Forex News

• Markets price in a 25 bps BoC rate hike on Wednesday, supporting the Canadian Dollar.
• Higher crude prices and Israeli election uncertainty add upside pressure to the commodity-linked CAD.
• The Euro faces pressure from fiscal concerns, bond volatility, and expected ECB rate pauses.

EUR/CAD inches higher after six days of losses, trading around 1.5640 during European hours on Wednesday. The currency cross moved little ahead of the Bank of Canada’s (BoC) policy decision scheduled for later in the day, with financial markets largely pricing in a 25-basis-point interest rate hike.

However, the EUR/CAD could face downside pressure as the commodity-linked Canadian Dollar (CAD) gains support from rising crude oil prices. Higher oil prices followed global market attention on Israel's election results, which could alter the trajectory of the ongoing Middle East conflict. Exit polls indicated a tight race between Prime Minister Benjamin Netanyahu and opposition leader Gadi Eisenkot, showing neither bloc securing an immediate majority. Despite the deadlock, the results point to weakening support for Netanyahu, who has guided the country through nearly three years of continuous conflict.

Looking ahead, market focus will shift to the European Central Bank’s (ECB) policy meeting on Thursday, where the central bank is expected to hold key interest rates unchanged following its 25-basis-point hike in September. Further depreciation for the EUR/CAD cross remains possible, as the Euro was on track to be the worst-performing developed-market currency of the month. High energy costs, ongoing volatility in French government bonds, and persistent concerns over France's fiscal standing are expected to continue exerting selling pressure on the shared currency in the near term.

Germany’s GfK Consumer Climate Indicator edged down to -30.8 heading into November, dropping slightly from -30.6 in October. Although the reading came in marginally better than the market expectation of -31.0, it nevertheless marked the lowest consumer sentiment level since May and remained sharply lower than the -24.1 recorded a year earlier. Persistent anxiety over household finances and elevated inflation continue to suppress consumer spending intentions, dampening overall recovery despite minor improvements in broader economic sentiment.

• EUR/GBP edges up to 0.8370 but stays near the 17-month low of 0.8360.
• The Pound is losing ground against its main peers, with all eyes on the UK budget release.
• German consumer sentiment deteriorated in October, with economic expectations improving but consumers' income falling.

The Euro (EUR) is drawing some support from a softer British Pound (GBP) on Wednesday, as markets brace for the release of the first budget of Prime Minister Andy Burnham’s cabinet. The EUR/GBP pair has ticked up to session highs above 0.8370 but, so far, seems unable to move far from the 17-month low of 0.8360, after dropping nearly 3% over the last five weeks.

In the UK, all eyes on Wednesday are on Chancellor John Healey’s budget, and more specifically on how he plans to finance the tax exemptions announced by the cabinet to ease British citizens’ cost of living.

UK’s public finances came under scrutiny earlier this year, as the total public sector’s net debt surpassed GBP 3 trillion for the first time in history, at approximately 95% of the country's Gross Domestic Product (GDP). The previous Chancellor, Rachel Reeves, left a GBP 23.6 billion buffer, but the surge in debt costs is likely to have eaten up a big chunk of it, and traders are sensitive, with bond markets jumpy and memories of Liz Truss' fiasco in 2022 still fresh.

German consumer sentiment remains subdued

In the Eurozone, the German GfK Consumer Confidence Survey has shown a further deterioration in October, with the index hitting a five-month low of -30.8 from -30.6 in September, yet above the -31.0 market consensus. 

The report released by the Nuremberg Institute of Market Decisions reveals a mixed picture, with economic expectations improving for the sixth consecutive month, while the willingness to buy continues its decline and income expectations deteriorate. 

The highlight in the Eurozone calendar this week is the European Central Bank's (ECB) monetary policy decision, due on Thursday. The bank is widely expected to leave its Rate on Deposit Facility steady at 2.5%, after having hiked it by a quarter-point in September, although President Christine Lagarde is likely to hint at further monetary policy in the near term.

Analysts at Danske Bank highlight that the latest ECB Q3 Bank Lending Survey shows that banks "tightened credit standards more than expected, although the net share reporting a tightening remained low from a historical perspective and was mainly driven by banks in France." In Danske Bank’s view, this pattern "suggests that ECB's tightening has so far only led to a modest tightening of credit standards and should not in itself stop the ECB from tightening further as the pass-through remains relatively smooth."

Deutsche Bank strategists highlight that US equities advanced on strong data and a buoyant tech mood, with the Nasdaq and Mag-7 moving higher alongside a sharp rise in the Philly semiconductor index. European equities also gained, though the FTSE 100 lagged on HSBC earnings. Asian markets followed Wall Street’s lead, with South Korea’s KOSPI and Japan’s Nikkei outperforming on AI and chip-related optimism.

Tech-led gains drive global equity strength

"The strong data yesterday also added to the resilience of US equities, which were already advancing amidst a continuing buoyant tech mood. Indeed, the Philly semiconductor index (+3.60%) posted a big gain, while the Nasdaq (+1.18%) and the Mag-7 (+0.94%) also marched higher. Notable tech moves came from CoreWeave (+7.94%), Nvidia (+0.90%), and Broadcom (+4.00%). "

"European equities also continued this week’s advance, with the Stoxx 600 (+0.47%), DAX (+0.71%), and CAC 40 (+0.51%) all gaining. Only the FTSE 100 (-0.75%) underperformed, dragged by a fall in HSBC (-5.42%) after its Q3 earnings fell short of estimates. The true test of the tech-rally will be today, with Alphabet and Microsoft amongst those reporting their earnings."

"Asian equity markets are trading broadly higher this morning, building on Wall Street’s overnight gains amid renewed enthusiasm around AI-related stocks. Across the region, South Korea’s KOSPI (+6.80%) is surging after chipmaker SK Hynix (+9.84%) reported blockbuster third-quarter results, with net profit tripling from a year earlier."

"This has helped push US Nasdaq futures +0.35% higher. Japan’s Nikkei (+1.11%) is also extending its recent rally, while gains elsewhere are more modest, with the Hang Seng (+0.36%), CSI 300 (+0.76%), and Shanghai Composite (+0.81%) all in positive territory. The S&P/ASX 200 (-0.03%) is lagging regional peers, as stronger-than-expected inflation data reinforced expectations of another RBA rate hike next week."

(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 Wednesday, October 28:

The US Dollar (USD) stays resilient against its peers early Wednesday, with the USD Index holding at fresh two-week highs near 102.50 after posting gains for three consecutive days. Later in the American session, the Federal Reserve (Fed) will announce its interest rate decision following the two-day policy meeting and Fed Chair Kevin Warsh will comment on the outlook at a press conference.

Markets widely expect the Fed to keep the policy settings unchanged, with the federal funds rate holding steady at the range of 3.75%-4%. The benchmark 10-year US Treasury bond yield stays above 5% following a modest rebound and US stock index futures trade mixed, reflecting a cautious stance.

USD steadies as AI tailwind persists and Fed focus shifts to December

Strategists at OCBC note that the US Dollar “was broadly steady overnight as appetite for AI-related risk returned and oil prices eased.” They acknowledge that “the AI tailwind could fade in 2027,” but argue that “it is still too early to position for a weaker USD on an AI downturn.” For now, they judge that “hawkish Fed risk should keep the USD supported, although the trade is becoming less one-way.”

On policy, OCBC says “we expect the Federal Reserve to stay on hold in October, with the focus shifting quickly to December.” They highlight that “September CPI surprised to the upside, while most FOMC participants had already indicated that another hike could be appropriate by year-end,” keeping the prospect of further tightening in play.

During the Asian trading hours, the Reserve Bank of New Zealand (RBNZ) announced that it left the policy rate unchanged at 2.75%, against the market expectation for a 25 basis points (bps) hike. In the policy statement, the RBNZ noted that interest rate increases are probable in the future but added that they depend on the economic outlook. NZD/USD came under heavy bearish pressure following the RBNZ event and was last seen losing 1.3% on the day near 0.5600.

The data from Australia showed on Wednesday that the Consumer Price Index rose by 4.3% on a yearly basis. This print followed the 4% increase recorded in August and came in above the market expectation of 4.2%. AUD/USD clings to moderate daily gains near 0.7030 after rising to its highest level in a month above 0.7050 following the inflation data.

USD/CAD edges higher early Wednesday and trades above 1.4050. The Bank of Canada (BoC) will also announce monetary policy decisions later in the day and markets forecast a 25 bps increase in the interest rate to 2.5% from 2.25%.

EUR/USD stays on the back foot after losing more than 0.4% on Tuesday and declines toward 1.1100.

GBP/USD extends its slide and trades below 1.3300 in the European session on Wednesday, following a three-day losing streak.

Gold corrected higher on Tuesday and gained more than 1% on a daily basis. The precious metal fluctuates in a tight range at around $4,050 early Wednesday.

Gold steadies above key threshold as Fed meeting comes into focus

Strategists at ING note that Gold has “climbed back above $4,000/oz after briefly falling below the key level in Tuesday’s trading session, as attention shifts to the Federal Reserve's 28 October meeting.” They add that the metal is “finding its feet again after the recent correction attracted bargain hunters and physical buyers,” even as they caution that “ETF outflows have recently been a headwind.”

USD/JPY stays in a consolidation phase above 157.50 after posting gains on Monday and Tuesday.

UOB’s Quek Ser Leang and Lee Sue Ann observe USD/JPY broke above the prior 157.80 strong resistance, reaching 157.97, with negative divergence signalling slowing upside momentum and no imminent pullback. Intraday, they expect consolidation between 157.55 and 158.05. Over 1–3 weeks, they now see the pair in a range-trading phase, likely oscillating between 157.00 and 158.60 after the earlier steep decline failed to extend.

Japanese Yen settles into broader consolidation band

"24-HOUR VIEW: We expected USD to “trade in a range between 156.90 and 157.80” yesterday. Instead of trading in a range, USD rose to a high of 157.97. Negative divergence on momentum indicators suggests slowing upward momentum, and USD is unlikely to rise much further. However, there is no sign of an imminent pullback. Today, USD is likely to trade between 157.55 and 158.05."

"1-3 WEEKS VIEW: After the steep decline in USD last Thursday, we highlighted on Friday (23 Oct, spot at 156.60) that “the rapid increase in downward momentum suggests USD is likely to decline further.” We added, “support levels are 156.00 and 155.50.” After USD rebounded strongly from a low of 156.06, we highlighted yesterday (27 Oct, spot at 157.45) that “downward momentum is slowing, and a break above 157.80 (‘strong resistance’ level) would indicate that USD is likely to range-trade instead of heading lower.” USD subsequently broke 157.80 with a high of 157.97. USD has likely entered a range-trading phase, and for the time being, we expect it to trade between 157.00 and 158.60."

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

• Silver struggles to capitalize on the previous day’s goodish bounce from the YTD low.
• Traders now look forward to the FOMC policy decision for some meaningful impetus.
• The technical setup suggests that the path of least resistance remains to the downside.

Silver (XAG/USD) attracts fresh sellers near the $54.60 region on Wednesday, stalling the previous day's recovery from the $52.70-$52.65 area, or its lowest level since November 2025. The white metal sticks to intraday losses below the $54.00 mark through the early part of the European session as traders now look forward to the outcome of a two-day FOMC meeting.

The US Federal Reserve (Fed) is scheduled to announce its decision later during the US session and is widely expected to keep rates unchanged. Hence, traders will closely scrutinize the accompanying policy statement and Fed Chair Kevin Warsh's comments during the post-meeting press conference for more cues about the policy path. The outlook will drive the US Dollar (USD) and provide a fresh impetus to the XAG/USD ahead of Thursday's important US macro releases – the Advance Q3 GDP report and the Personal Consumption Expenditures (PCE) Price Index.

The two-way price moves since the beginning of this week could be categorized as a bearish consolidation phase following the recent breakdown below a strong horizontal support near the $55.00 psychological mark, which should now act as an immediate strong barrier. Meanwhile, the Moving Average Convergence Divergence (MACD) indicator is turning positive above the zero line, hinting at emerging but still fragile upside momentum, while the Relative Strength Index (RSI) recovers from oversold territory yet remains below the 50 mark, reinforcing a capped tone.

However, a sustained strength beyond the $55.00 mark could trigger an aggressive short-covering move and lift the XAG/USD beyond the $56.00 mark, towards the $56.40 intermediate hurdle en route to $57.00 and the 100-period Simple Moving Average (SMA) on the 4-hour chart. The latter is pegged at $57.55, and bulls would need to reclaim that to ease the broader downside pressure, which should open the door to a more sustained recovery. Nevertheless, the XAG/USD remains vulnerable to further declines while it trades under the $57.55 key barrier.

On the downside, XAG/USD bears might now wait for some follow-through weakness below $53.50 before positioning for further losses to the $53.00 mark, which, if broken, would expose the year-to-date low, around the $52.70-$52.65 zone, touched on Tuesday.

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

XAG/USD 4-hour chart

• New Zealand Dollar underperforms against its peers as the RBNZ leaves policy rates steady.
• The RBNZ was expected to hike the OCR by 25 bps to 3%.
• Investors expect the Fed to hold interest rates steady.

The New Zealand Dollar (NZD) trades sharply lower against its major currency peers on Wednesday. Against the US Dollar (USD), the kiwi dollar is down 1.28% to near 0.5600.

In the policy meeting, the Reserve Bank of New Zealand (RBNZ) unexpectedly leave the Official Cash Rate (OCR) steady at 2.75%. The RBNZ was widely anticipated to raise rates by 25 basis points (bps) to 3%.

However, RBNZ Governor Anna Breman has kept the door open for further tightening and has signaled more than previously expected.

“More OCR hikes probable, but dependent on economic outlook, the RBNZ said in the monetary policy statement. “They may even be higher than we said at the September ​meeting," RBNZ Governor Breman said, Reuters reported.

Meanwhile, the US Dollar extends its winning streak for the fourth trading day on Wednesday ahead of the Federal Reserve’s (Fed) monetary policy announcement. As of writing, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades slightly higher to near 101.43.

The Fed is widely anticipated to leave interest rates unchanged in the 3.75%-4.00%, which underpins the central bank’s communication as key driver for the US Dollar’s outlook.

Economists at Deutsche Bank expect the upcoming Fed decision to be largely uneventful in terms of the formal communication, noting that “the statement itself [is] to contain only limited changes, although dissents to a hold are possible.” In their view, “the interest will therefore be in Chair Warsh’s press conference and how the Fed balances still-elevated inflation and solid growth against the recent tightening in financial conditions,” with markets likely to scrutinize his remarks for any shift in the policy narrative.

NZD/USD Technical Analysis

In the daily chart, NZD/USD trades at 0.5614, keeping a bearish near-term bias as spot holds beneath the 20-day Exponential Moving Average (EMA) at 0.5663. The pair remains pressured after failing to sustain this moving average in recent sessions, while the Relative Strength Index (RSI) at 39 is recovering from oversold territory but still leans to the downside, suggesting that bounces may continue to face selling interest below the 0.57 area.

On the topside, initial resistance is located at the 20-day EMA around 0.5663, and a daily close above this barrier would ease immediate downside pressure and open the way toward last week’s highs. On the downside, the absence of nearby mapped technical supports from the current dataset leaves the recent lows as a soft floor, implying that a clear break under the 0.56 handle would likely expose further weakness in the broader downtrend.

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

Danske Bank’s Danske Research Team notes that EUR/USD traded sharply lower, nearing year-to-date lows, as broad-based Euro weakness dominated G10 FX. The bank expects the Fed to keep rates unchanged but to reiterate its commitment to returning inflation to target, with two further hikes projected in December and March. ECB lending data suggest the Euro area can still handle higher interest rates.

Euro pressured as Fed seen hawkish

"There were only modest moves in global rates yesterday, with the OAT-Bund spread widening slightly. In FX, however, we saw more action with EUR/USD trading sharply lower, closing in on year-to-date lows."

"Looking at the full G10 spectrum, yesterday's price action was most likely predominately another reflection of broad-based EUR weakness."

"In the US, the main event of the week is this evening's FOMC rate decision and the following press conference. We expect the Fed to keep policy rates unchanged, in line with consensus, while markets price in a 10% probability of a hike."

"Most central FOMC members have signalled that they can wait until December before hiking again, although a few see more urgency, and we expect 2-3 dissenting votes in favour of a hike. We still see a need for further tightening and expect two more hikes, in December and March."

"In the euro area, the ECB's Q3 Bank Lending Survey showed that banks tightened credit standards more than expected, although the net share reporting a tightening remained low from a historical perspective and was mainly driven by banks in France. This suggests that ECB's tightening has so far only led to a modest tightening of credit standards and should not in itself stop the ECB from tightening further as the pass-through remains relatively smooth. "

"Separate data on credit growth for September showed that momentum has continued to rise and is now at the highest level since 2022, signalling that the euro area economy can handle higher interest rates surprisingly well, although lower loan demand should dampen credit growth going forward."

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

• USD/JPY rises to near 158.00 as the US Dollar continues to outperform.
• Both the Fed and the BoJ are expected to leave interest rates unchanged this week.
• This week, investors will also pay attention to key US data releases.

The Japanese Yen (JPY) continues to underperform against the US Dollar (USD) as the latter strengthens amid caution ahead of the Federal Reserve’s (Fed) monetary policy at 18:00 GMT.

As of writing, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades 0.1% higher to near 102.50, the highest level seen in over a week.

What to expect at the Fed meeting?

Strategists at OCBC expect the Fed to remain patient in the near term, writing that they “expect the Federal Reserve to stay on hold in October, with the focus shifting quickly to December.” They highlight that “September CPI surprised to the upside,” and note that this comes against a backdrop where “most FOMC participants had already indicated that another hike could be appropriate by year-end,” keeping attention firmly on the policy path into the final meeting of 2024.

This week, investors will also focus on the preliminary us Q3 Gross Domestic Product (GDP) and Personal Consumption Expenditure (PCE) Price Index data for September, which are scheduled for Thursday.

On the JPY front, investors await Bank of Japan’s (BoJ) monetary policy announcement on Friday. The BoJ is almost certain to hold interest rates steady at 1.25%.

USD/JPY Technical Analysis

In the daily chart, USD/JPY trades at 157.90 after a V-shape recovery, holding slightly above the 20-day exponential moving average (EMA) at 157.75, which keeps a mild bullish bias intact while the pair consolidates near recent highs. The Relative Strength Index (RSI) at 51.45 is neutral, hinting that directional momentum is modest and that bulls currently retain an edge as long as price stays above the nearby average.

On the downside, immediate support is located at the 20-day EMA around 157.75, where a daily close below would suggest a deeper correction toward the recent low near 156.00. On the upside, the pair needs a decisive break above the September 24 high near 159.00 for a fresh upside leg.

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

• AUD/USD pulls back to levels near 1.2520 after rallying to 13-year highs above 1.2600.
• The Kiwi plummeted across the board as the RBNZ left interest rates on hold.
• The pair has reached overbought levels at most timeframes.

The Aussie Dollar (AUD) is rallying sharply against an ailing New Zealand Dollar (NZD) on Wednesday, following an unexpected pause at the Reserve Bank of New Zealand (RBNZ) monetary policy meeting. The AUD/NZD pair, however, has reached heavily overbought levels after hitting multi-decade highs near 1.2600, and has pulled back during the Asian session, approaching the previous resistance area around 1.2490.

The RBNZ left its Official Cash Rate (OCR) unchanged at 2.75%, earlier on Wednesday, against market expectations of a quarter-point rate hike. The Kiwi Dollar plummeted across the board following the decision, to regain some ground shortly afterwards, when Governor Anna Breman hinted at further monetary tightening in December.

In Australia, Consumer Price Index (CPI) data released earlier in the day provided additional support to the Aussie, as inflation accelerated to 0.8% in September from 0.4% in August and the yearly CPI rose to 4.3%, from 4% in the previous month.

Likewise, the Reserve Bank of Australia (RBA) Trimmed Mean CPI rose to 1% from 0.8% in the quarter and remained unchanged at 3.6% from the same quarter last year. These figures add pressure on the central bank to hike rates for the fifth time this year, at next week’s monetary policy meeting.

Technical Analysis: Overbought levels suggest the posibility of a deeper correction

AUD/NZD has broken above the last seven weeks' horizontal range, but the sharp move has pushed the 4-hour Relative Strength Index (14) near 80, heavily overbought levels that often lead to some correction.

The Moving Average Convergence Divergence (MACD) histogram remains positive, suggesting that momentum is constructive in the near term. Bulls, however, have lost steam, and the pair might test support at the previous range top around 1.2490 before rallying further.

A deeper correction brings the October 21, 22, and 26 lows, around 1.2370, into focus ahead of the key support area at the 1.2275 area (September 10, October 16 lows).

On the upside, bulls are likely to be tested at session highs at 1.2609. Further up, the 127.2% Fibonacci extension of the August-September rally, at 1.2642, seems a plausible target.

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