Forex News

• Euro attracts slight bids against the US Dollar after sliding to a fresh 18-month low near 1.1066.
• Fed’s hawkish repricing after strong US CPI data continues to strengthen the US Dollar.
• The ECB is unlikely to extend its monetary tightening cycle beyond December.

The Euro (EUR) finds cushion after posting a fresh 18-month low near 1.1066 against the US Dollar (USD) during the day, trading almost flat at around 1.1090 in the European trade. The EUR/USD pair rebounds slightly on Thursday as the US Dollar gives back some of its early gains.

In European session, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, retreats to near 102.90 after posting a fresh 18-month high at 103.08 during the day.

The outlook of the US Dollar remains firm as traders have raised hawkish Federal Reserve (Fed) expectations further in the wake of rising United States (US) inflation.

Fed funds futures extend hawkish repricing after CPI

Analysts at Deutsche Bank note that, even with US Treasury cash markets closed, the “hawkish implications from the CPI print continued to be felt in futures pricing yesterday.” They highlight that “Fed funds futures continued to shift in a hawkish direction, with pricing for the December meeting edging up to 28.5bps.” Further along the curve, Deutsche Bank points out that “expectations for the September 2027 meeting surged another +7bps to 82bps, although that’s edged back down to 77bps overnight,” underscoring how the CPI release has materially repriced the path of Fed policy.

Going forward, the US inflation strength would be tested by the Producer Price Index (PPI) data for October, which is scheduled for Friday.

Meanwhile, the Euro is broadly under pressure as market experts doubt that the monetary tightening cycle by the European Central Bank (ECB) will sustain in the long run. The ECB has raised interest rates twice this year and is expected to deliver one more in the December meeting, but that is expected to be its last one due to growing economic uncertainty.

Eurozone growth worries temper expectations for further ECB tightening

Strategists at Rabobank caution that the ECB may be nearing the end of its current tightening cycle, noting that “the ECB, however, could prove to be reluctant to hike rates beyond December.” They point out that “the last ECB press conference suggested that the Governing Council was becoming increasingly concerned about the growth outlook,” reinforcing the view that policymakers are likely to adopt a more cautious stance on further rate increases once the December move is out of the way.

EUR/USD Technical Analysis

In the daily chart, EUR/USD trades at 1.1091, keeping a bearish near-term bias as spot holds below the 20-day Exponential Moving Average (EMA) at 1.1185. The pair remains capped by this dynamic barrier, while the Relative Strength Index (RSI) at 37 stays in bearish territory but above oversold, hinting at persistent downside pressure rather than exhaustion.

On the topside, immediate resistance is located at the 20-day EMA around 1.1185, and a daily close above this level would be needed to ease the current bearish tone. As long as EUR/USD remains under this moving average, rallies are likely to be sold, leaving the pair vulnerable to fresh lows into uncharted support levels on the chart.

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

• USD/JPY stalls around 159.80 on Thursday after rallying about 1.25% in the previous two days.
• Speculation about another Fed rate hike in December has sent the US Dollar higher across the board.
• In Japan, dovish comments from BoJ's Asada have offset the impact of hot producer inflation figures.

The Japanese Yen (JPY) trades practically flat against the US Dollar (USD) on Thursday, following a nearly 1.25% selloff over the previous two days, hammered by growing monetary policy divergence between the Federal Reserve (Fed) and the Bank of Japan (BoJ). The USD/JPY rally has stalled around 159.80, as the 160.00 level is considered a key milestone for Tokyo authorities.

Investors have ramped up US Dollar long positions following hot US consumer inflation data earlier this week and a string of hawkish comments from Fed officials calling for another interest rate hike in December. 

Futures markets are fully pricing in further Fed tightening after the US central bank’s meeting on December 9, with a nearly 10% chance of a half-point rate hike, according to data from the CME’s FedWatch Tool. Later on Thursday, a myriad of Fed officials will hit the wires and provide a clearer picture of the bank’s near-term plans.

Dovish BoJ comments dampen expectations of a December rate hike

In Japan, the scenario is diametrically different, especially after BoJ policymaker Toichiro Asada, one of the two dovish dissenters at September’s meeting, warned that pushing borrowing costs higher might weigh on growth and underlying inflation. These comments cast doubt over market expectations of another rate hike at the next meeting, due on December 17, and have added pressure on the Japanese Yen.

Data from Japan released earlier on the day has been supportive, as producer inflation figures provided further reasons for BoJ hawks. The Producer Price Index (PPI) accelerated to 7.1% in the 12 months to October, beating expectations of a 6.5% reading and following a 6.8% growth in September.

Analysts at MUFG, however, see the Yen supported by “signs that confidence in the JGB market has improved, no doubt helped by the more active BoJ and the general consensus that within one or two hikes, the BoJ would be at the neutral policy rate.” Considering this, and with “intervention likely halting the prospects to the upside, and confidence in the BoJ improving,” MUFG experts conclude that “the risks certainly look more skewed to Yen strength over the medium term.”

• Hot US inflation and hawkish Fed signals boost December rate hike probabilities, strengthening the US Dollar.
• New Zealand’s 10-year bond yield drops to 4.76% amid strong auction demand following preliminary election results.
• Potential continuity for the National-led coalition could support the NZD, though official election results await November 27.

NZD/USD loses ground for the third consecutive day, trading around 0.5550 during European hours on Thursday. The currency pair depreciates as the US Dollar (USD) holds firm amid growing hawkish sentiment surrounding the Federal Reserve's (Fed) policy outlook, fueled by hotter-than-expected US Consumer Price Index (CPI) inflation data.

Traders have ramped up bets on a December rate hike after Fed Governor Christopher Waller indicated earlier this week that he would support a quarter-point increase, or even a half-point move if inflation worsens. According to the CME FedWatch Tool, markets are now pricing in an 87% probability of a December rate hike, alongside nearly a 13% chance of a larger 50-basis-point increase.

In New Zealand, the 10-year government bond yield is down 3 basis points to 4.76% at the time of writing, driven by strong auction demand after preliminary election results eased concerns over the country's fiscal outlook.

Meanwhile, preliminary election results indicating that the incumbent National-led coalition could retain power offered some support for the New Zealand Dollar (NZD), as this outcome would likely preserve the Reserve Bank of New Zealand’s (RBNZ) sole focus on inflation alongside current government spending policies. However, the political picture remains uncertain ahead of the official results on November 27.

Analysts at Brown Brothers Harriman highlight that political developments remain central to the New Zealand policy outlook, noting that "New Zealand's ruling center-right coalition holds a one-seat majority following Sunday’s election, with final results due November 27." They stress that the incumbent coalition led by the National Party "wants to stick to the RBNZ’s sole price stability mandate which has been in place since December 2023," in contrast to the Labour Party, which "ran on a proposal to return to a dual inflation-employment mandate." This clear divergence on the central bank’s framework is seen as an important backdrop for market pricing of the policy path.

• GBP/JPY holds steady on Thursday as the prevailing JPY selling bias continues to lend support.
• GBP bulls remain on the sidelines as a strong USD rally offsets mostly upbeat UK macro data.
• Looming intervention risks help limit any further JPY losses, capping the upside for spot prices.

The GBP/JPY cross reverses a modest intraday dip, climbing back to the 212.00 mark during the early European session on Thursday, though it remains confined within a range held over the past week or so. Spot prices react little to upbeat UK macro releases, with the prevailing selling bias surrounding the Japanese Yen (JPY) acting as a tailwind amid looming intervention risks.

The Office for National Statistics (ONS) published the first quarterly estimate of Gross Domestic Product (GDP), which showed that the UK economy grew by 0.7% during the July to September period. Meanwhile, the yearly rate stood at 1.9%, which marks a notable acceleration from  1.4% YoY in the previous quarter. Other UK data showed that Industrial Production increased 0.3%, while Manufacturing Production rose 0.7% in September, both coming in stronger than market expectations. The data, however, fails to provide any respite to the British Pound (GBP) amid a bullish US Dollar (USD).

Meanwhile, the JPY continues to underperform despite firming expectations of further Bank of Japan (BoJ) tightening, bolstered by a rise in Japan's Corporate Goods Price Index (CGPI) for the first rise in three months. The wide interest rate differential between Japan and other major economies, including the UK, keeps the so-called carry trade active and continues to undermine the JPY. In fact, the BoJ policy rate is at 1.25%, while the Bank of England (BoE) raised its base rate to 4.00%, leaving the nominal rate differential of 275 basis points (bps), preserving yield advantage for the GBP.

Meanwhile, Japan's top currency diplomat Atsushi Mimura warned against excessive FX volatility, fueling intervention risks and holding back JPY bears from placing aggressive bets. This, in turn, acts as a headwind for the GBP/JPY cross, though the fundamental backdrop seems tilted firmly in favor of bulls. However, some follow-through buying is needed to back the case for additional gains. Nevertheless, any corrective pullback might still be seen as a buying opportunity and is more likely to be limited.

Deutsche Bank’s Early Morning Reid highlights a sharp rebound in US equities, led by AI‑linked and semiconductor names after CoreWeave’s strong earnings. The Philly Semiconductor Index and Nasdaq surged, lifting the S&P 500 back above pre‑midterm levels. However, after‑hours news about Nvidia’s CEO saw its stock drop 8.6%, pulling Nasdaq and S&P futures lower again.

AI and chips drive volatile gains

"The crazy whipsawing post midterms continued yesterday as after the post-CPI selloff on Tuesday, markets bounced back again over the last 24 hours, as the positive momentum from CoreWeave’s (+24.71%) earnings drove a sharp rally in tech stocks."

"So the Philly semiconductor index (+5.66%) helped drive the S&P 500 (+1.31%) back above its levels before the midterm elections. Who said markets didn't always go up after midterms! And over in Europe, both the STOXX 600 (+0.72%) and the DAX (+1.20%) moved up to fresh records."

"However, the current volatility in the tech trade continues this morning as the WSJ reported after the US closing bell that the Nvidia board are planning to oust CEO Jensen Huang after the last few days of stories around him have surfaced. Their stock fell -8.6% in after-hours trading, which has pushed Nasdaq (-1.09%) and S&P (-0.45%) lower. So a big deal for one of the largest companies in the world."

"Those upbeat earnings from CoreWeave were a boon for tech and chip stocks, with the Philly Semiconductor Stock Exchange up +5.66%, while the Nasdaq Composite (+1.6%) also climbed."

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

Deutsche Bank’s Jim Reid and colleagues highlight that Fed funds futures shifted in a more hawkish direction after the CPI release, lifting expectations for future rate hikes. This helped push the Dollar Index to its highest level since April 2025, while the Euro fell to an 18‑month low against the Dollar, with EUR/USD closing near 1.109 and spot quoted at 1.108.

Hawkish Fed repricing lifts Dollar

"Whilst US Treasury markets were closed yesterday, the hawkish implications from the CPI print continued to be felt in futures pricing yesterday. Indeed, Fed funds futures continued to shift in a hawkish direction, with pricing for the December meeting edging up to 28.5bps. And further out the curve, expectations for the September 2027 meeting surged another +7bps to 82bps, although that’s edged back down to 77bps overnight."

"The prospect of a more hawkish Fed helped push the dollar index (+0.66%) to its highest level since April 2025. Conversely, that also saw the euro (-0.66%) reach an 18-month low against the dollar, closing at around $1.109."

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

• EUR/GBP trades steadily at around 0.8350 after UK Q3 and September GDP data.
• The UK Q3 GDP growth remained stronger at 0.7%.
• Investors shift their focus to the UK labor market and the inflation data.

The Euro (EUR) remains steady at around 0.8350 against the British Pound (GDP) in the European trade on Thursday, as the latter trades almost stable after the release of the United Kingdom (UK) Q3 and September Gross Domestic Product (GDP) data.

The Office for National Statistics (ONS) has reported that the economic growth remained stronger at 0.7%, as expected, against 0.5% seen in the second quarter this year. On an annualized basis, the growth rate was also in line with estimates at 1.9%, faster than the previous reading of 1.4%.

Month-on-Month (MoM) GDP growth in September was at 0.2%, while it was expected to remain flat again. The August GDP data was revised lower from 0.1%.

Signs of strong UK economic growth are expected to provide relief to Bank of England (BoE) policymakers at a time when the central bank has entered a fresh monetary tightening cycle to tame accelerating price pressures.

Going forward, the major trigger for the British Pound will be the UK labor market data for three months ending September and the Consumer Price Index (CPI) data for October, which will be released next week. Both economic indicators are expected to have a significant impact on expectations of BoE’s monetary policy outlook.

On the Euro front, talks about the succession of European Central Bank's (ECB) leadership heats up. Rabobank’s RaboResearch team highlights that Dutch ECB Governing Council member Klaas Knot, widely seen as a leading candidate to replace ECB President Christine Lagarde, used a Financial Times interview to underscore the central bank’s readiness to respond to future shocks. Knot stated that “If circumstances require it, we will not hesitate to take action,” a remark Rabobank stresses was not about deploying “50bps rate hikes due to geopolitically driven inflation” but rather about moving in the opposite direction. Specifically, Knot suggested that if Europe were to face a future crisis “of a different nature,” he “would not rule out developing another, more tailored instrument.”

Rabobank notes that, with potential crises increasingly likely to stem from “the absence of black, sticky, liquid products rather than digital financial liquidity,” Knot’s comments carry a tacit implication that the ECB’s famous “Whatever it takes” might need to evolve into “Wherever it takes us.”

The UK economy grew at a quarterly rate of 0.7% in the three months to September 2026, following a 1% contraction in the second quarter (Q2) (revised from 0.5% growth). The data came in line with the market forecast.

UK GDP grew 1.9% year-over-year (YoY) in Q3 2026 vs. 1.9% expected and 1.4% growth in Q2.

The monthly UK GDP arrived at 0.2% in September, compared to 0% in August (revised from 0.1%), above the market consensus of 0%.

Other data from the UK showed that Industrial Production increased 0.3% over the month in September, while Manufacturing Production rose 0.7% MoM during the same period. Both readings came in stronger than market expectations.

Market reaction to the UK data

The British Pound (GBP) edges slightly higher following the UK GDP data. At the time of press, the GBP/USD pair is down 0.08% on the day to trade at 1.3264.

This section below was published at 03:00 GMT on Thursday as a preview of the UK GDP data.

• The UK GDP is expected to show stronger economic growth in Q3. 
• The Gross Domestic Product is seen accelerating further in the three months to September, boosted by strong manufacturing activity.
• The Pound Sterling against the US Dollar maintains a near-term positive trend, with bulls focusing on the 1.3500 area.

The highlight of the United Kingdom’s (UK) economic calendar this week will be the preliminary estimate of third-quarter Gross Domestic Product (GDP), which the Office for National Statistics will release on Thursday. The market is bracing for 0.7% growth in the three months to September, following 0.5% growth in the second quarter of 2026, with the annual rate accelerating to 1.9%, from 1.4% in the previous month.

Strong Industrial Production data, which is expected to have grown 3% in the 12 months to September, from 1.6% in August, is seen as one of the main drivers of the UK’s economic growth, which, if confirmed, would provide a favourable background for the Bank of England’s (BoE) monetary policy to extend the tightening cycle started last week.

UK GDP forecast: What numbers could tell us

Recent macroeconomic figures from the UK have shown surprising resilience to uncertainty from the war in the Middle East and higher Oil prices, which has improved market expectations about economic growth in the third quarter.

Monthly GDP data from August beat expectations last month, with the economy growing  0.1%, against market expectations of a 0.1% decline, thanks to the strong performance of the manufacturing sector. Factory output grew 0.8% in August, largely offsetting the flat performance of the services sector and a 0.2% decline in construction output.

Beyond that, UK Manufacturing and Services Purchasing Managers’ Index (PMI) figures revealed that business activity continued growing in October, while unemployment declined to its lowest rate since July last year. All in all, a fairly healthy macroeconomic picture, which has prompted the International Monetary Fund to raise the UK's growth projections for 2026 to 1.3% from the previous 1%.

On the political front, a neutral UK budget has contributed to the economic bonanza, calming fears about the hefty public debt, at least for now, and providing support to the British Pound. Lower charges on food and energy bills are expected to be paid for by higher taxes on banks and gambling companies. The feared bond markets have not shown any significant objection to these plans.

All this acknowledged, the third quarter’s GDP report will be analysed with particular attention after last week’s Bank of England rate hike. Economic growth is not a specific target of the BoE’s mandate, but a healthy GDP will doubtless make the central bank’s rate-setting work much easier, considering the stubbornly high consumer inflation data.

Last week, the BoE tightened its monetary policy for the first time in three years. Some policymakers, including Governor Bailey, suggested the bank might need to hike rates further to bring inflation to target. BoE’s Deputy Governor, Clare Lombardelli, went further on Tuesday, affirming that she “would not rule out rate hike possibility in December”. Against this backdrop, a strong GDP reading on Thursday would endorse those views and might spur speculative demand for the Pound.

When will the UK release Q3 Gross Domestic Product, and how could it affect GBP/USD?

As noted, the UK will release the preliminary Q3 GDP estimate on Thursday at 07:00 GMT. Data is expected to show moderate economic growth in the three months to September, with the GBP/USD risk skewed to the upside, as a stronger-than-expected reading will boost odds of another BoE rate hike, most likely in February.

The GBP/USD pair trades around 1.3320 at the time of writing, following a sharp reversal on Tuesday, as strong US inflation data and hawkish comments by Fed speakers boosted the US Dollar across the board. Bears have pushed price action below the bottom of the ascending channel from October, and momentum indicators on the 4-hour chart have turned bearish, with the Relative Strength Index (14) approaching oversold levels and the Moving Average Convergence Divergence (MACD) histogram showing widening red bars. 

According to Guillermo Alcalá, FX Analyst at FXStreet, “Recent GBP/USD price action suggests that the corrective recovery from mid-October lows might have come to an end, and that the pair is ready to resume the broader bearish trend.”

“While below the channel bottom and the November 6 low, near 1.3340, bears are likely to be tempted to revisit the late October lows near 1.3270, with their gaze on the key resistance area near 1.3130,” says Alcalá.

On the upside, Alcalá argues that “The pair would need to return above the broken trendline support, now around 1.3380, to ease bearish pressure, and shift the focus back towards the November 10 high near 1.3460 and the November peak, in the 1.3500 area.”

(This story was corrected on November 12 at 05:25 GMT to say When will the UK release Q3 Gross Domestic Product, not Q2; the UK will release the preliminary Q3 GDP estimate, not Q2 GDP. And to show moderate economic growth in the three months to September, not to June.)

• GBP/USD edged up to 1.3260 from session lows near 1.3250 but remains 1.4% down in the last three days.
• UK economy expanded in the third quarter, in line with expectations amid a strong performance of the industrial sector.
• The US Dollar remains strong as recent US inflation data pave the path for further Fed tightening in December.
  

The British Pound (GBP) edged up against the Dollar (USD) following the release of UK Gross Domestic Product (GDP) and Industrial Production figures on Thursday, yet with the broader bearish trend practically intact. The GBP/USD pair has picked up to 1.3260 from session lows around 1.3250, but it still shows a 1.4% decline in the last three days.

UK Q3 Gross Domestic Product (GDP) bounced up 0.7% in the third quarter after a downwardly revised 1% contraction in the second, according to preliminary data released by National Statistics on Thursday. The year-over-year (Y-o-Y) growth accelerated to 1.9% from 1.4% in the previous quarter, in both cases meeting market expectations.

The third quarter’s economic growth was supported by strong Industrial Production, which rose 0.3% in September and 3.1% Y-o-Y, beating expectations of -0.3% and 2.9%, respectively. The Index of Services, which measures the sector’s gross value added, increased 0.9% in the three months to September following a similar growth in the previous month.

Fed tightening bets keep US Dollar dips limited

The US Dollar, on the other hand, keeps marching higher against most peers. October’s US consumer inflation figures and comments from a string of Federal Reserve (Fed) policymakers have boosted hopes that the central bank will hike rates by at least 25 basis points at its December meeting.

Strategists at Rabobank argue that “diminished fears about political interference on the Fed are a supportive factor for the USD,” helping to shore up confidence in US monetary policy.

Looking ahead, “reduced concerns over the credibility of the greenback should allow it more opportunity to benefit from the US’s robust economic growth performance,” says Rabobank in a note.

More Fed speakers will meet the press on Thursday. Among them are Chicago Fed President Austan Goolsbee and San Francisco Fed President Mary Daly, who have already shown their concern about high inflation earlier this week, as well as the influential New York Fed President, John Williams, who has been hinting at another rate hike before the year-end. The risk for the US Dollar is skewed to the upside.

Here is what you need to know on Thursday, November 12:

The US Dollar Index extends its rally, which was fuelled by hot inflation data and hawkish comments from Federal Reserve (Fed) policymakers, and trades at its highest level since April 2025 above 103.00 on Thursday. In the second half of the day, weekly Initial Jobless Claims and Existing Home Sales data will be featured in the US economic calendar. Investors will also continue to pay close attention to comments from central bank officials.

The shift in the market-pricing of the Fed rate outlook helps the USD outperform its rivals this week. According to the CME FedWatch Tool, markets are currently pricing in a nearly 62% chance of the Fed raising the policy rate by a total of 50 basis points (bps) in the next two meetings, compared to only 10% probability a week ago. The benchmark 10-year US Treasury bond yield holds steady at around 5% on Thursday after rising for three consecutive days, while US stock index futures stay in negative territory despite Wednesday's bullish action.

Fed hike debate intensifies as MUFG flags risk-reward in favour of 25bps

Analysts at MUFG/BTMU acknowledge that recent market moves have revived speculation over a more forceful policy response from the Fed, but they “remain sceptical of the need to hike by 50bps at this stage and suspect the majority will see the better risk-reward in going by 25bps.” They point out that “we still have another payrolls report (but no further CPI prints, although it’s the day after) before the FOMC meeting,” and caution that “a strong print plus a rebound in crude oil after the recent sharp drop would be one scenario of a possible more aggressive hike.”

The UK's Office for National Statistics reported earlier in the day that the Gross Domestic Product expanded at an annual rate of 1.9% in the third quarter. This reading followed the 1.4% growth recorded in the previous quarter and matched the market expectation. Other data from the UK showed that Industrial Production and Manufacturing Production rose by 0.3% and 0.7%, respectively, on a monthly basis in September, with both prints coming in better than analysts' estimates. After losing more than 1% in a two-day slide, GBP/USD limits its losses on upbeat UK data but still trades at its lowest level in nearly a month at around 1.3250.

Bank of Japan (BoJ) board member Toichiro Asada said on Thursday that the central bank must be mindful of risk rate hikes that could push down underlying inflation given consumption lacks momentum. USD/JPY holds its ground after rising nearly 0.7% on Wednesday and trades at its highest level since early September near 160.00. Earleir in the day, the data from Japan showed that the Producer Price Index increased by 0.7% on a monthly basis in October, following the 0.2% decline reported in September.

Hawkish Fed repricing continues to weigh heavily on Gold, with the previous metal losing more than 2.5% since the beginning of the week and trading at a new weekly low at around $3,960 in the European session on Thursday.

EUR/USD struggles to shake off the bearish pressure and trades at its weakest level since May 2025 below 1.1100.

AUD/USD declines for the third consecutive day on Thursday and closes in on 0.6800, while NZD/USD trades near 0.5500 after losing about 0.8% on Wednesday.

USD/CAD is up nearly 1% this week and trades above 1.4250 in the European morning.

(This story was corrected on November 12 at 07:35 GMT to note in the first sentence that the article refers to November 12, Thursday, not November 11.)