Forex News

MUFG’s Lee Hardman highlights a sharp adjustment lower in energy markets, with Brent down about 16% and still weakening. Renewed investor optimism over a potential US-Iran deal and increased diplomatic activity across the Middle East are supporting lower Oil prices. MUFG cautions that further progress in talks is needed to sustain cheaper energy and limit upward pressure on the US Dollar.

Energy slide linked to diplomacy

"The other main development last week was the sharp adjustment lower for energy prices. The price of Brent fell by around 16% and has continued to weaken further at the start of this week. Lower energy prices have been encouraged by renewed investor optimism over the potential for a US-Iran deal."

"Investor optimism has been encouraged further over the weekend by comments from President Trump who told CNN that it is “highly unlikely” he will need to order fresh military strikes on Iran if talks show progress. He noted that “it depends on whether or not they sign a very strong agreement."

"However, US Secretary of State Macro Rubio sounded more cautious saying that “I wouldn’t say we’re on the verge of a breakthrough”. Further progress in talks will be required to sustain lower energy prices and help to ease upward pressure on the US dollar from a more protected energy price shock."

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

Brown Brothers Harriman (BBH) reports New Zealand Dollar (NZD) is leading G10 FX performance, helped by New Zealand’s preliminary election result that reduces the risk of the Reserve Bank of New Zealand (RBNZ) reverting to a dual inflation-employment mandate.

Mandate stability underpins New Zealand Dollar

"KRW is outperforming across the board on Korean exporters’ dollar selling. NZD tops the G10 FX leaderboard. New Zealand’s preliminary election result reduces the risk the RBNZ returns to a dual inflation-employment mandate which could have tilted policy in a more dovish direction given weak labor market condition."

"New Zealand's ruling center-right coalition holds a one seat majority following Sunday’s election, with final results due November 27. The incumbent coalition led by the National Party wants to stick to the RBNZ’s sole price stability mandate which has been in place since December 2023. The Labour Party, meanwhile, ran on a proposal to return to a dual inflation-employment mandate."

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

Societe Generale reports USD/JPY traded in a 157.97–158.53 range overnight, with consolidation intact below the 158.68 200-day moving average (dma) and implied volatility steady. The pair is framed by support at 156.96 and resistance at 159.04.

USD/JPY holds under key average

"USD/JPY: 157.97 - 158.53 overnight range. Consolidation intact below 158.68 (200dma), implied vol steady. Support 156.96, resistance 159.04."

"Bank of Japan Governor Ueda: upside risks to inflation, haven’t heard complains on higher rates. Current account data tonight."

"The 10y UST yield successfully defended the 100dma at 4.80% and the question for any tactician is whether this week’s CPI print will endorse or cut short the return of duration buyers."

"Last month, hot CPI was roundly ignored as stocks tumbled on October 14th."

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

Brown Brothers Harriman (BBH) reports EUR/USD has bounced toward 1.1200 resistance after briefly trading near 1.1130, helped by lower Oil prices easing the energy drag on Eurozone growth. However, the bank warns that France’s ongoing fiscal troubles could still push EUR/USD down to 1.1000, keeping the pair vulnerable despite improved risk sentiment and energy dynamics.

Energy support versus fiscal headwinds

"EUR/USD recovered towards resistance at 1.1200 after testing an intra-day low around 1.1130 on Friday. Lower crude oil prices ease the energy drag on Eurozone growth and offers EUR support. However, France’s ongoing fiscal troubles can still drive EUR/USD down to 1.1000."

"Both contenders for the ECB presidency struck a pragmatic tone in newspaper interviews. Netherlands’ Klaas Knot noted that further tightening should be limited if energy prices remained roughly where they were, while signaling readiness to tackle disorderly bond market moves. Spain’s Pablo Hernandez de Cos stressed the “need to remain vigilant about inflation risks” but noted that second-round effects have yet to emerge."

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

ING’s Francesco Pesole says EUR/GBP trades 2.6–2.8% below short-term fair value, reflecting a French risk premium but still looking stretched. Following a hawkish Bank of England hike, he expects further tightening to be limited, sees market pricing for multiple cuts as too aggressive, and views a move back toward 0.840 in EUR/GBP as the most realistic outcome in coming weeks.

Fair value points to higher EUR/GBP

"EUR/GBP continues to trade sharply below its short-term fair value, by around 2.6-2.8% according to our models. That continues to reflect the euro’s idiosyncratic premium related to French risk (EUR/GBP has been one of the favourite channels), but even accounting for that, the decline in the pair looks a bit too stretched."

"The lack of dovish dissenters in November reinforced our view that the BoE will hike again in February, with some risk already in December."

"Market pricing for three more cuts remains far too aggressive in our view, and argues – alongside short-term valuation signals – against further sterling strength against the euro. A return to 0.840 in EUR/GBP remains the most realistic move in the coming weeks, in our view."

(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 has rebounded, lifting the Dollar Index back above 102.00 after post-election losses. Stronger US labour market data and higher employment growth have shifted the Federal Reserve’s focus toward upside inflation risks.

Dollar strength driven by labour data

"The US dollar has continued to trade at stronger levels overnight after rebounding strongly at the end of last week. It has resulted in the dollar index rising back above the 102.00-level after hitting a low of 101.10 on 4th November just after the release of the US mid-term elections results. The US dollar has quickly reversed all of its post-election losses encouraged by the release of further evidence showing that the US labour market continues to strengthen this year."

"Overall, the report provides further evidence that the US labour market is continuing to strengthen alongside stronger economic activity in recent quarters which will encourage the Fed to tighten policy further. However, with the risk of second round inflation effects from the labour markets still appearing contained the report does not significantly increase pressure on the Fed to speed up plans for hikes helping to dampen upward pressure on US yields and the US dollar."

"Market participants and the Fed will be watching closely for evidence of spillover effects from higher energy prices in the latest US inflation data released this week."

"The US dollar appears to be running ahead of short-term yield spreads indicating that a hawkish surprise maybe required to maintain US dollar strength.

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

ING strategists Francesco Pesole, Frantisek Taborsky and Chris Turner note that recent contagion from AI-driven equity selling into defensive stocks has lifted the Dollar, even before strong US jobs data. They argue the Dollar rally looks stretched and say softer front-end US rates and upcoming US CPI should limit upside.

Dollar rally seen overstretched

"We think the dollar rally requires the risk-off mood to persist this week. Otherwise, there is some moderate correction risk, as Friday’s move looked a bit too stretched relative to short-term market drivers. Still, in our view, the macro story should prevent DXY from returning to last week’s lows of 101.1."

"We expect tomorrow’s October US CPI to come in at 0.3% month-on-month for both headline (consensus 0.3%) and core (0.3%). That should help cement expectations for a December Fed hike (19bp priced in), making the swap curve more protected from other equity market shocks."

"Contagion from AI to defensive stocks in the US and worldwide allowed the dollar to rally even before the strong US jobs market report. But unless risk sentiment remains poor this week, lower front-end US rates should favour a weaker dollar, even if inflation tomorrow comes in slightly hotter than expected."

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

Deutsche Bank reports the S&P 500 at 7377, up 0.31% Friday but down 2.68% on the week, its worst since April 2025. AI-exposed stocks saw heavy losses, while sector rotation favoured Consumers Discretionary and Communications Services. Despite volatility, Deutsche Bank’s asset allocation team finds global and US earnings growth in Q3 remained remarkably strong with record margins.

Index hit by AI slump, earnings strong

"The S&P 500 fell -2.68% (+0.31% Friday), marking its worst weekly performance since April 2025."

"Moreover, the most AI-exposed areas saw even bigger declines, with the Philly semiconductor index down -12.15% (+4.21% Friday), whilst CoreWeave fell another -15.44% (+6.28% Friday)."

"Our asset allocation team have reviewed the global earnings season here and highlighted how growth has remained remarkably strong in Q3 despite a very high hurdle after 38% year-on-year growth in Q2 and persistent upgrades ahead of the reporting season."

"US earnings growth likely held at 34%, with the median company growing 14% and growth excluding Tech, Energy and Materials at 13%, one of the strongest rates since the GFC."

"So although consensus sees some moderation in 2027, the striking feature of this earnings season has been how broad-based the strength remains even against an exceptionally demanding starting point."

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

• The Eurozone Sentix Investor Confidence Index falls to 2.4 in November from 2.7 in October.
• Economic expectations deteriorate amid elevated interest rates, high energy prices and political uncertainty.
• Germany shows modest signs of stabilization, although investor confidence remains in negative territory.

Investor confidence in the Eurozone deteriorates slightly in November, according to the latest Sentix survey released on Monday. The Sentix Investor Confidence Index falls to 2.4 points from 2.7 in October.

Looking at the details, the Current Situation Index remains unchanged at -3.3 points, while the Economic Expectations Index declines by 0.5 points to 8.3 points. This divergence highlights growing investor caution regarding the Eurozone's economic growth outlook.

Sentix warns that hopes for a sustained economic recovery have suffered another setback, citing rising interest rates, elevated energy prices and political uncertainty as the main obstacles to economic activity.

Meanwhile, Germany shows modest signs of stabilization. The country's Investor Confidence Index rises by 0.3 points to -3.3 in November, although it remains in negative territory.

Market reaction

The Euro (EUR) shows little reaction to the Sentix survey, with EUR/USD rising 0.45% on Monday to trade around 1.1190 at the time of writing.

• Gold retraces Friday's losses and picks up to levels near $4,100 on Monday
• Risk appetite hurt the USD on Monday, with Iran peace talks in progress and Oil prices steady near two-month lows
• XAU/USD price action holds above the top of the descending channel from late August highs

Gold (XAU/USD) shows moderate gains on Monday, reversing Friday’s losses, and consolidating last week’s recovery, with price action levels just below $4.100 and last week’s highs, in the $4,150 area on the bulls’ focus. Precious metals are drawing support from a weak US Dollar, as efforts towards a peace deal in the Middle East continue, and Oil prices remain steady near two-month lows.

The US Dollar is dropping across the board on Monday amid improved risk sentiment, following news reports of ongoing negotiations to reach a peace deal in Iran. US President Trump contributed to improve the market mood as he affirmed on Sunday that it is unlikely that hostilities against the Islamic Republic will resume if talks show progress.

Recent macroeconomic data, however, has been USD supportive. US Nonfarm Payrolls growth overshot expectations by a wide margin in October, paving the path for further Federal Reserve (Fed) tightening in December. Key Fed policymakers also supported that view following the NFP release on Friday. This is likely to keep US Dollar dips contained.

Technical Analysis: Gold bulls break the top of the bearish channel

XAU/USD trades at $4,094, after bouncing above the upper boundary of the downward-trending channel earlier in the day. The broader tone remains capped as spot gold stays well below the 200-day Simple Moving Average (SMA), but the daily Relative Strength Index (14) has stabilized around the 50 level, and the Moving Average Convergence Divergence (MACD) indicator has turned positive, highlighting a growing upside momentum.

Bulls are likely to meet resistance at the mentioned $4,150 area, which capped rallies on Friday. If this level gives way. the next targets are the early October highs around $4,230, and then the mid-September highs near $4,400.

On the downside, initial support is seen at the confluence of the broken trendline, at $ 4,050, Friday's low at $4,030, and the $4,000 psychological level. A bearish reaction below here negates the bullish view and brings the November 3 low near $3,900 and the Channel bottom, now at $3,825, into focus.

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