Forex News

Chris Turner at ING highlights that the Mexican Peso has been the weakest emerging market currency since early September, hurt by dovish Banxico rhetoric and narrowing policy spreads versus the Federal Reserve. Without a hawkish surprise at the 5 November meeting, he expects MXN to remain vulnerable, with IMF-flagged US tech exposure adding pressure and USD/MXN seen heading toward the 19.00–19.10 area in coming weeks.

Policy spread compression weighs on Peso

"Since US rates exploded higher at the start of September, the Mexican peso is by far the worst-performing EM currency. It is close to 8% weaker versus the dollar. The next worst currency is the Romanian leu at around 4%."

"The peso has been hit hard by dovish Banxico rhetoric, outlining that it did not plan to mechanically track the Fed with rate hikes. Should Banxico fail to match a presumed rate hike from the Fed in December, the Banxico-Fed policy rate spread will reach the narrowest on record and leave the peso exposed at a difficult time for risk assets."

"Barring a hawkish surprise from Banxico at its 5 November meeting, we expect the peso to remain vulnerable."

"We note that in the IMF financial stability report, Mexico was seen to have the near entirety of its foreign portfolio investments in US securities, which the IMF saw as AI-chasing behaviour."

"Unrest in the tech sector may therefore be weighing on the peso. 19.00/19.10 looks to be the trajectory for USD/MXN over the coming weeks. Banxico has done a number on the peso."

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

TD Securities strategists note that FX markets remain meaningfully long the US Dollar (USD) ahead of the October FOMC, with data showing the Fed faces the strongest G10 hiking pressures. They expect the USD to stay firm near term, but see scope for a post‑midterms relief selloff and year‑end seasonal weakness against G10 majors.

Long positioning and post‑midterms risks

"FX market remains meaningfully long USD going into the FOMC despite the rate hold pricing. We expect the USD to stay resilient in the near-term and see a post-midterms election relief selloff as more likely."

"The USD has gradually retraced lower from the peak last week, but FX market continues to hold meaningful aggregate long USD positions (+1 z-score vs history) going into next week's FOMC meeting. Although the Fed is likely to keep rates on hold at its upcoming meeting, data suggests the Fed has the highest rate hike pressures in G10."

"We see more room for the USD to selloff after the midterms election. The USD has rallied into the midterms election along rising odds of a "Blue Wave" like it did in 2018."

"A relief selloff after the event risk, coinciding with bearish USD year-end seasonality could be at play. Potential US equity underperformance vs RoW on AI growth concerns and a decline in US real yields after US Treasury bottomed out are additional catalysts that could allow the USD to retrace its strength from the past month vs the G10 majors."

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

• Silver extends losses as investors favor government bonds over precious metals.
• XAG/USD remains vulnerable to further losses as bearish momentum persists.
• RSI approaches oversold territory as sellers eye the psychological $50 mark.

Silver (XAG/USD) slides to fresh yearly lows on Friday after plunging 5.8% on Thursday as concerns over AI-related investments weighed on equities, but failed to spark safe-haven demand for Silver as investors favour government bonds. Some traders may also be selling precious metals to offset losses in stocks. At the time of writing, Silver trades around $53.89, on track for a second consecutive weekly decline.

The white metal is now down roughly 55% from its January peak near $121. The decline has largely been driven by rising energy costs linked to the Middle East war, which began in late February, adding to inflation pressures and prompting major central banks, particularly the Federal Reserve (Fed), to raise interest rates. Higher borrowing costs increase the opportunity cost of holding non-yielding assets such as Silver.

Next week’s Fed meeting could help determine whether Silver extends its decline or stages a recovery. The US central bank is widely expected to leave interest rates unchanged after raising them by 25 basis points (bps) in September. However, policymakers’ commitment to returning inflation to the 2% target could keep another rate hike before year-end on the table. Markets price in an 80% chance of a December increase, according to the CME FedWatch Tool.

Technical analysis

On the daily chart, XAG/USD extends its decline below the descending channel floor and remaining well under the 100-day Simple Moving Average (SMA) and the 200-day SMA, which together underline a firmly bearish near-term bias.

Momentum reinforces this tone as the Relative Strength Index (RSI) hovers near oversold at 31, while the Moving Average Convergence Divergence (MACD) indicator stays below zero with a negative reading and a weakly trending backdrop highlighted by the Average Directional Index at 30.

On the topside, initial resistance appears at $55, closely followed by the broken channel lower boundary near $56.50, before the $60 horizontal cap, with the upper edge of the bearish channel and the 100-day SMA at $62 forming a dense barrier ahead of the $67 swing high and ultimately the 200-day SMA at $71.

On the downside, meaningful support is only seen at the $50 horizontal level, leaving XAG/USD vulnerable to further declines while price holds beneath the stacked overhead resistances.

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

Commerzbank economists, led by Dr. Jörg Krämer and colleagues, expect the Fed and ECB to keep rates unchanged in October but deliver 25 bps hikes in December, with policy then staying slightly restrictive as inflation trends lower into 2027. Their forecasts show EUR/USD drifting higher from 1.12 to 1.18 by end‑2027 as Dollar support erodes.

Euro gains as Dollar softens

"The EUR/USD exchange rate is likely to continue drifting higher in the coming quarters because the dollar is suffering as a result of Trump curtailing the Fed’s independence and taking aggressive action against many countries, prompting them to seek alternatives to the dollar."

"The Fed and the ECB thus have good reasons to pause in October, not least to gain more clarity on the economic and geopolitical conditions. In December, however, both central banks are likely to respond to persistently high inflation and raise interest rates—as priced in by the futures markets—by 25 basis points. However, the forecast for the ECB is contingent on the situation in the French government bond market not escalating."

"Due to the expected decline in oil prices, our forecast indicates that the ECB’s and the Fed’s inflation targets should come within reach again toward the end of 2027. In the U.S., core inflation is also expected to decline steadily. In the eurozone, this will likely not be the case until mid-2027, but the significant decline in headline inflation should convince the ECB that this is merely a temporary phenomenon that does not warrant further interest rate hikes."

"We continue to assume that, due to these constraints, the central banks will pursue a monetary policy that is on the loose side. The decline in inflation next year could therefore be only a temporary phenomenon."

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

OCBC strategists Christopher Wong and Sim Moh Siong highlight renewed weakness in Gold despite falling US Treasury yields and rising geopolitical risks. They note that surging Oil prices are reviving inflation concerns and expectations of prolonged restrictive Fed policy, weighing on Gold. They remains cautious, saying easing Oil prices, lower real yields and a better price response are needed for Gold to regain traction near term.

Safe haven struggles despite lower yields

"Gold came under renewed selling pressure overnight, falling more than 2.5%. Brent’s sharp rise amid renewed Middle East supply concerns added to inflation worries and expectations that the Fed may need to keep rates restrictive for longer. What was notable was that gold continued to weaken even as US Treasury yields fell sharply amid the global tech selloff."

"Neither lower yields nor heightened geopolitical uncertainty has been sufficient to support gold, suggesting that near-term sentiment remains fragile."

"We remained cautious in the near term, particularly as gold has struggled to respond positively to the recent decline in yields."

"An easing in oil prices and further decline in real yields could help gold stabilise, but we would want to see a better price response before turning more constructive in the near-term."

"Support at 4000, 3943 levels (recent low). Resistance at 4080, 4156 (21 DMA)."

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

The US Dollar (USD) has experienced a sharp setback against the Japanese Yen (JPY), with USD/JPY plunging from the 158.20 area to intraday lows around 156.08 as falling US Treasury yields and a spike in geopolitical risk aversion triggered aggressive safe-haven demand for the Yen. While the US Dollar continues to hold broad-based yield advantages across most major currency pairs, its momentum against the JPY is facing headwinds from hotter Japanese inflation metrics and solid private sector growth. Institutional strategists at UOB and BBH are evaluating whether this steep oversold decline represents a temporary tactical pullback within a broader 155.00–160.00 trading range or the start of a deeper structural unwinding.

UOB sees downside momentum pushing USD/JPY toward 156.00 and 155.50

Quek Ser Leang and Lee Sue Ann at UOB highlight the sudden acceleration in USD/JPY downside momentum, which broke the pair out of its recent 157.70–158.80 consolidation zone down to 156.67. Although technical indicators are deeply oversold in the short term, they expect the USD/JPY to extend its decline toward 156.00 before stabilizing, with strong resistance now lowered to 157.30.

"In a sudden sharp move, USD plunged to a low of 156.67. The rapid increase in downward momentum suggests USD is likely to decline further. Support levels are 156.00 and 155.50. On the upside, a break above 157.80 would mean that USD is not declining further... While deeply oversold, the decline could extend to 156.00 before stabilisation can be expected."

BBH expects JPY safe-haven inflows to anchor USD/JPY within 155.00–160.00 range

Elias Haddad at Brown Brothers Harriman (BBH) highlights that the Japanese Yen is leading global currency gains as investors seek refuge during market volatility. While hotter Japanese inflation metrics (2.4% core CPI) and resilient PMI data (52.3) bolster the long-term case for BoJ rate hikes, low market expectations for an October rate move (2% odds) mean USD/JPY should hold inside a defined 155.00–160.00 range unless risk-off sentiment intensifies.

"JPY leads gains, underscoring its status as the ultimate refuge currency. Japan September CPI and October PMI back additional BOJ hikes... Nonetheless, the BOJ is unlikely to crank up the pace of tightening with headline and core CPI inflation tracking below its 2026 projection of 2.5%. The swaps curve price in just 2% odds of a 25bps BOJ rate hike to 1.50% on October 30, and 80% probability of a hike on December 18... That leaves USD/JPY likely to trade within a 155.00-160.00 range in the near term."

Key Takeaway

The sharp drop in USD/JPY toward 156.08 demonstrates that while the US Dollar retains overall macro dominance, it remains vulnerable to sudden surges in JPY safe-haven demand and lower US Treasury yields. While UOB warns that technical momentum could drive the USD/JPY lower toward 156.00 and 155.50 near term, BBH stresses that with Bank of Japan tightening expectations largely pushed back to December (80% probability), the pair should find solid structural support within a broader 155.00–160.00 trading corridor.

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

Elias Haddad at Brown Brothers Harriman notes GBP/USD is weaker on broad Dollar strength, even as UK PMI beats and supports expectations for a 25 bps BOE hike to 4.00% in November. He argues the swaps market is overpricing future tightening, citing below-capacity growth, weak real wages, a near-neutral policy rate and likely fiscal restraint as headwinds for the Pound.

Pound pressured despite strong PMI

"GBP/USD is down on broad USD strength while EUR/GBP dropped to its lowest level since May 2025. UK October PMI beat expectations, cementing bets on a 25bps BOE policy rate hike to 4.00% on November 5."

"The composite PMI improved to an eight-month high at 53.1 (consensus: 51.7) vs. 52.0 in September, driven by faster services and manufacturing growth."

"Over the next twelve months, the swaps curve still implies over 100bps of BOE tightening."

"We see scope for less which is a headwind for GBP: (i) The UK economy is operating below capacity, (ii) virtually no real wage growth constrains spending, (iii) the policy rate is near the top of the BOE’s estimated 2% to 4% neutral range, and (iv) fiscal policy will likely turn more restrictive following the October 28 UK budget."

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