Forex News

• The US Dollar Index may rebound toward the nine-day EMA of 102.07.
• The 14-day Relative Strength Index at 57.40 signals positive, constructive bullish momentum.
• The DXY may further fall toward the 50-day EMA of 100.87.

The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six major currencies, is extending its losses for the second successive day and trading around 101.90 during the Asian hours on Friday.

The DXY is retaining a bullish near-term bias as it holds above the 50-day Exponential Moving Average (EMA). Price is now testing the short-term nine-day EMA, which acts as immediate resistance, suggesting the latest advance is pausing rather than reversing. The 14-day Relative Strength Index (RSI) at 57.40 stays in positive territory without being overbought, hinting that bullish momentum remains constructive even as the FXS Fed Sentiment Index cools from prior highs.

Additionally, the technical analysis of the daily chart indicates that the dollar index is positioned slightly below the lower boundary of the ascending channel, signaling a loss of bullish momentum and a potential shift toward a downward trend. Because the price is only slightly below the boundary, it may be a temporary dip or a liquidity hunt aimed at triggering stop-loss orders just beneath support.

The US Dollar Index could rebound and test the initial barrier at the nine-day EMA of 102.07. A return to the channel would revive 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 103.70.

On the downside, the US Dollar Index may navigate the region around the 50-day EMA of 100.87. Further declines would expose the five-month low of 98.56, which was recorded on August 20.

Dollar fails to extend gains despite broadening US price pressures

Commerzbank’s Thu Lan Nguyen highlights that a run of stronger-than-expected US data has done little to deliver lasting support for the Dollar. She notes that “surprisingly strong US consumer price data on Wednesday were followed yesterday by stronger-than-expected retail sales and producer price figures,” adding that this sequence “adds to the evidence that price pressures are becoming increasingly broad-based.” However, Nguyen points out that “the dollar was unable to hold on to its gains from Wednesday,” underscoring that the latest upside surprises in inflation and activity have not translated into a sustained currency rally.

Warsh cautious on crisis scars but upbeat on structural growth and AI

Fed Chair Warsh’s speech scores 5.6/10 on the FXS Speechtracker, modestly below the 6.1/10 historical average, pointing to a slightly less impactful tone relative to the established baseline despite broadly consistent messaging since the September FOMC. The admission of being “over-scarred from the global financial crisis” underscores a lingering bias toward risk management and financial stability even as Warsh highlights structural growth and an investment surge driven by “good policies,” and stresses that upcoming October and December meetings will be the true “crystallizing moment” for decisions on output, employment, and inflation. Warsh’s focus on AI as a demand-side force that will eventually bolster data confidence and monetary policy, while keeping near-term employment effects uncertain, reinforces a cautious but constructive stance for the Dollar and broader risk sentiment.

The FXS Fed Sentiment Index was unchanged, moving 0.00 points to a still-elevated level of 127.51, signaling that the overall policy tone remains firmly in hawkish territory despite the slightly softer FXS Speechtracker score. For FX markets, the combination of a high FXS Fed Sentiment Index and Warsh’s emphasis on price stability and financial stability risks suggests ongoing support for the Dollar, with sensitivity to incoming data and AI-related developments into the year-end FOMC meetings.

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

Danske Bank’s Danske Research Team observes that equities traded mostly lower, with defensives outperforming cyclicals and the SOX declining for a fifth session amid an ongoing AI-related rotation and mixed US bank earnings. However, several indices remain close to all-time highs, which the team interprets as sector rotation rather than broad deleveraging, given a resilient macro backdrop and strong earnings.

Rotation not deleveraging signal

"Equities traded mostly lower yesterday, although the tone in Europe and the US was more constructive than in the preceding Asian session."

"Once again, more S&P 500 constituents advanced than declined, underscoring the distinction between index performance and underlying breadth."

"The SOX fell for a fifth consecutive session, while defensives outperformed cyclicals for a sixth session. Weakness centred on the ongoing AI rotation, particularly memory, and a mixed opening round of US bank earnings."

"Yet several indices remain close to all-time highs despite almost a week of defensive leadership. As we emphasised throughout Q3, against a backdrop of resilient macro and strong earnings, these moves look more like rotation across sectors than broad deleveraging or a decisive shift towards risk aversion. A deterioration in the macro backdrop would warrant a different interpretation, but that is not what we are seeing."

"Asian equities are recovering modestly this morning, with European and US equity futures also pointing higher."

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

• USD/JPY softens to around 157.85 in Friday’s early European session.
• BoJ’s Koeda says central bank should not be overly cautious in raising rates.
• Fed Chair declines to offer clues on whether there will be an interest rate hike again in the October meeting.

The USD/JPY pair loses ground to near 157.85 during the early European trading hours on Friday. Hawkish hints from Bank of Japan (BoJ) policymakers provide some support to the Japanese Yen (JPY) against the US Dollar (USD).

BoJ board member Junko Koeda said on Thursday that the central bank should not become overly cautious about raising interest rates given considerable upside risks to inflation. Koeda added that Japan's financial conditions remain accommodative even after the past interest rate hikes, with little sign that higher borrowing costs were hurting household and business activities.

"The BoJ should adjust interest rates in a timely manner with an eye on the economic and price situation, while keeping in mind the estimated range of the neutral interest rate," said Koeda.

The BoJ’s next policy meeting is scheduled for October 29–30. The board will publish updated economic growth and inflation projections that traders will closely monitor for clues about when the next interest rate hike might occur.

During the International Monetary Fund (IMF) event on Friday, Federal Reserve (Fed) Chairman Kevin Warsh refrained from signaling whether there will be another interest rate hike again in the October policy meeting.

“I don’t prejudge meetings. I don’t believe in saying now what I might do at the meetings that we have in the balance of this year,” said Warsh, reiterating his opposition to the use of forward guidance for markets that should rely on interpreting data.

The Greenback attracts some sellers following Warsh’s speech. However, signs of hotter inflation in the US might help limit the USD’s losses. The US Producer Price Index (PPI) jumped by 6.3% year-on-year (YoY) in September, versus a rise of 5.6% prior (revised from 5.4%), the Bureau of Labor Statistics revealed on Thursday. This figure registered the largest increase since 2022 and was hotter than the forecast of an increase of 5.3%.

Yen sentiment steadies as BoJ’s Koeda cautions against excessive patience on hikes

Societe Generale notes that policy rhetoric remains a key driver for Yen sentiment, highlighting comments from BoJ board member Koeda, who “warns against being overly cautious on rate hikes.” The bank suggests that this firmer tone on normalization is helping to frame near-term expectations for the BoJ’s policy path alongside prevailing USD/JPY levels and the recent narrowing in US–Japan yield spreads.

BoJ’s Koeda flags higher neutral rate, keeping Yen bulls engaged

Koeda’s speech score at 8.2/10 matches the historic average on FXS Speechtracker, signaling a consistent tone but with a clear hawkish tilt versus past BoJ caution. Guidance that the neutral rate is “significantly above 1%,” underlying inflation stabilising around 2%, and the need to adjust policy in light of upside price risks collectively point to a BoJ that is more comfortable with further tightening, even without a preset pace of rate hikes.

The commitment to prevent underlying inflation from exceeding 2% and the explanation that the September rate hike reflected resilient economic data reinforce a bias toward additional normalization. By stressing that the monetary environment has been accommodative and that financial conditions must be assessed comprehensively alongside funding demand, Koeda underpins a constructive backdrop for the Yen, as markets can price a higher terminal rate path and reduced policy divergence versus other major currencies.

Technical Analysis: USD/JPY keeps a bearish tone under the key 100-day SMA

In the daily chart, USD/JPY keeps a capped tone as spot holds below the 20-period Bollinger middle band and well under the 100-day moving average (MA). The Relative Strength Index (14) at 51.1 remains neutral, suggesting limited directional conviction in the near term.

On the topside, initial resistance is located at the Bollinger midline near 157.95, followed by the upper band around 158.85, with the 100-day MA at 159.45 acting as a stronger barrier that would need to be reclaimed to revive bullish momentum. On the downside, immediate support emerges at the lower Bollinger band at 157.05, and a decisive break below this floor would open the door to a deeper corrective phase toward lower daily lows.

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

Commerzbank’s Thu Lan Nguyen notes that despite stronger-than-expected US inflation, retail sales and producer prices, the Dollar and EUR/USD have largely reverted to pre-data levels. She argues that without a shift toward more overall Federal Reserve tightening, US rate expectations and the US–Euro area differential stay broadly sideways, leaving recent EUR/USD weakness driven more by Euro softness than by the US outlook.

Dollar struggles despite robust data

"Surprisingly strong US consumer price data on Wednesday were followed yesterday by stronger-than-expected retail sales and producer price figures. This adds to the evidence that price pressures are becoming increasingly broad-based. Nevertheless, the dollar was unable to hold on to its gains from Wednesday."

"For the US dollar to benefit sustainably from stronger US data, however, it is not enough for the market simply to bring forward the timing of the next Fed rate hike. What matters is whether the market expects more monetary tightening overall. Put differently, whether the Fed raises rates in October or waits until December is ultimately of secondary importance for the US dollar as long as this remains the final rate hike."

"For the dollar to receive lasting support, the market would need to price in more tightening overall than it did previously. So far, that has not happened. US rate expectations for the end of this year have barely moved in recent days."

"There is another factor at play. The market also continues to expect the ECB to raise rates once more by the end of the year, and that expectation has changed little as well. As a result, the interest rate differential between the US and the euro area priced in for year-end has been moving broadly sideways for some time."

"The recent sharp decline in EUR/USD can therefore be explained less by a shift in the US rate outlook and more by weakness in the euro."

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

On behalf of Bank of Japan (BoJ) Governor Kazuo Ueda, Deputy Governor Shinichi Uchida said during the European trading session on Friday that the central bank will continue to raise policy rate in accordance with economic, price, and financial developments, reiterating the hawkish monetary policy stance.

Additional remarks

Stabilising underlying inflation at level around 2% is more important than past.

Underlying inflation approaching 2%.

Financial conditions are accommodative.

Pace and timing of future policy adjustment will be decided based on likelihood of our baseline projections materialising as well as risks.

There is risk of underlying inflation overshooting 2% price target.

Accommodative financial conditions continue to support economic activity even after September rate hike.

Economy, prices moving in line with our baseline forecasts.

Market reaction

No major action is seen in the Japanese Yen (JPY), following remarks from BoJ Governor Ueda. As of writing, USD/JPY is marginally down to near 157.88.

Ueda flags ongoing rate hikes as inflation nears target, lifting Yen outlook

FXS Speechtracker assigns the speech a 8.2/10 score, notably above Governor Ueda’s historic 7.3/10 average, signaling a stronger-than-usual policy signal. The emphasis on continuing to raise the policy rate as underlying inflation approaches and potentially overshoots the 2% target, while financial conditions remain accommodative, marks a clear hawkish shift that is supportive for the Yen.

By stressing that stabilising inflation around 2% is now more important than in the past and that the pace and timing of future adjustments will depend on baseline projections and risks, the speech reinforces expectations of a gradual but persistent normalization path. This combination of rising inflation risks and still-supportive financial conditions underpins a narrative of further rate hikes, which should underpin Yen demand and reduce the appeal of funding trades against the Yen.

ING analysts Warren Patterson and Ewa Manthey note that Oil remains supported, with ICE Brent trading comfortably above $100/bbl as Middle East tensions and concerns over flows through the Strait of Hormuz sustain a risk premium. They highlight IEA members’ plan to release remaining emergency reserves and discuss US inventory draws and potential US dissatisfaction with diesel release volumes.

Middle East risk keeps Brent elevated

"Oil remains well-supported. A pattern has set in: prices slide early in the session, then claw back most of those losses by the close. As a result, ICE Brent continues to comfortably trade above $100/bbl. Uncertainty in the Middle East and concerns over the sustainability of oil flows through the Strait of Hormuz has the market pricing in a significant risk premium.

"The longer this pickup in flows continues, the more likely the market will start giving back some of this risk premium. In order to see a full removal, there needs to be some kind of agreement between the US and Iran. This would provide the market with more confidence that stronger oil flows from the region will continue."

"International Energy Agency members agreed to release the remaining 100m barrels of oil from strategic reserves. It's part of the initial 400m barrels that members agreed back in March to help with the Persian Gulf supply shortfall. According to the IEA, members have distributed around 330m barrels to date."

"From the 100m barrels to be released, 20m barrels will be diesel, and will make its way onto the market as soon as possible. The US probably won’t be happy with the scale of the release, particularly regarding diesel. Initial suggestions were that we could see around 50m barrels of diesel released."

"The latest data from the EIA shows that US commercial crude oil inventories fell by 8.56m barrels over the last week, which is the largest weekly decline since February. Hurricane activity in the Gulf played part in the inventory decline, with offshore production shut in due to the storm. US output is estimated to have fallen by 300k b/d week-on-week."

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

• EUR/USD holds gains above 1.1200, with upside attempts capped below 1.1240.
• The pair is on track for the first weekly gain in a month as lower yields and dovish Fed speak have blunted the US Dollar.
• Recent price action suggests that the Euro might have found a bottom at the 1.1115 area

The Euro (EUR) ticks higher against the US Dollar (USD) on Friday and is on track to its first weekly gain in more than one month, as the recent pullback in US Treasury yields and dovish comments by Federal Reserve officials have undermined speculative demand for the Greenback. The pair, however, has been capped at 1.1240 for the second time over the last two days and pulls back to the 1.1220 area ahead of the release of the final Eurozone inflation data for September.

Preliminary data showed that the Eurozone Harmonised Index of Consumer Prices (HICP) accelerated to a 3.8% year-on-year growth in September, from 3.2% in August, boosted by higher Oil prices. The Core HICP showed a more modest increment, to 2.5%, from 2.4% in the previous month.

The US Dollar has been showing a moderately weaker tone over the last few sessions, as lower US yields and dovish comments by Fed policymakers have offset the hot US producer inflation and the strong Retail Sales figures seen on Thursday,

Federal Reserve Chairman Kevin Warsh spoke at the International Monetary Fund (IMF) meeting in Bangkok earlier in the day and showed optimism about economic resilience. Warsh also reiterated the Fed’s commitment to fight inflationary pressures but refused to provide any guidance about the timing or the scope of the monetary tightening cycle.

Technical analysis: Euro shows hints of bottoming activity

EUR/USD trades at 1.1226, with the broader bearish trend intact but the impulsive rebound from the 17-month low at 1.1113 hit earlier this week suggests that the pair might be ripe for a bullish correction. Momentum indicators endorse this view, as the 4-hour Relative Strength Index (14) steadies above the key 50 level and the Moving Average Convergence Divergence (MACD) holds above zero with a modest positive histogram.

Bulls, however, would need to breach Thursday's high at 1.1240 and the October 2 high at 1.1290 to confirm a trend shift. On the downside, initial support emerges at the intra-day low near 1.1190, ahead of a more important structural base at 1.1113 (October 14 low). A confirmation below here negates the bullish view and increases pressure towards the late May 2025 lows around 1.1050.

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

• Silver price recovers to near $57.60 at the expense of the US Dollar.
• The US Dollar underperforms amid uncertainty ahead of US mid-term elections.
• The Fed is expected to leave interest rates unchanged in the policy meeting later this month.

Silver price (XAG/USD holds onto Thursday’s recovery near $57.60 during the European trading session on Friday. The white metal rebounds as the US Dollar (USD) is under pressure due to Artificial Intelligence (AI)-driven risk-off.

As of writing, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades 0.1% lower to near 101.90. The USD Index has corrected sharply in the past two days from its over-a-year high of 102.95 posted after the United States (US) Consumer Price Index (CPI) data release.

Technically, a lower US Dollar makes the Silver price an attractive risk-reward bet for investors.

USD rally questioned as Fed risks, earnings and politics weigh

Economists at DBS Group Research argue that the market reaction to the latest upside surprise in US CPI has exposed cracks in the Dollar’s recent advance. They note that the “USD’s failure to sustain gains following the upside CPI surprise raises questions about the durability of its rally,” with the initial move higher in the Dollar and US Treasury yields fading as investors reassessed the policy outlook.

According to DBS, “the reversal in Treasury yields and in Fed hike expectations suggests that investors are mindful of growth and earnings risks from further tightening,” underscoring a more cautious stance toward additional rate increases. At the same time, “political uncertainty added to the headwinds.” With US midterms approaching, DBS highlights that “investors are questioning whether the benign assumption that Republicans would lose the House but retain the Senate is correct,” as the electoral landscape appears less predictable.

DBS points out that “prediction markets now see a growing risk of a Democratic sweep of Congress, raising concerns about tighter regulatory scrutiny, policy gridlock, and the sustainability of elevated equity valuation.” In their view, this combination of policy, growth and political risks is increasingly challenging the narrative of a straightforward, durable USD rally.

Silver Technical Analysis

In the daily chart, XAG/USD trades at $57.53, maintaining a bearish near-term bias as spot holds clearly below the 20-day exponential moving average (EMA) at $60.49. The downside break beneath this key trend gauge suggests the recent pullback is evolving into a deeper correction, while the Relative Strength Index (14) around 38 hints at persistent but not yet extreme selling pressure.

On the topside, immediate resistance is defined by the 20-day EMA at $60.49, which would need to be reclaimed to ease the current bearish tone and open the way for a more sustained recovery. As long as price remains under this barrier, momentum readings near oversold territory reinforce the risk of continued consolidation or further weakness rather than a decisive rebound.

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