Forex News

• USD/CAD may find initial barrier at the 18-month high of 1.4298.
• The 14-day Relative Strength Index at 68.07, signaling upside potential, is stretching near recent highs.
• The primary support lies at the nine-day EMA of 1.4236.

USD/CAD depreciates after two days of gains, trading around 1.4260 during European hours on Tuesday. The technical analysis of the daily chart indicates that the price is remaining within the ascending channel pattern, suggesting a persistent bullish bias.

The USD/CAD pair is extending its advance while holding above both the nine- and 50-period Exponential Moving Averages (EMAs), which reinforces a bullish near-term bias. The 14-day Relative Strength Index (RSI) at 68.07 hovers just below the overbought threshold, hinting that upside momentum remains strong but increasingly stretched as price presses against recent highs.

The USD/CAD pair may rebound toward the 18-month high of 1.4298, recorded on October 9. A successful break above this level would support the pair to test the top trendline of the ascending channel around 1.4390, followed by the psychological level of 1.4300.

On the downside, the primary support lies at the nine-day EMA of 1.4236. A break below the short-term price average would weaken the bullish bias and put downward pressure on the USD/CAD pair to navigate the region around the bottom trendline of the ascending channel around 1.4110, followed by the 50-day EMA of 1.4062.

Hammack leans hawkish as Fed rhetoric underscores need for tighter policy

Fed’s Hammack delivers a notably more hawkish message, with an FXS Speechtracker score of 8.4/10 compared to the established baseline of 7.5/10, emphasizing that interest rates need to be higher and that more tightness is needed in the economy. The focus on widespread inflation pressures, strong demand beyond energy, and the risk of an inflationary mindset becoming ingrained, alongside a preference for frequent, smaller policy tweaks, signals a restrictive bias even as financial conditions are described as neutral and trend inflation is seen stuck in the mid-to-high 2% range for some time. Hammack’s insistence that inflation expectations should not be assumed anchored, and that Fed officials must clarify the reaction function, reinforces a message of readiness to act relatively quickly to keep policy tight until the 2% target is credibly in sight.

The FXS Fed Sentiment Index rose by 0.59 points to 138.92, keeping Fed rhetoric firmly in hawkish territory well above the neutral 100 threshold and aligning with the elevated FXS Speechtracker score. This combination of a stronger hawkish tone and a high index level suggests sustained support for a tighter policy path, which is typically Dollar-positive and a headwind for risk-sensitive currencies.

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

• AUD/JPY drifts lower on Tuesday as BoJ rate hike bets and intervention risks boost the JPY.
• The AUD benefits from a broadly weaker USD, helping limit additional losses for spot prices.
• The bearish technical setup backs the case for an extension of the intraday depreciating move.

The AUD/JPY cross comes under some renewed selling pressure on Tuesday and retreats further from the 110.65 resistance zone, retesting the previous day. Spot prices slide to a fresh daily low during the early European session, with bears now awaiting a break below the 110.00 mark before positioning for further losses.

Traders remain on high alert amid speculation that Japanese authorities will step in to prop up the domestic currency. Adding to this, firming expectations for further policy tightening by the Bank of Japan (BoJ) provide a modest lift to the Japanese Yen (JPY), which, in turn, is seen as a key factor exerting pressure on the AUD/JPY cross. Meanwhile, the Australian Dollar (AUD) benefits from a modest US Dollar (USD) pullback from an 18-month peak and might help limit the downside for the currency pair.

From a technical perspective, spot prices keep a bearish intraday bias following the overnight rejection around the 100-period Simple Moving Average (SMA) on the 4-hour chart. Moreover, Moving Average Convergence Divergence (MACD) remains below zero with a negative reading of -0.03, and the Relative Strength Index (RSI) at 48.48 stays neutral, hinting that downside pressure is present but not yet overstretched. This, in turn, validates the near-term negative outlook for the AUD/JPY cross.

That said, some follow-through selling and acceptance back below the 23.6% Fibo. level and the 110.00 psychological mark is needed to back the case for deeper losses to the structural floor at 108.73. On the topside, initial resistance is seen at the 100-period SMA at 110.58, followed by the 38.2% Fibo. level at 111.12 and the 200-period SMA at 111.42, before the 50.0% retracement at 111.85 and the 61.8% level at 112.59 come into play. Higher up, the 78.6% retracement at 113.64 and the cycle high at 114.98 mark a broader cap.

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

AUD/JPY 4-hour chart

Danske Research Team highlights that global equities finished broadly flat, masking notable rotation as investors cut AI and semiconductor exposure. Europe and defensive sectors outperformed, with consumer staples leading. Despite a marginal S&P 500 decline, breadth remained strong and the equal-weighted index outperformed, challenging narratives of narrow US leadership signalling an imminent broader correction.

AI and semiconductors under pressure

"Global equities finished broadly flat on Monday, but the headline concealed substantial rotation as investors cut AI exposure, particularly semiconductors, among this year's strongest performers. Europe and defensives outperformed, with consumer staples leading sector returns. "

"Despite the marginal decline in the S&P 500, 321 constituents advanced versus 179 that declined, marking the seventh session in eight with positive breadth and another day of outperformance for the equal weighted index."

"We remain cautious about historical parallels: leadership has been driven predominantly by substantially stronger earnings growth rather than relative multiple expansion, an important distinction when assessing its vulnerability."

"The rotation away from AI and not least semiconductors continue this morning, with Korea's KOSPI down around 7%."

"European and US futures are mixed, with defensive exposure providing support while AI and semiconductors remain under pressure.

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

Commerzbank’s India section notes September CPI at 5.5% year-on-year, above August and near breaching the RBI’s target band, with risks skewed to the upside from Oil, INR weakness and El Niño. The authors flag RBI’s recent FX measures that strengthened the Indian Rupee and suggest USD/INR could ease back toward the 94–96 range in the near term as hedging costs rise for importers.

RBI actions underpin Indian Rupee

"September CPI inflation rose to 5.5% yoy (Bloomberg consensus: 5.6%) vs 4.8% in August, the highest reading since December 2024.The increase was led by higher food prices, but there were also signs that price pressures could be broadening out. Headline inflation is expected to breach the upper bound of the Reserve Bank of India’s (RBI) 2-6% target range as early as October."

"Last week, RBI projects inflation to average 6.0% in Q4 2026 and raised the forecast for fiscal year 2026-2027 to 5.2% from 5.0% previously. Overall, inflation risks are broadening beyond supply-side factors and remain tilted to the upside due to elevated oil prices, INR weakness and weaker rainfall amid the El Niño weather phenomenon."

"On monetary policy, upside risks to inflation leaves the door open for RBI to hike by another 25bp to 5.75% at the next meeting on 4 December and possibly another 25bp in Q1 2027. RBI has signalled a calibrated tightening bias."

"In FX, USD/INR fell nearly 1.0% to 95.78 yesterday following RBI measures aimed at supporting the INR. These included a special USD facility for state-run oil marketing companies and a reduction in the threshold for INR derivatives without an underlying asset to USD5mn from USD100mn."

"RBI also introduced a new Foreign Exchange Risk Reserve (FERR), requiring 20% of the notional value of each FX derivative transaction above USD2mn to be held with the central bank. The measures could support the INR while raising hedging costs for importers."

"We could see USD/INR ease back to the 94-96 range near term."

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

• XAG/USD reverses an intraday dip, though the upside remains capped.
• The USD retreats from an 18-month high and supports the commodity.
• The technical setup warrants caution before placing fresh bullish bets.

Silver (XAG/USD) attracts some dip-buyers in the vicinity of mid-$59.00s on Tuesday and sticks to its modest intraday gains through the early European session. The white metal, however, lacks bullish conviction and currently trades around the $60.50 area, up just over 0.30% for the day.

The US Dollar (USD) retreats from its highest level since April 2025 as bulls opt to take some profits off the table, offering some support to XAG/USD. However, the US Federal Reserve's (Fed) hawkish outlook and geopolitical uncertainties could limit deeper USD losses. Traders might also opt to wait for the release of the latest US consumer inflation figures and Fed Chair Kevin Warsh's speech on Friday for more cues about the policy path, which will drive the USD and provide a fresh impetus to the white metal.

From a technical perspective, the XAG/USD retains a bearish near-term bias beneath the 23.6% Fibonacci retracement level and the 100-period Simple Moving Average (SMA) on the 4-hour chart. Moreover, momentum indicators suggest only modest, consolidative price action rather than a decisive bullish recovery. In fact, the Moving Average Convergence Divergence (MACD) indicator hovers slightly in positive territory with a flat read. Moreover, the Relative Strength Index (RSI) at 51.39 sits near neutral.

Meanwhile, the 23.6% Fibo. level at $61.54 could act as an initial hurdle ahead of the 100-period SMA at $61.98, which forms a nearby cap. The XAG/USD would need to clear this barrier to ease downside pressure and climb further to the 38.2% retracement at $63.38 en route to the 50.0% level at $64.87, ahead of deeper Fibonacci resistance at $66.36, $68.48 and the cycle high zone near $71.17. On the flip side, the primary structural support is the Fibonacci anchor around $58.57, where buyers could attempt to reassert a floor if the current bearish tone extends.

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

XAG/USD 4-hour chart

• EUR/GBP edges up above 0.8450 but remains close to 16-month lows at 0.8444.
• The pair has lost nearly 2% in just over two weeks, hammered by concerns about a credit crisis in France and surging Oil prices.
• German inflation data confirmed that prices accelerated in September, boosted by higher energy costs.

The Euro (EUR) shows a frail recovery attempt against the British Pound (GBP) on Tuesday but remains broadly bearish, after a nearly 2% selloff in just over two weeks. The EUR/GBP pair trades at the 0.8450 area after bouncing from 16-month lows at 0.8444, but rallies are likely to remain subdued with the crisis in France and the elevated Oil prices weighing heavily on the common currency.

The Euro is weighed down by an uncertain, volatile situation in France, with no clear end in sight. France’s ballooning debt has sent borrowing costs to levels unseen since the 2009-2011 financial crisis; a deadlocked government lacks the support to carry out any credible savings plan, and student protests are spreading throughout the country, reclaiming more resources for education.

Oil prices above $100 remain a heavy burden for the Euro

Beyond that, Oil prices remain at painful levels for the Eurozone’s Crude-importing economies, adding pressure on the Euro. Brent Oil edges lower on Tuesday but remains well above the critical $100 level, as tensions in the Middle East remain high while the Ukraine-Russia energy ceasefire announced by US President Donald Trump on Sunday came to nothing.

On the Macroeconomic front, German final Harmonized Index of Consumer Prices (HICP) data confirmed that inflation accelerated to 0.6% in September, from 0.2% in August, with the year-over-year rate jumping to 3.3% from 2.9% in the previous month. The release failed to move the Euro.

The Pound, on the other hand, is showing resilience amid the risk-off markets, as solid UK data and the high inflationary pressures have prompted some hawkish repricing by the Bank of England (BoE). “Until now, we had not expected the BoE to hike rates again. Recent developments, however, have led us to conclude that a November rate hike is now more likely than not," says Volkmar Baur, analyst at Commerzbank.

ING strategists Warren Patterson and Ewa Manthey note that Oil prices remain supported as traders focus on Middle East and Persian Gulf supply risks rather than the Russia-Ukraine energy ceasefire. Brent has pushed back toward $107/bbl, while hurricane-related disruptions in the Gulf of Mexico and Saudi plans to expand pipeline capacity add further supply-side complexity for the market.

Brent supported by supply concerns

"The weakness in the oil market following President Trump’s announcement of an energy ceasefire between Russia and Ukraine was short-lived. That goes, too, for the US-Russia diesel export deal. ICE Brent settled 1.8% higher, just shy of $107/bbl yesterday — the highest close since mid-September."

"Clearly, the market is more concerned over recent developments in the Middle East, with Houthi attacks on Saudi Arabia and the lingering risks to oil flows from the Persian Gulf."

"While diesel initially saw some weakness following the US-Russia deal, strength has returned. The volumes suggested are doing little to offset the tightness in the global middle distillate market."

"The Persian Gulf could see further bypass volumes in a relatively short time period. The Saudi Energy Minister said that the country is looking to expand its pipeline export capacity to 10m b/d, up from a current 7m b/d."

"Meanwhile, hurricane activity in the Gulf of Mexico continues to disrupt offshore operations for US producers; they’ve shut in almost 605k b/d of oil production, which is equivalent to nearly 30% of total US production in the Gulf of Mexico, according to the Marine Minerals Administration."

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

Here is what you need to know on Tuesday, October 13:

The US Dollar Index (DXY) retreats from a 18-month high to around 102.35 after a holiday in some US markets. Yields on the 10-year Treasury bond ease, while oil prices drop. The US ADP Employment and Existing Home Sales data will be released later in the day. Attention will shift to the US Consumer Price Index (CPI) inflation report on Wednesday, followed by Producer Price Index (PPI) and Retail Sales data on Thursday. These reports could provide further direction on the Federal Reserve’s (Fed) policy path.

Markets are now pricing in nearly an 80.6% probability that the US central bank will hold rates steady in its October policy meeting, but are pricing in an 84.7% odds of an increase at the final meeting of the year in December, according to the CME FedWatch tool.

Traders assessed the prospect of increased diesel supplies from Russia as hopes for an energy ceasefire between Moscow and Kyiv remained uncertain, despite US President Donald Trump’s announcement. Ukrainian President Volodymyr Zelenskiy said on Monday that Russian forces had struck at least six energy facilities during deadly airstrikes across Ukraine.

Meanwhile, the Saudi-led coalition fighting Yemen’s Iran-backed Houthi rebels reported that it was responding to another wave of drone and missile attacks targeting Saudi Arabia.

According to the Reserve Bank of Australia (RBA) Minutes, board members discussed the challenges of judging how large the upside risks to inflation were or could become after hiking the Official Cash Rate (OCR) to 4.6%. The board will do what’s needed to meet its mandate, “including increasing the cash rate target further if required.”

The International Monetary Fund (IMF) raised the 2026 world economic growth outlook to 3.1% from 3.0% in July, with strong AI investment offsetting the energy shock from the Middle East war. The IMF projected 2027 world GDP growth to be unchanged at 3.4% and warned of “resilience under strain."

Oil shock fades but bond volatility persists as HSBC flags limits to relief

Strategists at HSBC Asset Management argue that “one of the major factors behind 2026’s bond market shock has been the surge in oil prices caused by the Iran conflict.” They note that this linkage was clearly visible earlier in the year, with “overlapping movements between implied measures of bond and oil market volatility as measured by the MOVE and oil VIX indices, respectively.” However, HSBC highlights that “what’s interesting is the recent disconnection between these volatility measures: bond markets have continued to sell off and remain choppy even though oil prices have settled.” In their view, “the initial leg higher in yields has created its own problems,” and with “hyperscaler debt issuance likely to remain massive, investors shouldn’t expect falling oil prices to be a silver bullet” for reversing bond market weakness.

EUR/USD rebounds from a 17-month low to 1.1175 in the European morning. Traders brace for Germany’s Harmonized Index of Consumer Prices (HICP) and speeches by European Central Bank (ECB) members Elderson, Escriva and Lane.

GBP/USD gathers strength to around 1.3225 on Tuesday. Bank of England (BoE) policymaker Megan Greene is set to speak later in the day.

USD/JPY softens to near 158.20 in the European session on Tuesday. The Statistics Bureau of Japan revealed on Tuesday that Japan's wholesale prices rose 6.8% YoY in September, versus 7.6% prior. This figure was slower than the previous month but indicated mounting inflationary pressure that ‌keeps alive market expectations of a near-term interest rate hike.

Gold edges higher to near $4,200 on Tuesday as crude oil prices ease. Inflows into gold-backed ETFs have reached a four-year high, according to data compiled by Bloomberg.

(This story was corrected on October 13 at 07:00 GMT to say, in the title, that US Dollar retreats from 18-month high as bond yields, oil prices ease, not 17-month high.)

• AUD/USD ticks up to near 0.6960 as the US Dollar faces pressure.
• A drop in US bond yields has led to some correction in the US Dollar.
• Investors keenly await the CPI data from the US and China, and the Australian employment data.

The Australian Dollar (AUD) is marginally higher at around 0.6960 against the US Dollar (USD) during the European trading session on Tuesday. The Aussie pair edges up as the US Dollar comes under pressure due to a decline in United States (US) Treasury Yields ahead of the Consumer Price Index (CPI) data for September, which will be released on Wednesday.

As of writing, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, is down 0.16% to near 102.40. Still, the DXY is close to its fresh yearly high of 102.61 posted on Monday. 10-year US bond yields trade 0.85% lower to near 5.20%.

The US CPI report is expected to show that the headline inflation accelerated to 3.7% Year-on-Year (YoY) from 3.4% in August. The core CPI – which excludes volatile items such as food and energy – is seen higher at 2.5% YoY from the previous reading of 2.4%.

Investors will pay close attention to the US CPI data as it is expected to influence Federal Reserve’s (Fed) interest rate expectations. Currently, the CME FedWatch tool show traders are confident that the Fed will leave interest rates unchanged in the policy meeting later this month.

On the Australian Dollar front, investors await China’s CPI and Australian employment data for September, which are scheduled for Wednesday and Thursday, respectively.

AUD/USD Technical Analysis

In the daily chart, AUD/USD trades at 0.6960, keeping a bearish near-term tone as spot holds beneath the 20-day exponential moving average (EMA) at 0.7009. The pair’s inability to reclaim this short-term trend indicator suggests rallies remain capped for now, while the Relative Strength Index (14) at 37.6 stays below neutral territory, hinting at lingering downside pressure rather than outright oversold conditions.

On the topside, initial resistance is located at the 20-day EMA at 0.7009, and a sustained break above this level would be needed to ease immediate bearish pressure and open the way for a more constructive recovery phase. On the downside, the October 1 lo at 0.6904 is the key support level; a decisive break below the same would expose the pair to the June low at 0.6865.

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