Forex News
- Gold gains ground as easing US Treasury yields temper US Dollar strength.
- Higher Oil prices and hawkish Fed signals reinforce expectations of an additional rate hike later this year.
- XAU/USD retains a bearish bias, with the RSI near 37 and MACD in negative territory.
Gold (XAU/USD) holds modest gains on Thursday as a retreat in US Treasury yields tempers the US Dollar’s (USD) strength, helping the metal regain some ground. However, Gold lacks bullish conviction and remains in a bearish consolidation phase near two-month lows. At the time of writing, XAU/USD trades around $4,133, up 0.55% on the day.
The benchmark 10-year US Treasury yield eases toward 5.27% after reaching 5.36% on Wednesday, its highest level since 2002. Still, Treasury yields remain elevated near multi-year highs, largely driven by higher Oil prices fuelling inflation concerns. Rising government debt, fiscal concerns and resilient US economic growth add further upward pressure on yields.
Oil prices rebound on Thursday, with West Texas Intermediate (WTI) gaining over 3% after reports that the Pentagon has ordered preparations for possible renewed strikes on Iran. Axios reports that military action could take place before November’s US midterm elections.
Strategists at Brown Brothers Harriman highlight that “persistently high energy prices keep risks to inflation, policy rates, and benchmark bond yields skewed to the upside, while favoring energy exporters’ currencies and USD over energy importers’ currencies.” In their view, “US growth outperformance and strong foreign appetite for US securities give USD an added boost.”
The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, trades around 102.14, below Monday’s peak of 102.53, its highest level since April 2025.
A hawkish Fed outlook lends additional support to the Greenback. Fed Governor Christopher Waller said on Thursday that more rate hikes are needed, but he remains “flexible about the pace.” He described the labour market as “solid and stable” in September despite slower job creation, adding that inflation remains “too high.” US Initial Jobless Claims fell to 197K from 199K the previous week, below expectations of 200K, according to data released on Thursday.
The Fed’s September meeting minutes, released Wednesday, revealed unanimous support for a 25-basis-point (bps) hike to 3.75%-4.00%, while most participants considered another rate increase likely appropriate by year-end amid persistent inflation risks. The minutes offered no commitment to a hike at the October 27-28 meeting, where traders broadly expect rates to remain unchanged.
A firm US Dollar, elevated yields and the prospect of further Fed tightening keep Gold bulls on the sidelines. However, longer-term support remains intact, backed by robust ETF demand and continued central bank purchases.
TD Securities argues that “a continued bid from discretionary traders, ETFs, and central banks all combine to provide a strong floor for gold,” reinforcing their view that the current weakness is being met by robust underlying demand. In their assessment, “we continue to see the stage being set for gold to disconnect from real rates further and begin a new bull run into 2027.”
Technical analysis: XAU/USD risks further losses below $4,100
On the daily chart, XAU/USD keeps a bearish near-term bias as price sits below the 20-period Bollinger Simple Moving Average (SMA) at $4,239 while holding just above the lower Bollinger band at $4,057 and the horizontal level at $4,100, while the Relative Strength Index (RSI) at 37 drifts in the lower half of its range and the Moving Average Convergence Divergence (MACD) remains negative, together suggesting downside pressure persists but without extreme oversold conditions.
On the topside, initial resistance appears at the Bollinger middle SMA near $4,239, ahead of the upper band at $4,420, and only a sustained move over these caps would ease the current bearish tone. On the downside, the immediate focus is on the horizontal support at $4,100, followed by the lower Bollinger band at $4,057.47, where failure to hold could open the way for a deeper slide.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
- EUR/USD rebounds as a pullback in US Treasury yields limits the Greenback’s advance.
- Higher Oil prices keep inflation risks elevated on both sides of the Atlantic.
- Fed minutes favour another hike this year, while the ECB keeps its policy options open.
EUR/USD rebounds during American trading hours on Thursday as a pullback in US Treasury yields tempers the US Dollar’s (USD) momentum. However, France’s fiscal concerns and broader US Dollar strength keep the Euro (EUR) pinned near the 17-month low touched earlier this week. At the time of writing, the pair trades around 1.1202, recovering from an intraday low of 1.1171.
The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, trades around 102.24, below Monday’s peak of 102.53, its highest level since April 2025. Meanwhile, the benchmark 10-year US Treasury yield eases toward 5.28% after reaching 5.36% on Wednesday, its highest level since 2002.
Despite the retreat, Oil-driven inflation risks and expectations of additional interest rate hikes by the Federal Reserve (Fed) keep upward pressure on yields. Concerns over government debt and resilient US economic growth also contribute to elevated borrowing costs.
Oil prices rebound on Thursday, with West Texas Intermediate (WTI) gaining over 3% after reports that the Pentagon has ordered preparations for possible renewed strikes on Iran. The threat of renewed escalation raises concerns that energy prices could stay high for longer, making it harder for both the Fed and the European Central Bank (ECB) to bring inflation back to their 2% targets and adding pressure to keep monetary policy tight.
Minutes from the Fed’s September monetary policy meeting, released on Wednesday, show that officials acknowledged inflation remained elevated, the labour market was near maximum employment and economic activity was expanding at a solid pace. Most participants considered another rate increase likely appropriate by year-end, with the CME FedWatch Tool placing the odds of a December hike at around 86%.
On the European side, the ECB’s September meeting account, released on Thursday, revealed that policymakers saw the outlook as highly uncertain and critically dependent on geopolitical developments, with upside risks to inflation and downside risks to growth. Updated staff projections indicated that inflation would stay well above target for an extended period. Officials stressed that future decisions should remain data-dependent, without committing to a particular rate path.
A Reuters poll conducted October 5-8 shows that 70 of 73 economists expect the ECB to hold its deposit rate at 2.50% on October 29, while 64 of 73 anticipate a 25-basis-point hike in December.
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 | -0.04% | -0.04% | 0.03% | -0.12% | 0.12% | -0.01% | -0.00% | |
| EUR | 0.04% | 0.00% | 0.07% | -0.05% | 0.09% | 0.02% | 0.04% | |
| GBP | 0.04% | -0.00% | 0.08% | -0.10% | 0.10% | 0.02% | 0.05% | |
| JPY | -0.03% | -0.07% | -0.08% | -0.16% | 0.03% | -0.07% | -0.01% | |
| CAD | 0.12% | 0.05% | 0.10% | 0.16% | 0.19% | 0.11% | 0.15% | |
| AUD | -0.12% | -0.09% | -0.10% | -0.03% | -0.19% | -0.06% | -0.04% | |
| NZD | 0.01% | -0.02% | -0.02% | 0.07% | -0.11% | 0.06% | 0.07% | |
| CHF | 0.00% | -0.04% | -0.05% | 0.01% | -0.15% | 0.04% | -0.07% |
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).
Deutsche Bank Research’s Germany Blog analyses August hard data, highlighting volatile one-offs in construction and manufacturing but more encouraging fundamentals. Senior economists Marc Schattenberg, Felicitas Henze and Eric Heymann note healthy order books, improving sentiment indicators and fiscal stimulus supporting Q4 activity. They still flag geopolitical risks to fossil fuel prices and project full-year German GDP growth at 1%.
Manufacturing stabilizes as orders improve
"More broadly, two key factors point toward further stabilization in the manufacturing sector."
"First, order books across several industrial sectors remain healthy, despite a recent softening in incoming orders."
"Second, the significant improvement in manufacturing sentiment indicators—particularly their forward-looking production expectations components—signals that a further, albeit initially gradual, recovery is on the horizon."
"This is partly driven by fiscal stimulus increasingly feeding through to the real economy, which should support a pickup in economic activity in Q4."
"However, a key downside risk to both manufacturing output and the broader economy remains, particularly regarding the geopolitical impact on fossil fuel prices."
"Overall, we forecast full-year GDP growth of 1%, in line with the market consensus."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
Scotiabank strategists Shaun Osborne and Eric Theoret highlight that USD/CAD around 1.4269 shows signs of consolidation after a sharp Canadian Dollar (CAD) weakening since early September. Price action is closely tracking the 2-year US–Canada spread, with Oil offering some support to CAD. Their fair value estimate for USD/CAD stands below spot at 1.4191, while technicals point to stalled upside and key levels at 1.4400, 1.4100 and 1.4000.
Consolidation with stretched valuation
"Recent price action in the CAD is suggestive of consolidation and a reassessment of the nearterm path following an astonishing run of weakness from early September."
"The CAD’s movement is largely mirroring the 2Y US-Canada spread, suggesting that markets are tightly focused on the outlook for relative central bank policy with oil prices providing an added lift via terms of trade."
"Domestic risk is limited ahead of Friday’s employment release, with BoC risk following next week as we await fresh comments from Gov. Macklem and Sr. Dep Gov. Rogers on the sidelines of the IMF meetings in Bangkok. Our FV estimate for USD/CAD is currently at 1.4191 and continues to trade below spot."
"Bullish/neutral – the USD/CAD rally from early September clearly looks to have stalled in the mid/upper-1.42s. Momentum has seen a notable moderation from extremely overbought levels with the RSI returning to the 70 threshold following its recent peak near 80. We see little in terms of resistance between current spot and 1.4400 and see support at 1.4100 followed by the psychologically important 1.4000 level."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
Nordea’s Chief Analyst Jan von Gerich interprets the ECB’s September monetary policy account as supporting further rate hikes, likely in December and March. The Governing Council remains focused on upside inflation risks, especially from persistent energy shocks and resilient growth. At the same time, the ECB avoids pre-commitment, stressing data dependence and neutral communication as it navigates high geopolitical and market uncertainty.
ECB keeps options open on rates
"The monetary policy account from the ECB’s September meeting reinforces the impression that the Governing Council remains primarily concerned about upside inflation risks. While indirect and second-round effects from the energy shock have so far remained limited, policymakers are concerned that a resilient economy could eventually allow broader price pressures to emerge."
"The outlook remained highly uncertain and critically dependent on geopolitical developments. Risks were to the upside for inflation and to the downside for economic growth."
"That said, the ECB was clear that it would not pre-commit or provide clearer forward guidance, keeping its options open amid high uncertainty."
"Overall, the account is consistent with our baseline of further 25bp rate hikes in December and March. While the ECB is not yet seeing broad-based inflation pressures, it is becoming increasingly concerned that persistent energy price shocks and a resilient economy could eventually generate more meaningful indirect and second-round effects. After the recent repricing prompted by concerns about France, current market pricing is once again close to our baseline."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
UOB’s Alvin Liew analyzes the September 2026 FOMC minutes, highlighting unanimous support for a 25bp hike to 3.75–4.00% as inflation stays elevated and growth remains solid. He notes policymakers generally see another hike as likely by year-end and expects two further increases in December 2026 and 1Q 2027, with the US Fed Funds Target Rate upper bound peaking at 4.50% and then held through 2027.
Fed path points to higher rates
"The Sep 2026 FOMC minutes revealed a unanimous shift toward policy tightening, with all 19 participants supporting a 25bp rate hike to 3.75-4.00%, compared with the divided Jul meeting. Policymakers agreed inflation remained elevated, the labour market was near maximum employment and economic activity continued to expand at a solid pace. While participants differed on the rationale for tightening, ranging from inflation-risk insurance to concerns about stronger underlying demand, most judged that another rate increase would likely be appropriate by year-end."
"The Sep FOMC minutes showed Fed policymakers broadly viewed another rate hike to be appropriate by year-end, but it certainly did not commit themselves to any move in the upcoming Oct FOMC. We expect two additional hikes, in Dec 2026 and 1Q 2027, thereafter on hold for rest of 2027 as inflation fades in a more durable fashion in the later part of 2027 as the most likely course. We have ruled out a back-to-back rate hike in the Oct FOMC, which falls less than a week from the midterm elections (3 Nov)."
"That said, we continue to keep in mind the risks of further policy tightening if the inflation trajectory becomes more persistent by the combination of higher energy prices, trade tariffs and AI-related factors. We have ruled out a back-to-back rate hike in the Oct FOMC, which falls less than a week from the midterm elections (3 Nov)."
"According to Bloomberg’s WIRP, the probability of a Oct rate hike fell further to 19.4% on 8 Oct (from 21.6% on 5 Oct, and materially lower from 70.3% on 28 Sep)."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
Bank of England (BoE) Governor Andrew Bailey said on Thursday that financial markets need to be better prepared for future shocks and monetary policy must stay focused on bringing inflation back to target.
Policymakers should strengthen core financial markets so they can absorb future shocks without amplifying them.
When shocks become more frequent, underlying growth is weaker, and the succession of shocks leads to a higher level of government debt, it's much harder for governments to use balance sheets to cushion a severe downturn.
Greater absorption of government debt has come with greater fragility.
Commitments on fiscal policy are needed more than ever when negative shocks occur
Monetary policy needs an unwavering commitment to returning inflation to target.
Evidence of pass-through of energy costs into broader inflation is currently quite subdued but there are risks.
Inflation risks rise longer high energy prices persist.
Fully committed to returning inflation to target.
We are seeing volatile markets.
Market movements are some way from normal, but we are not seeing illiquidity or stressed conditions.
BoE FAQs
The Bank of England (BoE) decides monetary policy for the United Kingdom. Its primary goal is to achieve ‘price stability’, or a steady inflation rate of 2%. Its tool for achieving this is via the adjustment of base lending rates. The BoE sets the rate at which it lends to commercial banks and banks lend to each other, determining the level of interest rates in the economy overall. This also impacts the value of the Pound Sterling (GBP).
When inflation is above the Bank of England’s target it responds by raising interest rates, making it more expensive for people and businesses to access credit. This is positive for the Pound Sterling because higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls below target, it is a sign economic growth is slowing, and the BoE will consider lowering interest rates to cheapen credit in the hope businesses will borrow to invest in growth-generating projects – a negative for the Pound Sterling.
In extreme situations, the Bank of England can enact a policy called Quantitative Easing (QE). QE is the process by which the BoE substantially increases the flow of credit in a stuck financial system. QE is a last resort policy when lowering interest rates will not achieve the necessary result. The process of QE involves the BoE printing money to buy assets – usually government or AAA-rated corporate bonds – from banks and other financial institutions. QE usually results in a weaker Pound Sterling.
Quantitative tightening (QT) is the reverse of QE, enacted when the economy is strengthening and inflation starts rising. Whilst in QE the Bank of England (BoE) purchases government and corporate bonds from financial institutions to encourage them to lend; in QT, the BoE stops buying more bonds, and stops reinvesting the principal maturing on the bonds it already holds. It is usually positive for the Pound Sterling.
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