract more foreign investment but it may encourage the Bank of Canada to put up interest rates, leading to a stronger currency. If economic data is weak, however, the CAD is likely to fall.
Gold prices rose in India on Friday, according to data compiled by FXStreet.
The price for Gold stood at 12,736.75 Indian Rupees (INR) per gram, up compared with the INR 12,715.11 it cost on Thursday.
The price for Gold increased to INR 148,559.90 per tola from INR 148,306.60 per tola a day earlier.
Unit measure | Gold Price in INR |
|---|---|
1 Gram | 12,736.75 |
10 Grams | 127,371.70 |
Tola | 148,559.90 |
Troy Ounce | 396,160.50 |
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.
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.
(An automation tool was used in creating this post.)
- NZD/USD gains momentum to near 0.5650 in Friday’s Asian session.
- Fed's Warsh gives no hint on October policy decision.
- RBNZ’s Conway says next interest rate call ‘wide open.’
The NZD/USD pair rises to around 0.5650 during the Asian trading hours on Friday. The US Dollar (USD) faces some selling pressure against the New Zealand Dollar (NZD) following remarks from Federal Reserve (Fed) Chair Kevin Warsh.
Fed Chairman Kevin Warsh said on Friday that he does not "prejudge" interest-rate decisions, giving no preview of whether the central bank will hike or, as markets expect, hold short-term rates steady at its upcoming October 27-28 meeting.
The US Producer Price Index (PPI) rose by 6.3% year-on-year (YoY) in September, compared to a rise of 5.6% in August (revised from 5.4%), according to the Bureau of Labor Statistics on Thursday. This figure registered the largest increase since 2022 and was higher than the expectation of an increase of 5.3%.
Traders are now pricing in about a 27.7% probability of a rate hike later this month, the CME FedWatch Tool showed.
San Francisco Fed President Mary Daly and Fed Vice Chair for Supervision Michelle Bowman indicated that an immediate rate increase might not be necessary.
On the Kiwi front, Reserve Bank of New Zealand (RBNZ) Chief Economist Paul Conway said that the interest rate decision in late October is “wide open” even as inflation pressures build.
The RBNZ lifted its Official Cash Rate (OCR) twice in the third quarter (Q3), but surprised some in its September statement by saying it wanted to assess the impact of those back-to-back increases. This led traders to reduce the likelihood of a 25 basis point (bps) rate increase at the October policy meeting to little more than 60%.
Warsh flags investment surge and AI risks but keeps Fed options open into year-end
Fed Chair Warsh’s speech scores 5.6/10 on the FXS Speechtracker, modestly below the 6.1/10 established baseline, pointing to a slightly less impactful tone despite broadly steady policy messaging. The admission of being “over-scarred from the global financial crisis” underscores a cautious bias on financial stability even as Warsh highlights structural growth and an investment surge driven by “good policies,” suggesting a guarded hawkish stance on output, employment, and inflation ahead of the October and December meetings. Warsh’s focus on AI as a demand-side force and on tail risks, alongside the upcoming AI field hearing, reinforces a forward-looking but non-committal posture that avoids pre-judging the policy path for the rest of 2026.
The FXS Fed Sentiment Index was unchanged, moving 0.00 points to a level of 127.51, which keeps the overall policy tone firmly in hawkish territory. The combination of a stable, elevated index reading and a slightly softer FXS Speechtracker score indicates that, relative to the historical average, markets still perceive the Fed as leaning toward tighter policy even as Warsh emphasizes data dependence and risk management.
Technical Analysis: NZD/USD keeps a bearish vibe under the 100-day SMA
In the daily chart, NZD/USD holds below the 100-period moving average (MA) and the upper Bollinger Band, which keeps the pair in a capped, mildly bearish stance despite the recent bounce from oversold territory. Price trades just above the middle Bollinger Band, suggesting some near-term stabilization, while the Relative Strength Index (14) at 46.5 remains below the 50 line, hinting that recovery attempts lack strong bullish momentum for now.
On the downside, immediate support is located at the middle Bollinger Band at 0.5635, ahead of a stronger floor at the lower Bollinger Band near 0.5560. On the topside, initial resistance emerges at the upper Bollinger Band around 0.5710, with a more significant barrier at the 100-period MA at 0.5780; as long as NZD/USD remains under these levels, rallies are likely to be treated as corrective rather than the start of a sustained uptrend.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
New Zealand Dollar FAQs
The New Zealand Dollar (NZD), also known as the Kiwi, is a well-known traded currency among investors. Its value is broadly determined by the health of the New Zealand economy and the country’s central bank policy. Still, there are some unique particularities that also can make NZD move. The performance of the Chinese economy tends to move the Kiwi because China is New Zealand’s biggest trading partner. Bad news for the Chinese economy likely means less New Zealand exports to the country, hitting the economy and thus its currency. Another factor moving NZD is dairy prices as the dairy industry is New Zealand’s main export. High dairy prices boost export income, contributing positively to the economy and thus to the NZD.
The Reserve Bank of New Zealand (RBNZ) aims to achieve and maintain an inflation rate between 1% and 3% over the medium term, with a focus to keep it near the 2% mid-point. To this end, the bank sets an appropriate level of interest rates. When inflation is too high, the RBNZ will increase interest rates to cool the economy, but the move will also make bond yields higher, increasing investors’ appeal to invest in the country and thus boosting NZD. On the contrary, lower interest rates tend to weaken NZD. The so-called rate differential, or how rates in New Zealand are or are expected to be compared to the ones set by the US Federal Reserve, can also play a key role in moving the NZD/USD pair.
Macroeconomic data releases in New Zealand are key to assess the state of the economy and can impact the New Zealand Dollar’s (NZD) valuation. A strong economy, based on high economic growth, low unemployment and high confidence is good for NZD. High economic growth attracts foreign investment and may encourage the Reserve Bank of New Zealand to increase interest rates, if this economic strength comes together with elevated inflation. Conversely, if economic data is weak, NZD is likely to depreciate.
The New Zealand Dollar (NZD) tends to strengthen during risk-on periods, or when investors perceive that broader market risks are low and are optimistic about growth. This tends to lead to a more favorable outlook for commodities and so-called ‘commodity currencies’ such as the Kiwi. Conversely, NZD tends to weaken at times of market turbulence or economic uncertainty as investors tend to sell higher-risk assets and flee to the more-stable safe havens.
Federal Reserve Bank Chairman Kevin Warsh participates in a conversation with IMF Managing Director Kristalina Georgieva on Friday at the Fireside Chat with the International Monetary Fund (IMF) Managing Director Kristalina Georgieva, Bangkok, Thailand.
Key quotes
I might be over-scarred from the global financial crisis.
Since September FOMC meeting, world has broadly conformed to our expectations.
Will be crystallizing what's happening to output, employment, inflation.
We'll be meeting a couple more times this year, and that will be the crystallizing moment.
Right now we have structural growth, an investment surge.
Will make judgements at the October and December meeting.
Obviously, the Fed's policies spill over to rest of the world but their policies spill back to us too.
Investment surge is due to good policies.
Investment surge is most important thing happening in global economy on the upside.
At the Fed, we made clear that we would deliver price stability, I don't believe in pre-judging meetings
Don't prejudge meetings.
Don't believe in saying what I might do in meetings for rest of 2026.
In the US, we now pronounce AI as ‘SI’.
AI is going to hit the demand side of the economy before the supply shock.
AI will help central banks have confidence in data, monetary policy.
AI will change the real economy, but near-term impact on employment is uncertain.
Fed will have field hearing on AI in the San Francisco Bay Area on November 16.
Fed task forces are charged with creating new intellectual capital to aid FOMC.
US is investing through private sector into new technologies, the Fed does not try to figure out who is right or wrong.
Fed needs to think about financial stability risks.
Need to ask, 'are there negative tail-side risks' that policymakers can do something about.
If i hadn't been at the Fed before, I'd be hesitant to introduce new ideas.
Fed has a lot of talent, need to get the culture right.
75% of fed staff do not work on monetary policy.
Fed chair needs to be head of all parts of the Federal Reserve.
Fed's power comes from its institutional credibility; it must be burnished.
Will try to give equal focus to other parts of Fed business in the next 100 days.
I'm not in the legacy business; I'm trying to get policy right.
Proud that Volcker, Greenspan and Bernanke left the Fed with more institutional credibility.
World is changing faster than any part of my adult life so need to be front of our feet, what does this mean for us.
Inflation is not unique to the United States.
We saw synchronous tightening in monetary policy in most parts of the world, and that means there are no free riders.
Common vision around world is to make sure price stability is set, give confidence to businesses and households that's so important for growth to continue.
I prefer frameworks to mean regressing models.
In the US, we are going to come out stronger, durable economy most capable of leading economy.
Market reaction
As of writing, the US Dollar Index (DXY) is losing 0.22% on the day to trade at 101.82, facing headwinds from Warsh’s comments.
Warsh cautious on crisis scars but highlights investment surge and AI as Fed policy drivers
Fed Chair Warsh’s speech scores 5.6/10 on the FXS Speechtracker, modestly below the 6.1/10 established baseline, pointing to a slightly less impactful but still broadly aligned communication tone. The admission of being “over-scarred from the global financial crisis” underscores a structurally cautious bias even as Warsh emphasizes a structural growth and investment surge, suggesting a balanced stance between vigilance on tail risks and confidence in current policy outcomes. Warsh’s refusal to prejudge the October and December meetings, coupled with focus on AI and investment-led growth, keeps the policy path data-dependent and avoids explicit forward guidance that could unsettle Dollar markets.
The FXS Fed Sentiment Index was unchanged, moving 0.00 points to a level of 127.51, which remains firmly in hawkish territory and signals that the speech did not materially alter perceived policy bias. The combination of a steady, elevated index reading and a slightly softer FXS Speechtracker score suggests that, relative to the historical average, Warsh’s remarks reinforced an existing hawkish framework without adding new impetus for Dollar repricing.
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.
- The US Dollar Index posts fresh 10-day low near 101.80 even as Fed’s Warsh stresses on price stability.
- Fed’s Warsh said that right now we are witnessing structural growth and investment surge.
- Fed’s Hammac warns that lower-income Americans are struggling with inflation.
The US Dollar (USD) delivers a negative reaction after remarks from Federal Reserve (Fed) Chair Kevin Warsh at the Fireside Chat with International Monetary Fund (IMF) Managing Director Kristalina Georgieva.
As of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, is down 0.15% to near 101.80, the lowest level seen in 10 days.
US Dollar Price This week
The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the weakest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.36% | -0.52% | -0.14% | -0.69% | 0.41% | -0.70% | -0.39% | |
| EUR | 0.36% | -0.08% | 0.21% | -0.29% | 0.78% | -0.32% | 0.01% | |
| GBP | 0.52% | 0.08% | 0.25% | -0.21% | 0.86% | -0.22% | 0.07% | |
| JPY | 0.14% | -0.21% | -0.25% | -0.41% | 0.67% | -0.54% | -0.13% | |
| CAD | 0.69% | 0.29% | 0.21% | 0.41% | 1.10% | -0.12% | 0.30% | |
| AUD | -0.41% | -0.78% | -0.86% | -0.67% | -1.10% | -1.07% | -0.74% | |
| NZD | 0.70% | 0.32% | 0.22% | 0.54% | 0.12% | 1.07% | 0.29% | |
| CHF | 0.39% | -0.01% | -0.07% | 0.13% | -0.30% | 0.74% | -0.29% |
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).
In the event, Fed Chair Warsh stressed on achieving price stability, adding that he will make judgements at the October and December meetings. Warsh praised government policies being key driver to rising investments in the economy.
Warsh flags investment surge and AI risks but avoids pre-committing on rates
Fed Chair Warsh’s speech scores 5.6/10 on the FXS Speechtracker, modestly below the 6.1/10 established baseline, pointing to a slightly less impactful tone despite broadly steady messaging. The admission of being “over-scarred from the global financial crisis” underscores a cautious bias toward financial stability even as Warsh highlights structural growth and an investment surge driven by “good policies,” suggesting a guarded hawkish stance rather than an aggressive one. Warsh’s focus on AI, upcoming field hearings, and task forces to build new intellectual capital reinforces a forward-looking but non-committal approach, with explicit refusal to prejudge the October and December FOMC meetings keeping Dollar traders focused on data rather than guidance.
The FXS Fed Sentiment Index was unchanged, moving 0.00 points to a level of 127.51, which keeps the overall stance firmly in hawkish territory well above the neutral 100 mark. The lack of index movement, despite the slightly softer FXS Speechtracker score, indicates that Warsh’s remarks are seen as broadly consistent with the prevailing hawkish policy framework, leaving Dollar and broader FX expectations largely intact.
Several Fed members have already stressed on containing elevated price pressures, which are hurting households.
Hammack flags inflation mindset risks as Fed tone stays firmly hawkish
Fed’s Hammack delivers a moderately hawkish message, with a 7.2/10 FXS Speechtracker score slightly softer relative to the historical average of 7.6/10 but still signaling concern over persistent price pressures. The emphasis on lower-income Americans struggling with inflation, rising input costs, and the risk of an entrenched “inflation mentality” points to openness to more aggressive policy action if inflation expectations drift higher, especially given the view that financial conditions do not yet appear restrictive and the neutral rate is uncertain.
The FXS Fed Sentiment Index slipped by 0.25 points to 127.92, indicating a modest tonal pullback but remaining well above the 100 neutral mark. This keeps the broader Fed stance in clearly hawkish territory despite the slight decline, aligning with Hammack’s caution on inflation dynamics and the potential need for firmer policy if an inflationary mindset takes hold.
US Dollar Index Technical Analysis
In the daily chart, Dollar Index Spot trades at 101.83. The near-term bias is mildly bullish as price holds above the 20-day exponential moving average (EMA) at 101.63, suggesting underlying demand after the recent recovery from sub-100 levels. The Relative Strength Index (14) at 56.79 stays in neutral-to-positive territory, hinting that upside momentum is moderating but not yet deteriorating.
On the downside, initial support is defined by the 20-day EMA at 101.63, which acts as the primary technical floor while the index consolidates above it. As long as this level contains pullbacks, the broader constructive tone is likely to persist, though a decisive break lower would signal that the bullish phase is losing traction.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
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.
- USD/JPY struggles to capitalize on a modest Asian session uptick as USD bulls remain on the back foot.
- Fed Chair Warsh’s remarks do little to alter rate expectations or provide a fresh impetus to the USD.
- The technical setup warrants some caution for bearish traders before positioning for deeper losses.
The USD/JPY pair fades an Asian session uptick to the 158.15-158.20 region, sliding back below the 158.00 mark following Federal Reserve (Fed) Chair Kevin Warsh's opening remarks at the Annual Meetings of the International Monetary Fund and World Bank Group, in Bangkok.
In a conversation with the International Monetary Fund (IMF) Managing Director Kristalina Georgieva, Warsh said that the world has broadly conformed to our expectations since the September FOMC meeting. Warsh added that the Fed has made clear that it would deliver price stability and that he doesn't believe in prejudging meetings. This, along with a further decline in US bond yields, keeps the US Dollar (USD) depressed and exerts some downward pressure on the USD/JPY pair.
Meanwhile, traders remain on high alert amid fears that authorities will step in again to prop up the Japanese Yen (JPY), which contributes to capping the currency pair. However, the growing acceptance that the US central bank will raise borrowing costs again at its December policy meeting, along with persistent geopolitical uncertainties stemming from escalating conflicts in the Middle East, could act as a tailwind for the safe-haven Greenback. This could help limit losses for the USD/JPY pair.
From a technical perspective, the recent repeated failure near the 159.00 mark warrants caution for bullish traders. Adding to this, the Relative Strength Index (14) at 45.03 sits just below the midline and hints at neutral-to-slightly bearish momentum. Furthermore, the Moving Average Convergence Divergence (MACD) (12, 26, close, 9) remains marginally negative, suggesting that upside attempts could stay hesitant until momentum improves or the USD/JPY pair decisively breaks through 159.00.
Spot prices, however, have been finding decent support near the 157.50 horizontal zone, making it prudent to wait for sustained weakness below the said area before positioning for any further losses. The USD/JPY pair might then turn vulnerable to weaken further below the 157.00 round figure and aim towards testing the 156.50-156.45 horizontal support. Nevertheless, traders are more likely to wait for a momentum break in either direction to re-establish a stronger near-term trend for the currency pair.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
USD/JPY 4-hour 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.
- EUR/USD appreciates as Fed official Kevin Warsh emphasizes price stability over premature rate decisions.
- US PPI jumped 6.3% year-over-year in September, exceeding expectations and boosting the Greenback.
- Political fiscal challenges in France and a cautious ECB monetary policy stance keep gains restrained for the Euro.
EUR/USD remains stronger after posting modest gains the previous day, trading around 1.1230 during Asian hours on Friday. The currency pair inches higher as the US Dollar (USD) declines following recent comments from key financial leaders.
Speaking at a fireside chat with International Monetary Fund (IMF) Managing Director Kristalina Georgieva in Bangkok, US Federal Reserve (Fed) Chairman Kevin Warsh reiterated the Fed’s commitment to price stability while refusing to prejudge upcoming policy meetings. Warsh highlighted that an investment surge is currently the most significant upside force in the global economy.
Meanwhile, US Treasury Undersecretary for International Affairs, Erin Browne, called on the IMF to take a more assertive approach to identifying global imbalances and urged a balanced outlook considering positive US-led economic shocks. She further cautioned that sharp, disorderly currency moves could trigger volatility across broader financial markets.
However, the Greenback gained support from stronger-than-expected inflation data released by the Bureau of Labor Statistics on Thursday. The US Producer Price Index (PPI) surged 6.3% year-over-year in September, its largest gain since 2022, easily topping the market consensus of 5.3% and following a revised 5.6% increase in August. On a monthly basis, the PPI rose 1.3%, significantly outpacing the 0.5% analyst estimate. Core PPI, which excludes food and energy, also came in hotter than expected, rising 0.7% month-over-month and 5.0% year-over-year.
Despite the elevated inflation figures, market expectations regarding Federal Reserve interest rate decisions remained largely unchanged. According to the CME FedWatch Tool, traders are pricing in a 72% probability that the central bank will keep rates steady. However, expectations for a rate increase in December have climbed to 92%.
On the European front, upside momentum for the EUR/USD pair remains constrained due to political uncertainty in Europe, particularly in France. European Central Bank (ECB) President Christine Lagarde emphasized that France must address its national debt challenges through fiscal consolidation, dampening speculation that the ECB might intervene by purchasing French bonds to contain rising yields.
While Lagarde noted that energy-driven inflation has not yet spread to the broader euro-area economy, supporting a cautious policy stance, ECB policymaker Gediminas Šimkus asserted that a rate hike this month remains an option if necessary. Markets continue to price in another ECB rate increase in December.
Euro FAQs
The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
- AUD/USD edges higher to around 0.6945 in Friday’s early European session.
- Fed Chair Warsh says he won’t preview how it will adjust policy at its final two meetings this year.
- Pricing in financial markets showed the odds of a RBA rate hike in the November meeting dropped to below 20%.
The AUD/USD pair gains ground to near 0.6945 during the early European trading hours on Friday. The US Dollar (USD) attracts some sellers against the Australian Dollar (AUD) following a speech from Federal Reserve (Fed) Chair Kevin Warsh.
Fed Chair spoke at the International Monetary Fund (IMF) event on Friday, saying that he will assess the situation at the October and December policy meetings.
“We removed a dose of accommodation about a month ago,” said Warsh. “I don’t prejudge meetings. I don’t believe in saying now what I might do at the meetings that we have in the balance of this year,” he added.
On the Aussie front, financial markets trimmed the probability of a Reserve Bank of Australia (RBA) interest rate rise on November 3 to below 20% following the latest Australian jobs data, down from about 35% before the data, according to Bloomberg.
Unemployment has reached 4.7%, its highest rate in nearly five years, while the total number of employed Australians dropped by 39,300 jobs in September, the Australian Bureau of Statistics data showed earlier this week.
Australia jobs stumble as RBA annual report looms
Analysts at Rabobank highlight that “today the sun rises with Australian labour data for September,” showing the unemployment rate “printing at 4.7% and a contraction of almost 40 thousand jobs, erasing the job gains seen in July.” Against this softer backdrop, Rabobank notes that “the RBA will also be releasing its annual report later today,” which will be closely watched for any policy signals.
Warsh flags investment surge and AI risks as Fed keeps options open into year-end
Fed Chair Warsh’s speech scores 5.6/10 on the FXS Speechtracker, modestly below the 6.1/10 established baseline, pointing to a slightly less impactful but still broadly consistent tone. The admission of being “over-scarred from the global financial crisis” underscores a cautious bias even as Warsh highlights structural growth and an investment surge driven by “good policies,” suggesting a preference to wait for “crystalizing” data on output, employment, and inflation at the October and December meetings. Warsh’s focus on AI as a demand-side force and on tail-risk management reinforces a risk-aware stance that tempers any hawkish implications from the investment boom.
The FXS Fed Sentiment Index was unchanged, moving 0.00 points to a level of 127.51, which keeps the overall policy tone firmly in hawkish territory despite the slightly softer FXS Speechtracker score. The stable, elevated index level indicates that markets still interpret Warsh’s emphasis on price stability, investment strength, and upcoming data-dependent meetings as consistent with a bias toward tighter policy rather than a shift toward the Dollar-dampening dovish side.
Technical Analysis: AUD/USD retains a negative tone below the 100-day SMA
In the daily chart, AUD/USD keeps a bearish near-term bias as spot holds beneath a dense band of overhead levels. Price stays below the 20-period Bollinger middle band and the 100-day simple moving average (SMA), suggesting rallies remain capped while the pair consolidates in the lower half of the recent range. The Relative Strength Index (14) slips around 39, hinting at persistent but not extreme downside pressure after the latest decline.
On the topside, initial resistance is aligned with the 20-period Bollinger lower band around 0.6885, followed by the Bollinger middle band at 0.6990, where selling interest could re-emerge. Above that, the 100-day SMA at 0.7040 and the upper Bollinger band near 0.7095 form a broader supply zone that would need to be overcome to ease the current bearish tone and open the way for a more sustained recovery.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Australian Dollar FAQs
One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD.
The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive.
China is Australia’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs.
Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD.
The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.
US Treasury Undersecretary for International Affairs, Erin Browne, said on Friday that Japan is no longer faces deflationary environment, and the Japanese Yen (JPY) level and monetary policy must change along with that.
Key quotes
This is a moment of strong US economic momentum, we also take confidence from how far Japan has come.
Japan no longer faces deflationary environment and Yen level and monetary policy must change along with that.
US Japan communicate closely and work together at all levels to support stable, well-functioning markets.
IMF must be more assertive in identifying global imbalances.
IMF needs more balanced approach to assessing global outlook, should consider opportunities for positive, US-led economic shocks.
Sharp, disorderly currency moves can create much wider consequences, cause volatility across markets.
Market reaction
At the time of writing, the USD/JPY pair is up 0.01% on the day at 158.00
Risk sentiment FAQs
In the world of financial jargon the two widely used terms “risk-on” and “risk off'' refer to the level of risk that investors are willing to stomach during the period referenced. In a “risk-on” market, investors are optimistic about the future and more willing to buy risky assets. In a “risk-off” market investors start to ‘play it safe’ because they are worried about the future, and therefore buy less risky assets that are more certain of bringing a return, even if it is relatively modest.
Typically, during periods of “risk-on”, stock markets will rise, most commodities – except Gold – will also gain in value, since they benefit from a positive growth outlook. The currencies of nations that are heavy commodity exporters strengthen because of increased demand, and Cryptocurrencies rise. In a “risk-off” market, Bonds go up – especially major government Bonds – Gold shines, and safe-haven currencies such as the Japanese Yen, Swiss Franc and US Dollar all benefit.
The Australian Dollar (AUD), the Canadian Dollar (CAD), the New Zealand Dollar (NZD) and minor FX like the Ruble (RUB) and the South African Rand (ZAR), all tend to rise in markets that are “risk-on”. This is because the economies of these currencies are heavily reliant on commodity exports for growth, and commodities tend to rise in price during risk-on periods. This is because investors foresee greater demand for raw materials in the future due to heightened economic activity.
The major currencies that tend to rise during periods of “risk-off” are the US Dollar (USD), the Japanese Yen (JPY) and the Swiss Franc (CHF). The US Dollar, because it is the world’s reserve currency, and because in times of crisis investors buy US government debt, which is seen as safe because the largest economy in the world is unlikely to default. The Yen, from increased demand for Japanese government bonds, because a high proportion are held by domestic investors who are unlikely to dump them – even in a crisis. The Swiss Franc, because strict Swiss banking laws offer investors enhanced capital protection.
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