Forex News

• WTI Oil accelerates its recovery and reaches session highs near $91.00, nearly 3% up on the day.
• Attacks by Houthi militias on Saudi airports have boosted fears about an escalation of the conflict.
• An increase in attacks on oil vessels is pushing transport costs higher.

Crude Oil is trading higher on Thursday following reports of new attacks on Saudi Arabian airports by Iran-backed Houthi militias. The price of the US benchmark West Texas Intermediate (WTI) Oil barrel has returned above the $90.00 line and is nearing intra-week highs, at $90.87 at the time of writing.

A fresh wave of attacks on Saudi Arabian airports has killed three people, according to reports by the Saudi aviation authority. These attacks come as retaliation for Saudi support to the Yemeni government's offensive against the Houthis and threaten to escalate the conflict in the region, which will likely lead to Crude supply constraints.

Attacks on vessels boost shipping costs

Beyond that, the UK Maritime Trade Operations (UKMTO) has reported an increase in attacks on vessels in the Strait of Hormuz, as the nine attacks so far in October represent half of the incidents registered in September. This has pushed transport costs higher as companies raise hiring rates for supertankers, boosting Crude prices.

In the US, data released by the Energy Information Administration (EIA) on Wednesday revealed that Crude Oil stocks declined beyond expectations in the last week of September, providing a further impulse to prices.

The EIA reported a 3.186 million-barrel drawdown in the week ending on October 2, well beyond the 1.9 million-barrel decline and following a 922K build-up in the previous week. The report also said that Crude imports fell by 53,000 barrels per day (bpd) on the week, while exports rose by 1.2 bpd to 4.7 million bpd.

• EUR/JPY could find immediate support at the descending channel’s lower boundary around 176.30.
• The 14-day Relative Strength Index at 33.25 sits slightly above oversold territory.
• The primary resistance lies at the nine-day EMA at 177.87.

EUR/JPY inches higher after posting modest losses in the previous day, trading around 177.10 during European hours on Thursday. Technical analysis of the daily chart shows that the currency cross is remaining within the descending channel pattern, suggesting an ongoing bearish bias.

The EUR/JPY cross is keeping a bearish near-term tone as price holds below both the nine-period and 50-period Exponential Moving Averages (EMAs). The short-term EMA is trading under the longer one while both remain above spot, suggesting topside pressure, while the 14-day Relative Strength Index (RSI) at 33.25 hovers just above oversold territory, hinting that downside momentum is still dominant but becoming stretched.

The EUR/JPY cross may test the lower boundary of the descending channel around 176.30, followed by an 11-month low of 175.70, recorded in November 2025. Further declines below this confluence support zone would expose the 14-month low of 169.72.

On the upside, the primary resistance lies at the nine-day EMA of 177.87, followed by the 50-day EMA at 180.91. A break above these moving averages would support the EUR/JPY cross to approach the upper boundary of the descending channel around 184.10, followed by the all-time high of 187.95 set on April 17.

French debt jitters resurface as Treasury mulls shorter issuance

Analysts at ING note that the recent stabilisation in French sovereign markets has proved short-lived. They point out that French government bonds, which had "enjoyed a modest rebound earlier in the week," were "hit by a report yesterday that the French Treasury could shorten the duration of its issuance to protect the long end." ING suggests this shift in issuance strategy has unsettled investors, reinforcing the sense of fragility around French debt and, by extension, related Euro assets.

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

Commerzbank’s Tatha Ghose highlights that Hungary’s MNB minutes confirm a unanimous decision to halt rate cuts, yet offer no discussion of future hikes or cuts. Despite higher medium-term inflation forecasts and a lower target, the bank gives no signal of tightening. Ghose argues the Forint will remain weak until MNB adopts a much more hawkish stance and resolves its policy contradiction.

MNB stance seen as insufficiently hawkish

"Hungary's National Bank (MNB) published minutes confirming that the decision to stop rate cuts was unanimous at the September meeting. There was no discussion of rate cut or rate hike. Policymakers took comfort from (apparently) low inflation – ‘apparent’ because only the year-on-year measure is low – but stressed risks from higher and volatile energy prices, prospective wage settlements and the medium-term inflation outlook."

"September CPI inflation accelerated slightly to 1.6%y/y, driven by fuel prices, but this year-on-year number is wholly misleading. Month-on-month CPI indicators, including the rate of change of MNB’s underlying core measures, are re-accelerating from disinflation territory back towards target after having turned disinflationary. This reversal deserves attention."

"MNB recently raised its inflation forecast for 2027 sharply to 3.1%, while also reducing its medium-term inflation target from 3.0% to 2.5%, effective from January 2028. Lowering the target lowers tolerance for inflation overshoots too. Yet MNB still gives no signal towards a possible need to hike rates, even while sentiment has turned in this direction in most other countries."

"MNB is using euro adoption and ERM II talk almost like a verbal intervention tool to reassure markets that deeper reforms are on the way. This will not suffice. The forint is still weak and will not recover until MNB has shifted to a much more hawkish stance."

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

ING’s Chris Turner notes the Dollar remains supported after September FOMC minutes showed a Federal Reserve still expecting another rate hike this year. Money markets already price a 25bp move in December and further tightening in 2027, which ING sees as too aggressive but unlikely to be challenged. Elevated Treasury yields, rising volatility and strong demand at the latest US 10-year auction underpin Dollar strength, with US Dollar Index (DXY) seen grinding towards 102.85.

Fed pricing keeps Dollar supported

"September FOMC minutes published last night reflect a hawkish Fed. One sentence which caught our eye was: "Most participants assessed that another increase in the target range for the federal funds rate would likely be appropriate by year-end." This followed a discussion of frustratingly high inflation and the Fed being surprised about the pace and magnitude of the AI build-out."

"But a hawkish Fed is firmly priced by money markets at this stage. After an expected 25bp hike to 4.25% in December, the market still looks for another 50bp of tightening next year. We think that is too aggressive, but doubt the market will want to fight against that hawkish pricing this year."

"Additionally, the US 10-year Treasury auction went very well last night, with a strong bid-to-cover ratio and a strong indirect bid, serving as a reminder that demand for Treasuries does exist if yields are high enough."

"This leaves the dollar well-supported and winning more friends in a slightly more difficult investment environment. Here, elevated Treasury yields and rising volatility have sucked money out of the carry trade, where most Latam currencies have been hit quite hard. Given events in Europe, we're looking for the dollar to hold onto gains over the coming months."

"DXY can grind up towards a target at 102.85."

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

European Central Bank (ECB) Governing Council member Emmanuel Moulin said during the European trading session on Thursday that high inflationary pressures in the Eurozone are 100% driven by energy shocks. Another ECB member who has ruled out fears of second-round inflation effects in the old continent.

Comments

Inflation is clearly 100% energy, don't see second round effects.

Geopolitical shock is also transmitting into a financial shock.

ECB is faced with an inflationary shock.

Economic growth in the Euro area has been quite resilient.

 Market reaction

No immediate action is seen in the Euro (EUR), following remarks from ECB's Moulin. As of writing, EUR/USD trades marginally lower to near 1.1190.

UOB strategists Quek Ser Leang and Lee Sue Ann report that GBP/USD failed to extend gains above 1.3286 and instead retreated to 1.3194, closing at 1.3213. Short-term momentum has turned mildly negative, with the pair expected to consolidate within a lower 1.3180–1.3235 intraday band. Over the next one to three weeks, they see downside risk contained above 1.3140 within a broader 1.3140–1.3280 range.

Pound biased lower but downside limited

"24-HOUR VIEW: After GBP rose to a high of 1.3286 on Tuesday, we highlighted the following yesterday: “Upward momentum has increased, albeit not significantly. Today, there is a chance for GBP to retest 1.3285. A continued rise above this level is unlikely.” The subsequent price movements did not unfold as expected, as GBP declined to a low of 1.3194. Despite the decline, downward momentum has not increased significantly. Today, GBP could edge lower, but it is likely to stay within a 1.3180/1.3235 range."

"1-3 WEEKS VIEW: Following Tuesday’s price action, we highlighted yesterday (07 Oct, spot at 1.3265) that “there has been a slight increase in upward momentum, and GBP may edge higher toward 1.3315.” Our view was invalidated quickly as GBP fell below our ‘strong support’ at 1.3200 with a low of 1.3194. This time around, there has been a slight increase in downward momentum, but it is insufficient to indicate a sustained decline. From here, GBP could edge lower, but any decline is likely to be part of a lower range of 1.3140/1.3280. In other words, GBP is unlikely to break clearly below 1.3140."

(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 Thursday, October 8:

The Euro (EUR) holds steady against its rivals in the European session on Thursday after suffering large losses midweek. Later in the day, policymakers from the European Central Bank (ECB), the Bank of England (BoE) and the Federal Reserve (Fed) will be delivering speeches. Additionally, the ECB will publish the minutes of its September policy meeting and the US economic calendar will feature weekly Initial Jobless Claims and Wholesale Inventories data for August.

The widening French-German bond yield spreads, and growing doubts over the ECB's ability to tighten the policy forced the Euro to stay under bearish pressure on Wednesday. EUR/USD lost more than 0.5% and came within a touching distance of the 17-month low it touched near 1.1160 last week. EUR/JPY fell 0.6% on the day, while EUR/GBP closed the ninth consecutive trading day in negative territory. Early Thursday, EUR/USD trades marginally lower on the day, slightly below 1.1200.

During the American trading hours, the Fed released the minutes of the September meeting. The publication showed that most policymakers judged that another hike would probably be appropriate by the end of the year and that they increasingly focused on upside inflation risks, a resilient economy and the possibility that strong AI investment could add to demand pressures.

Euro finds limited support as Fed hike odds fade

Analysts at Commerzbank note that, from the perspective of the “expected interest rate differential between the Euro area and the US,” recent developments have actually been “somewhat supportive of the Euro.” They point out that “the probability of a Fed rate hike in October is now seen as lower than it was at the end of last week,” a shift that was “reinforced by the FOMC minutes released yesterday.” According to Commerzbank, while “many policymakers continued to favour another rate increase this year, the timing remains uncertain,” and importantly, a “single additional rate hike was mentioned rather than the multiple hikes that markets are still pricing in,” tempering the hawkish implications for USD and offering only modest relief for EUR.

In the meantime, crude Oil prices gain traction on Thursday, with the barrel of West Texas Intermediate (WTI) rising more than 2% on the day and trading slightly above $90.50. Markets also seem to have adopted a cautious stance as US stock index futures lose about 0.7% on the day.

The Pentagon told US Central Command (CENTCOM) several days ago to conclude preparations for resuming major combat operations in Iran, Axios reported on Wednesday. US President Donald Trump hasn't made any final decisions or included a specific date for launching strikes, but the US and Israeli sources said it could happen before the US midterm elections and possibly the Israeli elections a week earlier. A White House official stated that Trump has all options available at any time.

Japanese Prime Minister Takaichi Sanae said on Thursday that the country does not require reflationary policy now, adding that she aims to gain market trust by keeping communication highly transparent. After closing virtually unchanged on Wednesday, USD/JPY clings to small gains above 158.50 in the European morning.

Gold (XAU/USD) lost more than 1% on Wednesday, pressured by the broad based USD strength. XAU/USD corrects higher on Thursday and trades above $4,100.

GBP/USD struggles to gather recovery momentum and trades near 1.3200 following Wednesday's sharp decline.

AUD/USD trades in the red near 0.6950 after losing 0.3% on Wednesday. Earlier in the day, the data from Australia showed that Consumer Inflation Expectations climbed to 5.3% in October from 4.9% in September.

• NZD/USD turns lower from a 0.5622 high on Wednesday and approaches an 18-month low at 0.5580.
• High Oil prices amid the escalating tensions in the Middle East have hammered risk appetite on Thursday.
• The pair is trading at the bottom of the recent range, ready to extend the downtrend from August's highs.
  

The New Zealand Dollar (NZD) reverses earlier gains as market sentiment sours on Thursday's early European session, and turns negative against the US Dollar (USD) in the daily chart. Higher Oil prices amid escalating tensions in the Middle East are pushing Treasury yields higher and setting a floor on the US Dollar's pullback seen during the Asian trade.

New attacks on Saudi Arabian airports by the Houthis from Yemen, an Iran proxy, have boosted Oil prices, pushing the Brent Crude barrel to levels near $102.00, amid growing concerns about supply constraints if new attacks damage Saudi's Oil sites.

Crude's rally is also boosting Treasury yields amid markets’ conviction that the elevated energy prices will force central bankers to tighten monetary policy. This has offset the mild US Dollar weakness witnessed after the release of September’s Federal Reserve (Fed) meeting, which showed concerns about inflation but did not alter the view that the central bank will stand pat on rates in October.

Technical Analysis: Support at 0.5580 is coming into play

NZD/USD trades at 0.5596, with bearish momentum building as the 0.5580 support area comes into focus. Indicators on the 4-hour chart endorse this view, with the Relative Strength Index (14) around 40 and the Moving Average Convergence Divergence (MACD) hovering near zero, altogether leaving the bears with a slight edge.

Bears are focused on Monday's low at the mentioned 0.5580. Below here, the next downside target would be the 127.2% Fibonacci retracement of the June-August rally, at 0.5530, ahead of the 2025 floor, at 0.8490.

On the topside, the late June low in the 0.5630 area is keeping upside attempts capped for now, and closing the path towards the September 28 high near 0.5690 and a support-turned-resistance around the June 23 lows at 0.5765.

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

Deutsche Bank strategists highlight a global equity selloff as wider European bond spreads and inflation concerns weigh on risk sentiment. European banks lead losses, while the S&P 500 retreats from record highs and the Russell 2000 underperforms. Asian equities also weaken despite Samsung’s sharp profit growth.

Risk-off tone hits global stocks

"This backdrop of wider bond spreads and fresh inflation fears meant it was a rough day for risk assets. That was particularly clear in Europe, where the STOXX 600 (-1.00%) fell back after three consecutive gains, and there were even bigger losses for the CAC 40 (-1.22%) and Italy’s FTSE MIB (-2.51%) with European banks (-3.38%) bearing the brunt of the losses."

"That also carried over to the US, where the S&P 500 (-0.22%) slipped back from its record high the previous day. And while the headline decline moderated as the session went on, there were still signs of stress under the surface, with almost three-quarters of the index lower on the day as cyclical sectors including industrials (-2.14%) and materials (-1.53%) underperformed."

"And while relative resilience in tech stocks limited the losses for the Nasdaq (-0.22%) and Mag-7 (-0.20%), the small-cap Russell 2000 (-1.31%) sunk to a 4-month low."

"Chinese markets reopened after the week-long Golden Week holiday on a positive note but have struggled to sustain their early gains with the CSI 300 (-0.43%) and Shanghai Composite (-0.27%) now lower. Elsewhere the Hang Sang (-0.69%) and the ASX (-0.74%) are also lower but with US and European equity futures broadly flat."

"In Asia, the KOSPI (-1.24%) is the weakest main market, and it’s a sign of the times that Samsung reported a 9-fold increase in profits which disappointed some investors. The weakness in tech stocks is also impacting the Nikkei (-0.87%)."

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