Forex News
The accounts of the European Central Bank's (ECB) September policy meeting showed that all members viewed the risks surrounding the inflation outlook as being to the upside, as reported by Reuters.
Key takeaways
"It was also pointed out that a deposit facility rate of 2.50% remained in the range of neutral interest rates estimated by staff."
"It was particularly important to refrain from giving any guidance regarding the future interest rate path."
"It was sensible to simply acknowledge the high uncertainty."
"At the same time, continued vigilance was vital."
"Risks did not all point in the same direction."
"The transmission of monetary policy had been smooth."
ECB FAQs
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy for the region. The ECB primary mandate is to maintain price stability, which means keeping inflation at around 2%. Its primary tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will usually result in a stronger Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
In extreme situations, the European Central Bank can enact a policy tool called Quantitative Easing. QE is the process by which the ECB prints Euros and uses them to buy assets – usually government or corporate bonds – from banks and other financial institutions. QE usually results in a weaker Euro. QE is a last resort when simply lowering interest rates is unlikely to achieve the objective of price stability. The ECB used it during the Great Financial Crisis in 2009-11, in 2015 when inflation remained stubbornly low, as well as during the covid pandemic.
Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the European Central Bank (ECB) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the ECB stops buying more bonds, and stops reinvesting the principal maturing on the bonds it already holds. It is usually positive (or bullish) for the Euro.
- Euro slides to near 1.1178 against the US Dollar as the latter outperforms.
- Widening difference in spreads offered on bonds from France vs the rest of the Eurozone is hurting the Euro.
- ECB policymakers still do not see inflation effects passing into wages and prices.
The Euro (EUR) is down 0.16% to near 1.1178 against the US Dollar (USD) during the European trading session on Thursday. The major currency pair faces selling pressure as the US Dollar outperforms due to surging United States (US) bond yields.
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.16% | 0.14% | 0.13% | 0.13% | 0.42% | 0.29% | 0.04% | |
| EUR | -0.16% | -0.02% | -0.02% | -0.04% | 0.19% | 0.13% | -0.12% | |
| GBP | -0.14% | 0.02% | 0.00% | -0.02% | 0.20% | 0.15% | -0.09% | |
| JPY | -0.13% | 0.02% | 0.00% | -0.01% | 0.22% | 0.12% | -0.08% | |
| CAD | -0.13% | 0.04% | 0.02% | 0.00% | 0.23% | 0.15% | -0.07% | |
| AUD | -0.42% | -0.19% | -0.20% | -0.22% | -0.23% | -0.05% | -0.30% | |
| NZD | -0.29% | -0.13% | -0.15% | -0.12% | -0.15% | 0.05% | -0.19% | |
| CHF | -0.04% | 0.12% | 0.09% | 0.08% | 0.07% | 0.30% | 0.19% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
As of writing, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades around 0.2% higher, near 102.44. The DXY is within striking distance of its annual high at 102.53 posted earlier this week. 10-year US Treasury Yields are close to their two-decade high of 5.36%.
Meanwhile, the Euro continues to face intense selling pressure amid heightened French fiscal worries. 10-year French bond yields are up over 2% to near 4.96%. The widening difference in yields offered by France vs the rest of the Eurozone is building significant pressure on the major currency.
On the monetary policy front, European Central Bank (ECB) officials continue to warn of upside risks, but still don’t see second-round inflation effects, a scenario in which initial price shock spreads into wages, services, and broader consumer prices.
Earlier in the day, ECB Governing Council member Emmanuel Moulin said that inflationary pressures are completely driven by energy shocks, but rules out fears of second-round inflation effects. “Inflation is clearly 100% energy, don't see second round effects,” Moulin said.
On Tuesday, ECB official and Governor of the Bank of Portugal Santos Pereira also pushed back second-round inflation fears. “There are no second-round inflation effects at present,” Pereira said.
Last week, ECB Governing Council member José Luis Escrivá also confirmed that inflation effects have not started spreading into wages or prices; however, he kept the possibility alive, saying, “In current situation high energy prices are worrisome if this persists and has second round effects."
EUR/USD Technical Analysis
On the daily chart, EUR/USD trades at 1.1178, maintaining a bearish near-term bias as spot holds well below the 20-period Exponential Moving Average (EMA) at 1.1354. The pair continues to slide away from the recent cluster of prices around the mid-1.15s, while the 14-period Relative Strength Index (RSI) at 21.6 sits in oversold territory, suggesting persistent selling pressure despite the increasingly stretched downside.
On the topside, immediate resistance is located at the 20-period EMA at 1.1354, which caps any recovery attempts and defines the first hurdle for a more meaningful rebound. With no nearby technical support derived from the current dataset, traders may look to price action around the 1.1178 area for signs of stabilization, while any bounce would likely struggle as long as EUR/USD remains below the 1.1354 barrier.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Euro FAQs
The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
Societe Generale expects no change from the NBR, keeping the policy rate at 6.50% as political deadlock in Bucharest and Romanian Leu weakness offset the sharp fall in inflation. The bank notes Headline CPI has dropped markedly on base effects. It highlights ongoing government formation uncertainty and warns that prolonged turmoil could jeopardize Romania’s Investment Grade rating.
NBR seen steady at 6.50 percent
"In EM, we pencil in no change by the NBR at 6.50% as political deadlock in Bucharest and weakness in the RON outweigh the significant slowdown in inflation. Headline CPI declined from a peak of 10.85% yoy in May to 6.17% in August mainly because of base effects."
"President Dan nominated diplomat Luca Niculescu as PM after his previous pick, Muresan, lost a confidence vote last week. Niculescu has until the 15th to form a cabinet and secure parliamentary approval. His nomination received a cool response from the Social Democrats, parliament’s largest party."
"They are demanding a shift away from the previous government’s austerity policies, even as Romania remains under the EC excessive deficit procedure and risks a downgrade to junk status."
"Last week, S&P affirmed Romania’s BBB− rating, the lowest IG level, but warned that prolonged political turmoil could trigger a downgrade if it delays fiscal consolidation."
"Moody’s similarly said the coming weeks would be crucial in determining whether this year’s fiscal adjustment is durable enough to support the current IG rating."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
ING economists Rafal Benecki and Adam Antoniak note that the National Bank of Poland kept its reference rate at 3.75% in October, as expected, with inflation driven mainly by fuel prices. They argue the current backdrop allows the MPC to stay on hold for several months, and see only modest, preventive tightening in early 2027, far below current market pricing.
Polish rates held as inflation driven by fuel
"The Monetary Policy Council (MPC) kept the National Bank of Poland (NBP) reference rate unchanged at 3.75% in October, as expected. While inflation has risen, the increase is largely attributable to higher fuel prices. In our view, the current inflation backdrop allows policymakers to remain on hold for several months."
"We assume that preventive rate hikes of 25–50bp may take place at the beginning of 2027, as the persistently high energy prices increase the likelihood of second-round effects emerging. So far, this has not yet been seen in Poland but is starting to be present in the Czech Republic. In addition, developments in the energy market are likely to translate into significant increases in regulated prices, particularly gas tariffs, from the beginning of 2027."
"In November, the Council will review the latest macroeconomic projection, which could trigger the beginning of a discussion on the need for tighter monetary policy. Our baseline scenario assumes that the MPC might deliver two 25bp rate hikes in the first quarter of 2027 to reduce the risk of elevated inflation becoming entrenched. This is particularly relevant given that our forecasts point to some increase in core inflation over the coming months."
"Nevertheless, we believe that the scale of monetary tightening is likely to be considerably smaller than current market pricing suggests. Markets are currently pricing in around 100bp of rate increases."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- The Indian Rupee attracted slight bids against the US Dollar due to suspected RBI intervention.
- Hawkish Fed bets are expected to keep the US Dollar stronger against the Indian Rupee.
- The RBI hiked its key Repo Rate by 25 bps to 5.5%.
The Indian Rupee (INR) traded mildly higher against the US Dollar (USD) on Thursday due to possible Reserve Bank of India’s (RBI) intervention. According to a Reuters report, Indian central bank likely sold US dollars near the market open on Thursday to support the Indian rupee, four traders said.
The RBI intervention was highly anticipated by financial markets, as the Indian currency fell sharply against the US Dollar on Wednesday, following the RBU’s monetary policy announcement.
As of writing, the USD/INR pair is mildly lower at around 96.72, but is close to Wednesday’s high of 96.85 and within striking distance of its all-time high at around 97.00.
What happens at RBI meeting?
Economists at ING reported that the RBI’s Monetary Policy Committee (MPC) “unanimously voted to raise the policy repo rate by 25bp to 5.50%, marking its first rate hike in four years.” At the same time, the MPC “shifted its policy stance to calibrated tightening, signalling that rate cuts are off the table in the near term,” and stressed that “future policy choices would be limited to either a rate hike or a pause, depending on evolving economic conditions and the inflation outlook.”
ING notes that “the pace and extent of further tightening will hinge on growth and inflation dynamics,” with particular focus on “the trajectory of underlying inflation, the broadening of price pressures, the risk of second-round effects from supply shocks, and the strength of demand conditions.” Much of that assessment, they add, “will depend on external inflation drivers,” where “key risks stem from international oil prices, exchange rate dynamics, and global monetary conditions.”
What to expect from INR in near-term?
Regarding the Indian currency’s outlook against the US Dollar, ING said that the external backdrop remains challenging for the Rupee, with “further Fed tightening” likely to “keep the US Dollar stronger for longer, maintaining depreciation pressure on the INR and increasing the risk of imported inflation.”
This reinforces their view that currency weakness and higher global rates could complicate the Reserve Bank of India’s gradual tightening path.
Recovery signs in oil prices
There have been some signs of a recovery in oil prices after remaining under pressure for weeks. Oil prices rebound after a tanker north of Qatar was struck by multiple projectiles, causing casualties, the United Kingdom Maritime Trade Operations agency said on Wednesday, Reuters reported.
Oil prices came under pressure in the past few weeks as the outflow of energy products from the Middle East increased, with United States (US) military supporting ships a safe passage.
Higher oil prices bode poorly for currencies from nations, such as India, which rely heavily on oil imports to meet their energy needs.
USD/INR Technical Analysis
In the daily chart, USD/INR trades at 96.72, holding a bullish near-term bias as spot remains above the 20-day exponential moving average (EMA) at 96.07. The pair has extended its recovery from late-August lows, and the elevated Relative Strength Index (RSI) at 72.6 hints at overbought conditions, suggesting upside momentum may be stretched even as the broader structure stays supportive.
On the downside, initial support is seen at the 20-day EMA at 96.067, where any pullback could find fresh buying interest while this level holds. Looking up, the pair aims to revisit the all-time high near 97.00
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Economic Indicator
RBI Interest Rate Decision (Repo Rate)
The RBI Interest Rate Decision is announced by the Reserve Bank of India. If the bank is hawkish about the inflationary outlook of the economy and rises the interest rates, it is seen as positive, or bullish, for the INR, while a dovish outlook for the economy (or a rate cut) is seen as negative, or bearish, for the currency.
Read more.Last release: Wed Oct 07, 2026 04:30
Frequency: Irregular
Actual: 5.5%
Consensus: 5.5%
Previous: 5.25%
Source: Reserve Bank of India
Lee Hardman at MUFG highlights that the Pound has rallied sharply against the Euro as Euro-zone fiscal concerns intensify, driving EUR/GBP to fresh year-to-date lows. While UK fiscal risks are present, they are seen as less acute than in France, and expectations for a Bank of England rate hike in November help to limit downside risks for the Pound.
EUR/GBP hits fresh year-to-date low as fiscal concerns mount
"Negative development in the euro-zone have boosted the relative appeal of the pound."
"The pound has strengthened sharply against the euro since the end of last month as the euro sell-off has broadened out."
"It has resulted in EUR/GBP falling from just above the 0.8600 to a fresh year-to-date low yesterday of 0.8448."
"Media reports have suggested that the Labour government is well aware of challenging global bond market conditions ahead of this month’s budget scheduled for 28th October which is encouraging them to play it safe as they seek to limit the risk of negative market reaction."
"A development that would help to ease downside risks for the pound."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
Brown Brothers Harriman’s (BBH) Elias Haddad highlights that EUR/USD trades heavy below 1.1200 ahead of the ECB Account release. Above-target Eurozone inflation and a firmer growth outlook give the ECB scope for further tightening, limiting divergence with the Fed. However, stronger US growth and France’s worsening budget crisis keep EUR/USD risks skewed to the downside over the coming months.
Inflation and growth support more ECB hikes
"EUR/USD is trading heavy under 1.1200. The ECB Account of the September 9-10 policy meeting is due today (12:30pm London, 7:30am New York)."
"At that meeting, the ECB unanimously voted to raise the policy rate 25bps to 2.50%. The Account will likely reinforce the case for further hikes, but the message will look somewhat dated given the recent surge in bond yields."
"Above target Eurozone inflation and a firmer growth outlook give the ECB scope to deliver additional hikes. The swaps curve implies nearly 75bps of tightening to 3.25% in the next twelve months."
"That limits policy divergence with the Fed and the drag on EUR/USD. However, stronger US growth traction relative to the Eurozone and France’s worsening budget crisis keep EUR/USD risk skewed to the downside."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
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