Forex News

Deutsche Bank strategists emphasize that polling and prediction markets point to Democratic gains in US midterms, with high odds of taking at least one chamber of Congress. They argue such an outcome would materially limit President Trump’s legislative agenda, particularly on spending and debt ceiling, while a Democratic Senate would further restrict his ability to appoint key officials.

Midterms reshape policy constraints

"Currently, the Republicans control both chambers of Congress, but the incumbent President’s party usually loses ground in midterm votes. Moreover, polling averages and prediction markets are consistently pointing to Democratic gains today. For example, Polymarket gives the Democrats a 95% chance of victory in the House as of this morning, and a 79% chance of retaking the Senate."

"Whatever the results are tonight, the new Congress doesn’t actually convene until January 3. However, even if the Democrats take just one chamber, that will have major implications for Trump’s legislative agenda, as all legislation requires majority support in both chambers of Congress. Notably from a market standpoint, that includes spending packages, as well as increases in the debt ceiling."

"So even if the Democrats just win in the House, it will constrain Trump’s room for manoeuvre. In addition, the Senate is the chamber that votes on presidential nominees, including cabinet appointments, Supreme Court justices and Fed Governors. So if the Democrats take the Senate as well (which hasn’t happened to Trump in either of his terms), then he’ll face a further constraint on who he can appoint."

"However, even if the Democrats take control of both chambers, they’re still limited in what they can do. That’s because legislation still requires the President’s signature, and that can only be overridden if two-thirds of both chambers vote for it. So Trump still retains a veto power, even if Democratic majorities were to pass legislation he was opposed to."

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

United Overseas Bank’s (UOB) Quek Ser Leang notes that spot gold remains under pressure after breaking an ascending trendline on 22 October and falling below $3,943 to a one-year low near $3,870 on 30 October. Strong downward momentum suggests further downside risk toward $3,700, although the bank sees a low probability of sustained losses below that level.

Gold extends decline toward $3,700

"While spot gold broke the trendline mentioned above on 22 October, there was little follow-through initially."

"Last Friday, however, it broke below $3,943 in a sharp move and dropped to a one-year low of $3,870."

"While the decline is entering oversold territory, strong downward momentum suggests there is scope for gold to decline further to $3,700."

"At this stage, the odds of a continued decline below $3,700 are not high."

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

ING strategists argue that the US Dollar’s reaction to the midterm elections should be short-lived. They see some short-term downside risk if Democrats win both chambers, mainly via regulation concerns and gridlock fears, but stress that the Federal Reserve narrative remains dominant. A split Congress is expected to be neutral to slightly supportive for the Dollar.

Midterm scenarios and Dollar risks

"We don’t expect today’s US midterm results to cause structural shifts in FX, but the dollar may face some short-term pressure should the Democrats secure both the House (widely expected) and the Senate (close call)."

"Our baseline assumption is that markets fully price in a Republican loss of the House, but only partially a Democratic clean sweep. A blue sweep can put some pressure on the dollar. Fears of tougher regulation could weigh on AI stocks (we’ve recently seen how that can hit the greenback), while markets could price in greater risks of decision-making gridlock around issues such as government funding and the debt ceiling."

"Still, we doubt that’s enough to trigger a structural directional shift in the dollar. The greenback continues to respond predominantly to the Fed story, which shouldn’t face an immediate and direct impact from the midterm result. We expect a split Congress (R-S, D-H) to have a neutral or slightly positive USD impact."

"Hopes of a revamp in diplomatic efforts have sent Brent tumbling back below $105/bl, while the dollar has softened slightly alongside commodity currencies. On the macro side, today’s calendar includes US JOLTS job openings."

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

• The British Pound flattens against the US Dollar in the countdown to US Midterm Elections.
• Deutsche Bank sees a 95% chance of Democrats’ victory in the House, and a 79% chance of retaking the Senate.
• The BoE is expected to hike policy rates by 25 bps to 4%, with a 7-2 majority.

The British Pound (GBP) trades almost flat at around 1.3410 against the US Dollar (USD) during the European trading session on Tuesday. The GBP/USD pair consolidates as investors shift their focus to United States (US) Midterm Elections, which will begin later in the North American session.

Democrats are seen winning in both House and Senate

Analysts at Deutsche Bank describe today’s US midterm elections as “the main event,” noting that voters will decide the entire House of Representatives, a third of the Senate, and 36 state Governors.

Deutsche Bank points out that Republicans currently control both chambers of Congress, but that “the incumbent President’s party usually loses ground in midterm votes.” They add that polling averages and prediction markets are “consistently pointing to Democratic gains today,” with Polymarket “giv[ing] the Democrats a 95% chance of victory in the House as of this morning, and a 79% chance of retaking the Senate.”

On the economic front, investors await key US economic releases this week, especially Nonfarm Payrolls (NFP) data for October, which is scheduled for Friday.

Later in the day, financial markets will pay attention to the US JOLTS Job Openings data for September, which will be published at 15:00 GMT. According to estimates, US employers posted 7.13 million fresh jobs, slightly higher than 7.097 million in August.

On the other side of the Atlantic, investors await the Bank of England’s (BoE) monetary policy decision on Thursday. The BoE is almost certain to hike interest rates by 25 basis points (bps) to 4%, with a 7-2 majority.

Strategists at Brown Brothers Harriman (BBH) argue that “firmer UK inflation and economic activity back the move,” after a year on hold. They added that doves Alan Taylor and Swati Dhingra are likely to “supporting a hold”.

GBP/USD Technical Analysis

In the daily chart, GBP/USD trades at 1.3410, extending its recovery above the 20-period exponential moving average (EMA) at 1.3346, which now underpins a bullish near-term bias. The EMA acting as immediate support suggests buyers are regaining control, while the Relative Strength Index (14) at 58.31 stays in positive territory without yet signaling overbought conditions, hinting that upside pressure could persist as long as price holds over the moving average.

On the downside, initial support is located at the 20-period EMA at 1.3346, with the 1.3410 area acting as a near-term pivot that would need to give way to undermine the constructive tone. With no major technical resistance levels immediately overhead in this dataset, the pair appears poised to probe higher levels, though a daily close back below the EMA would weaken the bullish structure and open the door to a deeper corrective slide.

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

Norman Liebke at Commerzbank notes that the Reserve Bank of Australia (RBA) raised rates to 4.85%, but the Australian Dollar fell as markets saw the move as dovish. With growth and labour forecasts softening and inflation driven partly by external Oil shocks, he expects no further hikes and sees the Aussie’s path tied to US and Euro interest rate expectations.

RBA caution and external inflation drivers

"The Australian central bank raised its policy rate by 25 basis points to 4.85% this morning. However, as the move had been widely expected by both the market and the consensus in the Bloomberg survey, the Australian dollar was unable to benefit: AUD/USD fell by around 0.3% in the immediate aftermath."

"In its statement, the RBA highlights that inflation remains well above its 2-3% target range and is unlikely to return to that range until late 2027, around three quarters later than previously expected. This could also be problematic for inflation expectations, as survey-based measures, at least, have risen more sharply of late, both at the short and long end. At first glance, this sounds fairly hawkish. Yet the Australian dollar weakened, and even after today’s rate hike, financial markets are not pricing in any further increase. So why is that?"

"The RBA stresses that the economy has weakened, as reflected, among other things, in falling house prices. With interest rates now higher, weaker residential investment and softer private consumption are expected next year, which should gradually help bring inflation down. The growth outlook has also deteriorated: for the end of 2027, the RBA now expects growth of just 1.3%, compared with 1.6% in its previous forecast."

"The fact that today’s rate hike was approved by only six votes to three further underlines the growing caution within the Board. Overall, the hurdle for another rate hike is therefore likely to be quite high, and we do not expect any further increase in interest rates. In the near term, the Aussie could remain under pressure following the relatively dovish rate hike."

"Further ahead, however, its performance is likely to depend primarily on how interest rate expectations in the US and the euro area evolve. Although our economists expect rate hikes in December, current market expectations for further monetary tightening are likely overdone, which could ultimately benefit the Aussie."

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

Societe Generale strategists note EUR/CHF has broken a short-term uptrend and failed to hold its 200-day moving average, reinforcing downside momentum. The cross is drifting toward the May low near 0.9095, identified as potential support. In spot markets, EUR/CHF has already slumped to a five-month low, with support cited at 0.9097.

Cross grinds lower toward key support

"EUR/CHF has extended its pullback after breaching a short-term ascending trend line last month."

"The pair has failed to defend the 200-DMA (0.9235), highlighting persistent downward momentum."

"EUR/CHF slumps to 5-month low, support 0.9097."

"It is gradually drifting towards the May trough near 0.9095, which could be a potential support."

"If a brief rebound develops, the 200-DMA and the recent pivot high at 0.9235/0.9260 may serve as a resistance zone."

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

• AUD/USD trades sharply lower as RBA’s dovish hike weighs heavily on the Australian Dollar.
• The communication from the RBA signaled that the bar for another interest rate hike is high.
• The outcome of US midterm elections is expected to have a short-term pressure on the US Dollar.

The Australian Dollar (AUD) underperforms its major currency peers on Tuesday, trading 0.45% lower to near 0.6965 against the US Dollar (USD) during the European trading session.

The Australian currency is under immense pressure as the Reserve Bank of Australia (RBA) seems less interested in hiking borrowing costs further after raising the Official Cash Rate (OCR) by 25 basis points (bps) to 4.85% earlier in the day.

Aussie slips as RBA hike comes with dovish signals and softer outlook

Analysts at ING note that the Aussie Dollar “came under pressure this morning after the RBA hiked rates as expected to 4.85%, but delivered some dovish signals.” They highlight that “the 6-3 split suggests lower conviction around today’s decision than in markets, which had almost fully priced in a hike (21bp),” underscoring a less forceful policy stance than investors had anticipated.

ING adds that “the statement dropped its reference to potential further hikes for the first time since June,” while “the economic outlook was revised sharply to the downside, with a focus on falling house prices weighing on consumers and upside risks to unemployment.” At the press conference, Governor Michele Bullock “reinforced the RBA’s wait-and-see approach, stressing that monetary tightening still has to feed through to the economy.”

ING notes that “she left the door open to further tightening, but the bar is clearly higher now,” with the RBA appearing “happy to assess the impact of previous hikes before acting again.” “This is in line with our forecast of no further RBA hikes,” ING added.

The next key trigger for the Australian Dollar will be the Trade Balance data for September, which is scheduled for Thursday.

Meanwhile, the US Dollar trades with caution ahead of United States (US) midterm elections in the late North American trading session.

ING strategists write that “we don’t expect today’s US midterm results to cause structural shifts in FX, but the Dollar may face some short-term pressure should the Democrats secure both the House (widely expected) and the Senate (close call).”

Their baseline is that “markets fully price in a Republican loss of the House, but only partially a Democratic clean sweep,” and that “a blue sweep can put some pressure on the Dollar.”

ING warns that “fears of tougher regulation could weigh on AI stocks (we’ve recently seen how that can hit the greenback), while markets could price in greater risks of decision-making gridlock around issues such as government funding and the debt ceiling.” Even so, they stress that “we doubt that’s enough to trigger a structural directional shift in the Dollar. The greenback continues to respond predominantly to the Fed story, which shouldn’t face an immediate and direct impact from the midterm result. We expect a split Congress (R-S, D-H) to have a neutral or slightly positive USD impact.”

AUD/USD Technical Analysis

On the daily chart, AUD/USD trades at 0.6967, holding a bearish near-term bias as it remains below the 20-day Exponential Moving Average (EMA) at 0.7008. The Relative Strength Index (RSI) near 42 suggests only modest downside momentum rather than outright oversold conditions.

On the downside, initial support aligns with the former break area around 0.6904, before the structural trend-line base near 0.6834. On the topside, the 20-day EMA at 0.7008 is the first resistance to clear; a sustained move above this barrier would be needed to ease bearish pressure and open the way for a more constructive recovery.

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

United Overseas Bank (UOB) analysts Quek Ser Leang and Lee Sue Ann note that USD/JPY remains stuck in a tight range, with intraday expectations for the Dollar to trade between 157.45 and 158.20. Their 1–3 week outlook keeps USD/JPY confined between 157.00 and 158.60, while the 1–3 month view points to further weakness, though a retest of the January low at 152.08 is uncertain.

Dollar seen confined in tight ranges

"24-HOUR VIEW: We indicated yesterday that USD “could trade between 157.60 and 158.20.” USD then traded within a relatively narrow range of 157.43 and 157.99. The price action provides no fresh clues. Today, USD could trade between 157.45 and 158.20."

"1-3 WEEKS VIEW: We have been holding the same view since last Wednesday (28 Oct, spot at 157.85), when we highlighted that USD “has likely entered a range-trading phase, and for the time being, we expect it to trade between 157.00 and 158.60.” We continue to hold the same view."

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