Forex News

The European Central Bank (ECB) is expected to raise its deposit rate by 25 basis points to 2.75% in December, according to a Reuters poll published on Thursday. All 71 economists surveyed expect a hike next month. Of those, 46 expect the deposit rate to peak at 2.75%, while 25 see another hike, most likely in the first quarter of 2027.

Economists raised their inflation forecasts from a month ago and now expect Eurozone inflation to remain around twice the ECB’s 2% target through at least the second quarter of 2027.

They see inflation averaging 3.1% in 2026 and 2.8% in 2027, up from 3.0% and 2.6% in the October poll. Core inflation is also expected to pick up, averaging 2.6% this quarter and 2.8% in the first quarter of 2027.

The growth outlook also improved. Economists now expect the Eurozone economy to expand by 1.1% in 2026 and 1.3% in 2027, up from 1.0% and 1.2%, respectively, in the October poll.

Elias Haddad at Brown Brothers Harriman (BBH) reports that the Pound (GBP) showed limited reaction to solid UK Q3 GDP, with 0.7% q/q growth driven by consumption and investment. Swaps still price a high probability of back-to-back Bank of England (BOE) hikes, pushing rates above neutral and raising future growth risks. For now, resilient UK activity is seen as supportive for GBP, particularly versus EUR.

Strong UK growth supports Pound

"GBP largely ignored the UK’s good Q3 GDP print. Real GDP increased 0.7% q/q vs. 0.5% in Q2, matching consensus and the BOE’s forecast. Household consumption and fixed investment were the main growth drivers."

"September real GDP also surprised to the upside, rising 0.2% m/m (consensus: 0%) after stagnating in August, underpinned by gains in services, production and construction."

"The swaps curve still implies about 70% odds of a back-to-back 25bps hike to 4.25% on December 17, and a total of 85bps of tightening over the next twelve months. That would push the policy rate well above the BOE’s estimated 2-4% neutral range, raising the risk of a sharper growth slowdown ahead. For now, resilient UK economic activity reinforces the case for additional BOE hikes which is GBP positive, especially against EUR."

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

• Japanese Yen firms as intervention warnings weigh on USD/JPY near the 160.00 mark.
• A modest US Dollar pullback offers some relief, though hawkish Fed expectations limit the Yen's recovery.
• Cautious remarks from BoJ policymaker Toichiro Asada cast doubt on the pace of further rate hikes.

USD/JPY trades slightly lower on Thursday after climbing to 159.94, its highest level in more than two months. Bets on more aggressive Federal Reserve (Fed) rate hikes strengthened the US Dollar (USD), bringing the pair within touching distance of 160.00, putting the risk of Japanese intervention back in focus. At the time of writing, USD/JPY trades around 159.70, down 0.10% on the day.

Japan’s top currency diplomat, Atsushi Mimura, said on Thursday that recent currency moves had been too fast, adding that “it’s still too early to forget what happened this summer.” Japan spent a record ¥15.4 trillion buying Yen over three days between July 30 and August 3 after the currency weakened to nearly 164 per US Dollar, its lowest level in about 40 years.

Japan signals readiness to defend Yen as USD strength complicates intervention

Analysts at MUFG/BTMU argue that recent official rhetoric “sends a strong signal that Japan is prepared to intervene again to support the Yen,” a stance they believe “should help to limit further upside for USD/JPY beyond 160.00.” However, they caution that “it will be even more difficult to reverse the upward trend for USD/JPY right now with the USD strengthening broadly on the back of expectations for faster Fed rate hikes.” In their view, “if the rising risk of further intervention helps to stabilize USD/JPY while the US Dollar continues to strengthen more broadly, it could see non-USD Yen crosses moving lower.”

However, a modest pullback in the US Dollar (USD) on Thursday takes some pressure off the Japanese Yen (JPY). The US Dollar Index (DXY), which tracks the Greenback against six major currencies, trades near 102.88 after reaching 103.08, its highest level since April 2025.

Traders now fully price in a December Fed rate hike, with a 25-basis-point (bps) move the most likely outcome and a small chance of a larger 50 bps increase. Those bets firmed after hotter-than-expected US consumer inflation data earlier this week and calls from Fed officials for further hikes to bring inflation back to the 2% target.

Meanwhile, Bank of Japan (BoJ) board member Toichiro Asada warned that “rate hikes may harm the economy, reduce core inflation.” He said that with the policy rate in the neutral range, a “further hike could have greater effect on the economy” and that the BoJ “must be cautious about the pace of increases.” Asada also said current price increases “aren’t necessarily fueled by demand” given weak growth and consumption.

Traders now turn to weekly US jobless claims later on Thursday and Friday’s Producer Price Index (PPI) for fresh clues on the Fed’s December decision.

• EUR/GBP holds at higher levels, with upside attempts capped below 0.8370.
• The Euro has drawn some support from a 20% decline in Oil prices.
• In the UK, the upbeat GDP and Industrial Production data have failed to support the Pound.

The Euro (EUR) is consolidating at a slightly higher range against the British Pound (GBP) this week, mainly favoured by the lower Oil prices, although the broader trend is still showing a capped tone. The EUR/GBP has found support above 0.8350, after bouncing from lows at 0.8320 last week, yet with upside attempts limited below 0.8370 so far. 

The common currency has drawn some support from the decline in Oil prices, which provides some relief to the Eurozone economies. Brent Oil has dropped about 20% from last week's highs and has been hovering just above the $90 level over the last few days, its lowest prices since early September.

On the macroeconomic front, UK Gross Domestic Product (GDP) met expectations with a 0.7% growth in the third quarter and a 1.9% yearly advance, with Industrial Production and services’ output growing beyond expectations. The impact on the Pound, however, has been muted.

In the Euro Area, the calendar is thin on Thursday, and the highlight will be European Central Bank (ECB) President Christine Lagarde’s comments at an economic event in Paris during the late US session. Lagarde, however, is unlikely to change market expectations that the bank will hike interest rates by 25 basis points at its next meeting on December 17.

Technical Analysis: Euro corrects higher within a broader bearish trend

EUR/GBP trades at 0.8358, holding a broadly neutral immediate tone, with the broader bearish trend intact after plunging more than 3% in October. Momentum indicators on 4-hour charts are mixed, as the Relative Strength Index (14) holds above the 50 midline, while the Moving Average Convergence Divergence (MACD) has slipped marginally into negative territory, altogether highlighting a lack of a clear bias.

Bulls would need to break Wednesday's high at 0.8370 and the October 28 high around 0.8380 to expose the October 26 high in the 0.8400 area. To the downside, a bearish reaction below Wednesday's low at 0.8350 brings the November 6 and 9 lows, near 0.8335, back into focus.

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

• The Indian Rupee corrects after hitting a fresh six-month high against the US Dollar.
• The US Dollar outperforms its other peers as hopes of Fed’s bigger rate hike come into picture.
• FIIs continue to raise their stake in the Indian stock market.

The Indian Rupee (INR) corrects against the US Dollar (USD) on Thursday after posting a fresh six-month low. The USD/INR pair rebounds to near 94.00 from the day's low of 93.65 as the US Dollar extends its advance.

In the Asian trade, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, posts a fresh 18-month high at around 103.08.

What is fuelling US Dollar's rally?

The US Dollar strengthens as financial markets take the possibility of a bigger interest rate hike by the Federal Reserve (Fed) in the December policy meeting into consideration.

According to TD Securities, the “strong upside surprise in the Consumer Price Index (CPI) data makes a December hike all but certain,” with the bank reiterating that the data “certainly seals a Dec rate hike by the Fed.” Strategists note that “after Waller's speech on Tuesday, the debate has now shifted to whether the FOMC will go 25 or 50bps,” as Governor Waller’s pre-CPI remarks have sharpened the focus on the need for a potential “catch-up” move. TD Securities writes that the discussion will now centre on whether the Fed should implement a “catch-up 50bps rate hike in December, or whether to maintain course with a 25bps rate increase and provide strong guidance toward a potential January follow-through.” For now, they emphasize that “we still favor a 25bp hike with a rising risk of another hike in January.”

Why INR performed strongly in past few weeks?

Indian currency outperformed on the back of strong inflows of overseas investment into the Indian stock market. Foreign Institutional Investors (FIIs) continue to increase their investment in the Indian equity market as fresh headwinds in the global Artificial Intelligence (AI) stocks and falling energy prices have underpinned “India” as a competitive bet.

So far in November, FIIs have remained net buyers on all trading days, except Diwali Muhurat session, that fell on Sunday, November 08. Foreign investors have made a cumulative investment of Rs. 65,735.57 crore.

What are the fresh headwinds in global AI sector?

Concerns about the continuation of spending on AI infrastructure, following the victory of Democrats in the United States (US) midterm elections, pushed AI-related stocks into turmoil.

And now fears of replacement of Nvidia’s CEO Jensen Huang after reports from New York Times (NYT) of his extramarital affair with alleged Chinese spy Alice Huang and rumours of a relationship with his subordinate Kimberly Powell, Nvidia's vice president of health care, could put AI stocks under pressure.

The Wall Street Journal (WSJ) has reported that Nvidia's board was preparing to oust the CEO, adding that the next 48 hours as potentially volatile.

Lower oil prices – a tailwind for net energy importers

Falling oil prices due to hopes that the US and Iran would prefer a deal rather than renewing military attacks have improved the appeal of currencies from economies, such as India, which rely heavily on oil imports to meet their energy needs.

As of writing, the MCX Crude Oil contract expiring on November 19 is down 2.42%, slightly below Rs. 8,000.

USD/INR Technical Analysis

In the daily chart, USD/INR trades at 94.00, maintaining a bearish near-term tone as spot holds below the 20-period exponential moving average (EMA) at 94.61. The placement of price under this short-term EMA suggests rallies remain capped for now, while the Relative Strength Index (14) at 31.96 hovers just above oversold territory, hinting that downside momentum is still present but gradually stabilizing.

The pair has rebounded and testing the breakdown of the prior hurdle placed near 94.00

On the topside, initial resistance is defined by the 20-period EMA at 94.61, and a daily close above this barrier would ease immediate selling pressure. On the downside, the six-month low at 93.65 is the immediate support; a break below that level would expose the pair to 93.00.

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

• AUD/USD declines to near 0.6833 as the Australian Dollar underperforms.
• The Fed is certain to hike interest rates in the December meeting.
• Investors keenly await RBA's monetary policy minutes and Governor Michele Bullock's speech.

The Australian Dollar (AUD) underperforms its currency peers on Thursday, trading 0.15% down at around 0.6833 against the US Dollar (USD) during the European trade. The Australian currency is under pressure as market experts doubt the continuation of Reserve Bank of Australia’s (RBA) monetary tightening cycle.

Analysts at OCBC Group Research highlighted the mixed signals in the last RBA’s decision, noting that while the statement cited that “inflation remains elevated and recent data indicate that it is broadly based” to justify the hike, it also acknowledged that “the increases in the cash rate target since the beginning of the year have tightened financial conditions. The economy is slowing, housing prices have fallen significantly and the unemployment rate has risen”.

OCBC further point out that the RBA has softened its forward guidance, with the statement having removed the phrase “including increasing the cash rate target further if needed”. Against this backdrop, OCBC concludes: “We expect no more hike in this cycle, and the next policy move is likely to be a cut.”

For fresh cues regarding RBA’s monetary policy outlook, investors will pay attention to monetary policy meeting minutes of the October policy meeting and Governor Michele Bullock’s speech scheduled on Tuesday.

Meanwhile, the broader strength in the US Dollar is also keeping the Aussie pair under pressure. As of writing, the US Dollar Index (DXY) trades flat at around 102.86 after giving back it early gains. During the day, the DXY posted a fresh 18-month high at 103.08.

Dollar index hits fresh high as Fed hike expectations firm into year end

Analysts at MUFG note that the US Dollar has “continued to strengthen overnight,” pushing the Dollar Index to “a fresh year-to-date high of 103.08.” They argue that the Dollar’s “renewed upward momentum has been encouraged by expectations that the Fed is likely to speed up the pace of rate hikes in response to the recent run of stronger US inflation data.” In rates, MUFG highlights that “the yield on the 2-year US Treasury has jumped high by around 33bps from the low at the end of last week although still remains below the peak set in September at 4.96%.”

On the policy outlook, MUFG points out that “a 25bps rate hike at the next FOMC meeting in December is now fully priced in, and market participants have moved further to price in small probability of larger 50bps hike.” They add that “there are currently around 28bps of hikes priced by December, and 43bps of hikes priced by the following meeting in January indicating that even if the Fed hikes by 25bps in December it is now expected to quickly follow up with another 25bps hike at the start of next year.”

According to MUFG, market expectations for a faster pace of Fed tightening have been “encouraged by hawkish comments this week by Fed officials.” They cite Governor Christopher Waller, who “stated he would consider voting for a larger 50bps hike in December,” and Dallas Fed President Lorie Logan, a current voting member, who said “the FOMC needs to implement at least two more 25bps rate increases” and that “it may be possible to move more rapidly this winter than the FOMC has moved this fall.” Chicago Fed President Austan Goolsbee, who becomes a voting member next year, also described the October CPI report as “another distressing report, borderline disturbing,” particularly highlighting that services inflation “has remained persistently high.”

MUFG stresses that “the updated views of New York Fed President John Williams could carry more weight.” They recall his recent remark that it is an “appropriate time to accumulate more information to help us determine what the appropriate stance of policy is to make sure we achieve a timely return to our 2% target.” While MUFG does not expect “a larger 50bps hike to be delivered in December,” they judge that “it is more likely now that the Fed could hike rates back-to-back in December and January.”

In their view, this evolving policy narrative is “a development that will encourage the US dollar to trade at stronger levels heading into year end.” MUFG concludes that “a sharp tightening of US financial conditions and/or ongoing drop in energy prices would likely be required to significantly push back against market expectations for faster Fed hikes at the current juncture.”

AUD/USD Technical Analysis

In the daily chart, AUD/USD trades at 0.6835, maintaining a bearish near-term bias as spot holds clearly below the 20-period exponential moving average (EMA) at 0.6947. The location of price under this key trend reference and the breakdown of the Head and Shoulder (H&S) chart pattern hint that recent rebounds remain capped, while the Relative Strength Index (14) around 35 stays in weak territory, suggesting only modest downside momentum rather than outright oversold conditions.

On the topside, initial resistance is located at the neckline of the H&S pattern, which is at 0.6900, followed by the 20-period EMA at 0.6947, and a decisive recovery above this barrier would be needed to ease immediate selling pressure and open the way for a broader corrective bounce. Looking down, the pair could extend its decline towards 0.6800.

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

• USD/CAD eases to 1.4240 from four-week highs at 1.4265 but maintains its bullish bias intact. 
• Strong US inflation and hawkish Fed comments are likely to keep US Dollar bears subdued.
• The Canadian Dollar remains on the back foot as soft labour data has dampened hopes of immediate BoC rate hikes.

The Canadian Dollar (CAD) posts marginal gains on Thursday as the US Dollar (USD) retreats from recent highs against most peers in a quiet market session. The USD/CAD changes hands at 1.4243 at the time of writing, down from a four-week high at 1.4265 hit earlier in the day, although it remains on track for a 0.8% weekly rally.

The US Dollar has drawn support from the strong US Consumer Price Index (CPI) figures seen earlier this week, which boosted expectations that the Federal Reserve (Fed) will hike interest rates further in December.

Fed officials have backed those views and are likely to point in that direction again on Thursday. A string of policymakers are expected to speak later in the day, some of whom have already shown their support for tightening monetary policy in the next meeting.

Soft Canadian labour data dampened hopes of immediate BoC hikes

The Canadian Dollar, on the contrary, is still paying a toll from the disappointing Canadian labour market report released last Friday. The country's economy lost 4.7K jobs in October, against expectations of a 13.6K increase, following another 68.3K decline in September. Beyond that, the Unemployment Rate rose to 6.7%, its highest level since April.

TD Securities analysts observe that “diverging employment data releases will likely keep USDCAD supported above 1.40,” as Canada’s “rising unemployment rate amid falling wage growth rate” undermines the case for tighter policy.

In their view, this backdrop “reduces the market pricing of a December BoC rate hike relative to the Fed,” leaving the Canadian Dollar vulnerable to further underperformance against the Dollar.

Societe Generale’s rates team notes a sharp advance in 10‑year US Treasuries after defending key trendline support near 4.81%, with yields now challenging the 50‑day moving average. The bank sees scope for consolidation between 4.81% and 5.05%, but if resistance breaks, a larger move towards the 5.16%–5.18% gap and October’s high around 5.36% is envisaged.

Treasury yields extend post‑CPI gains

"10y UST has staged a sharp up move after defending the confluence of a multi-month ascending trend line and the January 2025 peak near 4.81%. It is now challenging the 50-DMA."

"A short-term consolidation cannot be ruled out within the limits of 4.81% and the recent pivot high of 5.05%. If this hurdle is overcome, 10y UST could embark on a larger up move towards the recent down gap at 5.16%/5.18%, followed by the October high near 5.36%."

"US: 10y IRS consolidates post CPI gains around 4.60% as cash trading resumes. Support 4.53%, resistance 4.66%."

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

• The US Dollar Index has given back previous gains, retreating to the 102.80 area from 19-month highs at 103.08.
• Hopes of further Fed tightening and a recovery in US equity markets are seen as the main reasons for the US Dollar upswing.
• Dollar dips are likely to remain limited, with 103.10 and 103.50 on the bulls' target.

The US Dollar Index (DXY) has reversed previous daily gains, returning to levels below 103.00 after hitting fresh 19-month highs at 103.08 earlier in the day. The DXY, which measures the value of the Greenback against a basket of six currencies, maintains its broader bullish trend intact after rallying 1.20% in the previous two days.

Speculative traders have ramped up US Dollar longs this week, following stronger-than-expected price pressures in October, which have cemented expectations that the Federal Reserve (Fed) will hike rates in December, with the possibility of a jumbo hike –50 basis points– on the table.

Fed speakers have contributed to buoy the US Dollar, highlighting their concern about stubbornly high inflation. Some of them are expected to speak to the public later on Thursday, likely to reiterate their hawkish stance.

Commerzbank analysts Dr. Henry Hao and Charlie Lay point to the recent rally in US equities and semiconductor stocks amid “renewed artificial intelligence optimism” as another key factor explaining the recent USD upswing.

Technical Analysis: US Dollar is correcting lower from overbought levels

In the four-hour chart, the DXY is showing a mild bearish correction as bulls were capped at the 161.8% Fibonacci extension of the November 5-6 rally, at the 103.10 area on Wednesday. Momentum indicators on 4-hour charts remain positive, with the Relative Strength Index (14) already below the 70 level that marks overbought territory, while the Moving Average Convergence Divergence (MACD) indicator stays in positive territory, reinforcing the constructive bias.

Downside attempts are being contained above 102.80 so far, with the next bearish target below here, at the late October and early November highs, between 102.40 and 102.50. On the topside, initial resistance aligns at the horizontal barrier near 103.10, followed by the April 8, 2025 high, in the 103.50 area.

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

Societe Generale notes USD/JPY trading just below 160, with Japan’s Ministry of Finance warning markets not to forget FX intervention risks as yields and Dollar strength persist. The pair has reached its highest level since early September before meeting resistance near 160, with clearly defined support and resistance levels and sizeable option strikes that could shape short-term trading.

Japanese Yen faces intervention warnings

"Japan’s Mimura: markets shouldn’t forget intervention risks as USD/JPY nears 160."

"USD/JPY: 159.48 – 159.95 overnight range. Spot up to highest since 2 September before running into resistance near 160 on MoF FX intervention comments (Mimura). Support 158.70, resistance 160.90."

"European and US investors returning from the public holiday find the dollar broadening its CPI-driven gains and key technical levels coming under pressure across the majors. EUR/USD is trading with a 1.10 handle, USD/JPY is approaching 160, GBP/USD stumbled in the high 1.32s and AUD/USD must dig in to defend 0.68."

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