Forex News
German ZEW Survey - Economic Sentiment arrives 28.1 in October, lower than 32.0 estimates and the September reading of 34.7.
The ZEW Survey - Current Situation improves further to -35.9 from the previous reading of -47.1. The data was already expected to arrive higher at -45.0.
Similary, Eurozone ZEW Survey - Economic Sentiment also deteriorates to 18.5 in October. The data was seen at 24.2, lower than 25.8 in September.
Market reaction
There is a sharp decline in the Euro (EUR) against the US Dollar (USD) during the data release. However, it appears to be the outcome of strength in the US Dollar. As of writing, EUR/USD trades flat around 1.1213 after giving back its entire early losses.
Economic Indicator
ZEW Survey – Economic Sentiment
The Economic Sentiment published by the Zentrum für Europäische Wirtschaftsforschung measures the institutional investor sentiment, reflecting the difference between the share of investors that are optimistic and the share of analysts that are pessimistic. Generally speaking, an optimistic view is considered as positive (or bullish) for the EUR, whereas a pessimistic view is considered as negative (or bearish).
Read more.Last release: Tue Oct 20, 2026 09:00
Frequency: Monthly
Actual: 28.1
Consensus: 32
Previous: 34.7
Rabobank strategists Joe DeLaura and Florence Schmit highlight rising French political risk, as protests and looting drive French bond yields sharply higher and authorities consider curfews. They argue France cannot be allowed to fail within the EU, but question whether the Rassemblement National (RN), France’s far-right National Rally party can be allowed to succeed, flagging an ECB policy dilemma that could weigh on the Euro and broader EU stability.
French turmoil and ECB dilemma
"Yesterday saw an ugly bond reaction to the ugly protests and looting in France (and Belgium and Italy, following earlier peaceful protests in Spain and Portugal) with 10-year French yields +13bps, Italian +8bps, and German +3bps."
"Even if we only focus on fiscal metrics, French 10-year borrowing costs are now half a rate hike higher than Friday."
"Of course, France can’t be allowed to fail given its importance within the EU. Then again, can the RN be allowed to succeed?"
"The hypothetical whispered realpolitik binary is between the ECB bailing France out if needed, at a cost to the Euro and the fury of Germany, and not doing so at a cost to EU economic, political, and market stability."
"But could the ECB bail everybody else out from French contagion and leave Paris to sort out its mess?"
"Whatever happens now, more volatility seems far more likely than a ‘reversion to mean’. "
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- US Dollar Index could test the immediate barrier at the nine-day EMA of 101.98.
- The 14-day Relative Strength Index around 55 indicates steady and non-overbought momentum.
- The immediate support lies at the lower boundary of the ascending channel around 101.70.
The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six major currencies, is losing ground after posting modest gains and trading near 101.80 during the European hours on Tuesday.
The short-term tone looks mildly constructive as DXY holds above the 50-day Exponential Moving Average (EMA), yet the advance is capped by the nine-day EMA, which acts as immediate resistance. The 14-day Relative Strength Index (RSI) around 55 suggests steady, non-overbought momentum, while the latest readings of the FXS Fed Sentiment Index near 127.51 hint that broader policy expectations are no longer aggressively supportive, keeping upside in check.
Additionally, the technical analysis of the daily chart indicates that the dollar index is testing the lower boundary of the ascending channel pattern, signaling either a potential bullish bounce off trendline support to resume the uptrend, or a risk of a bearish breakdown if the level fails to hold.
The US Dollar Index could rebound and test the immediate resistance at the nine-day EMA of 101.98. A break above the short-term price average would strengthen the bullish bias and support the dollar index to test the 18-month high of 102.94, reached on October 14, followed by the upper boundary of the ascending wedge at 103.90.
On the downside, the US Dollar Index is testing the immediate support at the lower boundary of the ascending channel around 101.70, followed by the 50-day EMA of 100.94. Further declines would expose the five-month low of 98.56, which was recorded on August 20.
Warsh flags investment surge and AI focus but keeps Fed path data-dependent
Fed Chair Warsh’s speech scores 5.6/10 on the FXS Speechtracker, slightly softer relative to the historical average of 6.1/10, reflecting a cautious tone despite upbeat comments on structural growth and an investment surge. The admission of being “over-scarred from the global financial crisis” underscores a risk-aware bias that tempers any hawkish read from the emphasis on price stability and upcoming “crystallizing” October and December meetings. Warsh’s focus on AI as a demand-side force and on financial stability tail risks suggests the Fed is open to structural optimism but unwilling to pre-commit on the policy path for the rest of 2026.
The FXS Fed Sentiment Index was unchanged, moving 0.00 points to a still-elevated 127.51, signaling that the speech leaves the Fed firmly in hawkish territory despite the modestly softer tone versus the established baseline in the FXS Speechtracker. For markets, this combination of high index level and non-committal guidance implies the Dollar remains underpinned by expectations of sustained restrictive policy, even as data and AI-related developments will be crucial for the next policy “crystallizing” moments.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact 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 when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
- Silver price jumps to near $57.30 as US Treasury Yields fall.
- AI growth concerns weigh on US bond yields.
- Lower US bond yields push the US Dollar Index down to 101.75.
Silver price (XAG/USD) trades 0.35% higher at around $57.30 during the European trading session on Tuesday. The white metal rises as United States (USD) Treasury Yields come under pressure after a sharp upside move the previous day.
As of writing, 10-year US Treasury Yields are down 0.5% to near 5.12%. Yields on US-backed securities gained almost 1.2% to near 5.14%. Theoretically, a drop in US bond yields comes in as a relief of non-yielding assets, such as Silver.
Lower US bond yields have also weighed on the US Dollar (USD). In European trade, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades 0.22% lower to near 101.75.
AI growth concerns hit long-end yields
According to Deutsche Bank, mounting “Artificial Intelligence (AI)-related growth concerns helped to drive a decent rally for sovereign bonds,” with the US 10-year Treasury yield falling “down -16.5bps last week (+1.5bps Friday) to 5.07%.” Strategists highlight that “it was the biggest weekly decline for the 10yr yield since August 2025,” while the “30yr Treasury yield fell -17.5bps (+1.5bps Friday) in its biggest weekly decline since April 2025,” underscoring the intensity of the move at the long end of the curve.
Silver Technical Analysis
In the daily chart, XAG/USD trades at $57.34, keeping a bearish near-term tone as it remains capped beneath the 20-day exponential moving average (EMA) at $59.85. Price action stays below this key dynamic barrier, suggesting rallies are likely to face selling interest, while the Relative Strength Index (RSI) at 38.15 holds in bearish territory just above oversold, hinting that downside pressure persists but is not yet extreme.
On the topside, the 20-day EMA at $59.85 is the immediate resistance level that bulls need to reclaim to alleviate the current negative bias. On the downside, the July 17 low at $54.77 is the key support level.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
Claire Fan at Royal Bank of Canada (RBC) reports that Canadian business sentiment improved until August 21 but weakened markedly after Canada-U.S. trade talks broke down. Export and investment expectations deteriorated while inflation expectations rose, with half of firms planning to pass cost increases on to customers. Consumer near-term inflation expectations remain elevated, while longer-term expectations have risen significantly, driven primarily by the ongoing Middle East conflict.
Trade tensions lift inflation expectations
"Conditions among firms generally improved through early August, but evidence collected after the breakdown of Canada-U.S. trade talks on August 21 pointed to renewed weakness in sentiment, exports and investment alongside rising inflation expectations."
"Firms' one- to two-year-ahead inflation expectations declined between May and August as oil prices and trade uncertainty moderated, but resurged in September to near spring highs as those trends reversed."
"Firms' near-term inflation expectations remained below elevated April levels through July and August but rose sharply in September, to 3.7% one-year-ahead and 3.1% two-years-ahead."
"Concerningly, half of firms surveyed—more than last quarter—plan to pass on cost increases to customers."
"Consumer near-term inflation expectations were little changed at elevated levels. New development in Q3 was that longer-term (five-year-ahead) expectations rose significantly to match elevated shorter-term expectations, driven primarily by the ongoing war in the Middle East."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
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