Forex News

The US Dollar (USD) has added to Monday’s optimism, advancing to the area of fresh two-week highs on the back of mixed US Treasury yields and the continuation of the pre-Fed cautious stance in the global markets.

The US Dollar Index (DXY) has further extended its recent break above the key 102.00 hurdle, reaching new two-week tops. The FOMC gathering will take centre stage seconded by the usual press conference by Chair Warsh. Data-wise, the usual MBA Mortgage Applications are due, followed by the advanced Goods Trade Balance results, Wholesale Inventories, and the EIA’s weekly report on US crude oil stockpiles.

EUR/USD has come under extra selling pressure, receding toward two-week lows near 1.1130. Germany’s GfK Consumer Confidence gauge will only be released on the domestic calendar.

GBP/USD has retreated for the third day in a row, approaching the key 1.3300 neighbourhood, or five-day lows. The Autumn Budget will be the main focus on the UK docket.

Another firm performance has lifted USD/JPY to the boundaries of the 15800 barrier, hitting three-day highs. Next on tap in Japan will be the usual weekly Foreign Bond Investment figures along with the Consumer Confidence reading, all due on October 29.

AUD/USD has outperformed its risk-related peers, reaching new five-week highs north of the key 0.7000 yardstick. The main focus on the Australian docket will be the release of inflation figures for the month of September.

Front-month WTI futures (December contract) have come under extra pressure, challenging the $99.00 mark per barrel and adding to Monday’s retracement as traders continue to gauge hopes of a diplomatic solution to the US-Iran-Hormuz conflict.

Gold has picked up marked traction, extending Monday’s uptick and reaching three-day highs further north of the key $4,000 mark per troy ounce. Declining crude oil prices along with mixed US Treasury yields appear to have lent some support to the precious metal on Tuesday.

DBS Group Research economist Ma Tieying reviews South Korea’s preliminary 3Q GDP data, highlighting solid growth and strong exports led by semiconductor shipments, alongside weaker private consumption after the KOSPI correction. The report concludes that the AI-driven growth cycle remains intact and revises South Korea’s 2026 GDP forecast higher to 3.8% and 2027 to 2.9%.

AI momentum underpins revised forecasts

"South Korea’s preliminary 3Q GDP estimate, released this morning, came in stronger than expected. Year-on-year growth remained solid at 3.4% in 3Q, moderating slightly from 3.7% in 2Q and 3.8% in 1Q."

"On a QoQ saar basis, growth also remained firm at 3.9%, compared with an average of 5.0% in 1Q–2Q.Exports of goods and services rose by a strong 9.6% QoQ saar, supported by robust semiconductor shipments."

"Private consumption, however, declined by 1.0%, amid the sharp KOSPI correction since July following the introduction of leveraged ETF regulations.Overall, the 3Q GDP data corroborate our view that the AI-driven growth cycle remains intact, while the equity market correction may have contributed to a temporary divergence between exports, investment and domestic consumption."

"We revise up our 2026 GDP growth forecast to 3.8% from 3.5%, and our 2027 forecast to 2.9% from 2.4%."

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

Scotiabank strategists Shaun Osborne and Eric Theoret say British Pound (GBP) is softer versus the Dollar as markets stay cautious ahead of Wednesday’s UK budget. Overnight GBP/USD volatility is firmer, but a fiscally credible package is expected to be neutral for the Pound. Technically, they see GBP/USD below minor support, with risks of a pullback toward the 1.3250–1.3275 area before bargain-hunting emerges.

Fiscal event risk keeps Sterling subdued

"Caution ahead of Wednesday’s UK budget accounts for some of the GBP’s softness against the USD."

"Overnight GBP/USD vols are firmer, reflecting caution ahead of Chancellor Healey’s set-piece delivery tomorrow but a budget that maintains fiscal credibility will likely be GBP-neutral at worst."

"The GBP retains a soft undertone versus the USD, driving spot below minor support at 1.3350/55."

"That leaves the October 19th low at 1.3300 exposed and lifts the risk of the pound easing back to the 1.3250/75 range to retrace a little more of its mid-month rebound."

"Modest GBP losses should entice support from bargain-hunters."

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

• USD/CHF confirms a bullish engulfing pattern, preserving higher highs and lows.
• Bullish RSI strengthens upside momentum as buyers approach 0.8300 resistance.
• Break above 0.8300 exposes 0.8354, followed by 0.8395 and 0.8400.

USD/CHF advances for the third straight day, registering modest gains of 0.09% on Tuesday, with the pair recovering some ground after hitting a monthly low of 0.8191 last Friday. The pair exchanges hands at 0.8282 with buyers eyeing the 0.8300 mark.

USD/CHF Price Forecast: Technical outlook

Price action shows that the trend is up as the market structure of higher highs and higher lows is respected. Also, the formation of a ‘bullish engulfing’ candle pattern last week was confirmed on Monday, with USD/CHF clearing the October 23 high of 0.8256, which exacerbated the continuation of the trend.

Momentum turned bullish as depicted in the Relative Strength Index (RSI). Therefore, as price action and the RSI confirm, the USD/CHF path of least resistance is upward.

The first area of interest would be the 0.8300 mark. A breach of the latter will expose the October 15 high of 0.8354, with the next stop at 0.8395, the October 14 swing high. Once cleared, 0.8400 is up next, followed by the May 12, 2025 high of 0.8476.

For a bearish reversal, the first support for USD/CHF is Monday’s low of 0.8232. Below is the 50-day Simple Moving Average (SMA) of 0.8202, followed by the 0.8200 figure. A move past that area clears the way towards the 100-day SMA at 0.8143.

USD/CHF Price Chart – Daily

• AUD/USD edges higher despite a firmer US Dollar as hawkish RBA expectations support the Aussie.
• Australian inflation data on Wednesday could strengthen expectations of another RBA rate hike.
• Traders also await RBA Governor Bullock’s testimony and the Fed interest rate decision.

AUD/USD edges higher on Tuesday as hawkish Reserve Bank of Australia (RBA) expectations help the Australian Dollar (AUD) outperform its major peers. A recovery in equity markets as concerns over heavy AI spending subside also supports the risk-sensitive Aussie, although a firmer US Dollar (USD) limits the pair’s upside. At the time of writing, AUD/USD trades around 0.7027, near one-month highs.

Traders now look ahead to Australia’s inflation data and RBA Governor Michele Bullock’s parliamentary testimony on Wednesday. Both events could shape expectations for the RBA’s November interest rate decision, while the Federal Reserve’s (Fed) monetary policy announcement later that day adds another key test for the pair.

Australia’s headline Consumer Price Index (CPI) is expected to rise 0.7% in September, up from 0.4% in August, taking the annual rate to 4.2% from 4%. Third-quarter inflation is forecast to accelerate to 1.3% from 0.6% in the second quarter.

Traders will also closely watch trimmed mean inflation for signs of underlying price pressure. The monthly measure is expected to rise 0.3% in September after increasing 0.2% in August.

Brown Brothers Harriman’s Elias Haddad notes that the upcoming inflation prints “would leave inflation above the RBA’s year-end forecasts of 3.6% for headline and 3.3% for trimmed mean,” reinforcing Deputy Governor Andrew Hauser’s recent warning that the inflation outlook is “materially worse” than assessed in August. BBH adds that “firmer inflation would also strengthen the case for a back-to-back 25bps RBA cash rate hike to 4.85% at the next November 3 meeting (70% pried in) and widen AUD’s yield advantage.”

Meanwhile, the US Dollar extends its rebound following recent weakness, when AI-related equity jitters drove investors toward government bonds and pushed Treasury yields lower. The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, trades around 102.25, near two-week highs.

The recovery comes as traders reposition ahead of Fed interest rate decision. Policymakers are widely expected to leave rates unchanged at 3.75%-4.00% after raising them by 25 basis points (bps) in September, putting the focus on the policy statement and Chair Kevin Warsh’s press conference.

With inflation running above the Fed’s 2% target, traders will assess whether policymakers reinforce or temper expectations of a December rate hike, currently priced at around 80%, according to the CME FedWatch Tool.

Scotiabank strategists Shaun Osborne and Eric Theoret note the US Dollar (USD) is supported by sentiment even as rate differentials soften. They highlight a widening gap between US Dollar Index (DXY) and fair value, and argue that a neutral Federal Reserve (Fed) decision on Wednesday could leave USD risks skewed lower as disinflation trends are acknowledged.

Risk appetite weighs on Dollar outlook

"G10 currencies are mixed with a relative performance distribution that is suggestive of mild risk appetite in overall quiet trade."

"Rate expectations are muted, with 3bpts of tightening priced for tomorrow and 22bpts expected for December."

"We note the widening gap between the DXY (102.2 spot) and our FV estimate (100.5), reflecting recent sentiment-related support to the USD as interest rate differentials have softened and eroded its fundamental support."

"A neutral hold would leave risk for the USD tilted firmly to the downside, as policymakers could easily endorse the disinflationary trends previously highlighted among the narrower measures of inflation."

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

• Gold surges over 1% to $4,061 after testing $3,989.
• WTI retreats toward $100, offering relief from energy-driven inflation pressure.
• December Fed hike odds stand at 83% ahead of Warsh's remarks.

Gold prices stage a rebound off a daily low of $3,989, rising over 1% on Tuesday even as the US Dollar and US Treasury yields rose. Falling Oil prices provide a leg up for the yellow metal, while investors brace for the Federal Reserve’s (Fed) decision on Wednesday. The XAU/USD trades at $4,061.

XAU/USD rebounds despite rising US yields as falling Oil prices ease inflation

Today’s US data failed to provide a meaningful signal for Gold’s direction, with the precious metal opening lower before turning green. Geopolitics are driving price action after West Texas Intermediate (WTI), the US Oil benchmark, fell more than 1% to $100.05 per barrel.

The Middle East conflict seems far from a swift resolution as talks between the US and Iran seem to have stalled. According to recent new reporting, the US and Israel are likely to resume their attack on Tehran following Israel and US midterm elections, which pushed WTI prices above the $100.00 threshold on Monday.

The US housing data was softer than expected, though it was mostly ignored by market participants. Consumer Confidence improved in October from 84.2 to 91.7, according to the Conference Board, as Americans grew optimistic about the labour market and business conditions. On the contrary, inflation expectations were unchanged from the previous figure of 5.8%.

Durable Goods Orders rose 1.8% in September, up from 0.1%, as business spending stayed strong amid AI infrastructure expansion. Meanwhile, the ADP Employment Change 4-week average eased to 16.8K from 17.5K, signaling modest labour-market cooling.

Traders' focus is on the Fed, not on the monetary policy statement, unless it shows an aggressive hawkish tilt. Money markets see a 9% chance of a hike, which would be a surprise ahead of the midterm US elections. Eyes are on Fed Chair Kevin Warsh's speech, which could delineate the next move for the December meeting.

Worth noting that alongside the Fed, two other central banks are expected to increase rates, amid fears that energy prices would continue to trend higher. The European Central Bank (ECB) decision arrives on Thursday, followed by the Bank of Japan (BoJ) on Friday. The ECB is expected to leave rates unchanged on Thursday.

Data from Prime Terminal shows an 83% chance of a 25-basis-point rate increase by the Fed in December. Although the odds are positive, they continue to trend lower compared to last week’s 90%.

Besides this, traders are also eyeing the release of US Gross Domestic Product (GDP) figures and the Fed’s preferred inflation gauge, the core Personal Consumption Expenditures (PCE) Price Index on Thursday.

XAU/USD technical analysis: Gold buyers defend $4,000, eyes on $4,100

From a technical standpoint, Gold formed a "bullish harami" candle pattern, which was confirmed today as XAU/USD rises above October’s 23-day high of $4,034. Although momentum favors buyers in the short term, the Relative Strength Index (RSI) is bearish, so caution is warranted.

On the upside, the next area of interest is a resistance trendline drawn from around September highs, near $4,100. A breach of the latter will result in an exposure of $4,200. The next key resistance levels are the 100-day Simple Moving Average (SMA) at $4,219 and the 50-day SMA at $4,288.

If XAU/USD tumbles below $4,000, this opens the door for testing last Friday’s low of $3,975. The next key support levels are the July 17 low of $3,959 and the year-to-date (YTD) low of $3,941.

(This story was corrected on October 27 at 18:00 GMT to state in the fifth paragraph that the ADP Employment Change 4-week average was previously 17.5K not 18.5K)

Brown Brothers Harriman’s (BBH) Elias Haddad expects Chile’s central bank to keep its policy rate at 4.50% for a sixth meeting, despite market pricing for future hikes. He argues this path is too aggressive given weak domestic activity and a rate near the upper end of neutral, leaving the Chilean Peso (CLP) vulnerable to dovish repricing and pressured by a weaker copper/oil ratio.

Chilean Peso exposed to repricing

"Chile’s central bank is widely expected to keep the policy rate on hold at 4.50% for a sixth straight meeting (9:00pm London, 5:00pm New York). The swaps curve implies 50bps of hikes to 5.00% in the next twelve months and 100bps of cumulative tightening over the next two years."

"We think this is too aggressive given weak domestic economic activity and the policy rate already near the upper end of the bank’s 3.75-4.75% neutral range. That leaves CLP vulnerable to a dovish repricing."

"The decline in the copper/oil ratio also weighs on CLP as higher energy import costs dilute the benefit of firm copper prices."

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

Michael Pfister at Commerzbank reports that Lula’s surprise victory triggered a sharp Brazilian Real sell-off, with USD/BRL briefly above 5.60 before closing near 5.40. Markets are seen repricing the risk of loose fiscal policy and earlier deficit expansion, while some correction is expected in coming days. Commerzbank maintains its USD/BRL forecast at 5.20 by year-end, contingent on credible fiscal reforms.

Real slides on Lula fiscal concerns

"As my colleague Volkmar hinted yesterday, the Brazilian markets did not take Lula’s surprise comeback victory well. After opening, USD-BRL rose to over 5.60 (up from 4.97 on Friday), representing a depreciation of over 11%. Although the rate corrected slightly during trading, it closed still at 5.40."

"This depreciation was probably not unexpected; after all, the election result was a worst-case scenario for some market participants. Flavio Bolsonaro, the son of the imprisoned former president Jair Bolsonaro, had taken an unexpected lead in the first round of voting, having campaigned on a promise to get fiscal policy back on track."

"While Lula has also recently shifted towards fiscal consolidation, he did so only after allowing the deficit to skyrocket through a series of promises. Following the turnaround, it is therefore likely that the markets have once again priced in the risk of loose fiscal policy."

"The initial movement in USD-BRL was sharp; we may therefore see a correction in the coming days, once the election result has been digested. In the medium term, however, the key factor is likely to be whether Lula can credibly implement adjustments to his fiscal policy and carry out reforms."

"Recent history gives us some cause for doubt in this regard, which is why we are sticking with our USD/BRL forecast of 5.20 by the end of the year."

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