The EUR/USD pair has stabilized near 17-month lows as the euro weakens under the weight of political and fiscal risks across Europe. The pressure on the currency pair is exacerbated by a strong US dollar, bolstered by high US Treasury yields. Meanwhile, domestic political troubles in France and sluggish German economic data continue to hinder any sustained recovery in the euro.
Possible technical scenarios:
As we can see on the daily chart, EUR/USD reached the 1.1191 level and tested it, yet managed to hold above it. The support of a broad descending channel also runs through this area, which does not rule out a local rebound toward the horizontal resistance at 1.1399. That being said, if the level gets broken out and the pair consolidates below it, the next downside target will be the horizontal level of 1.0938.
Fundamental drivers of volatility:
The primary catalyst behind euro weakness remains the situation in France, where elevated public debt and political deadlock continue to fuel concerns over fiscal sustainability. Rising French bond yields pose spillover risks for other eurozone debt markets, while snap elections in Spain add another layer of uncertainty. On Tuesday, French sovereign yields retreated, partially easing contagion fears across the euro area.
German economic indicators have compounded negative sentiment for the single currency. In August, factory orders plunged by 10.6% following a 3.2% gain in July, largely dragged down by a sharp contraction in major transport equipment orders. Ongoing industrial weakness clouds the eurozone’s broader economic outlook.
The dollar maintains the upper hand, underpinned by elevated US Treasury yields, even as the implied probability of an October Fed rate hike dropped to 22%. Nevertheless, markets continue to price in an approximately 85% chance of monetary policy tightening by December. While US services sector data pointed to a deceleration in business activity, rising input costs indicate that underlying inflationary pressures remain sticky.
A drop in crude oil prices below $100 per barrel provided modest relief to the euro, as expensive energy imports amplify eurozone inflation risks. Still, the currency’s trajectory remains tethered to Middle Eastern developments and European authorities’ capacity to address mounting budget deficits. The ECB faces a difficult balancing act between elevated inflation and the danger of intensifying sovereign bond market distress if rates rise further.
Intraday technical picture:
Given the unfolding scenario on the 4H chart, EUR/USD is demonstrating a local rebound from the 1.1191 support level. The immediate upside target is the dotted resistance at 1.1324. A breakout above this barrier could pave the way for a move toward 1.1399.
The GBP/USD pair found some support thanks to corrective US dollar weakening and expectations of further Bank of England policy tightening. That said, elevated US yields and persistent geopolitical risks are capping its recovery after tumbling to fresh multi-month lows.
Possible technical scenarios:
OAs evidenced by the daily chart, GBP/USD continues to trade around the 1.3215 level. A breakout and consolidation below this mark would open the door for a slide toward 1.3158 marked by a dotted line. However, if support at 1.3215 holds firm, the price may stage a recovery within its broader sideways range.
Fundamental drivers of volatility:
Dollar profit-taking after hitting its highest level since April 2025 offered GBP/USD room to stabilize. Even so, the probability of a Fed rate hike before year-end remains above 85%, with US Treasury yields lingering near multi-year peaks. Investors are now awaiting the upcoming FOMC meeting minutes and speeches from Fed officials to gauge the future path of monetary policy.
The pound is drawing support from expectations of a tighter Bank of England stance amid persistent inflation driven by elevated energy costs. However, the UK composite PMI for September, despite edging up from 44.3 to 46.1, failed to generate significant market momentum. Traders are seeking fresh directional cues from an upcoming address by BoE Monetary Policy Committee member Catherine L. Mann.
The pressure on the dollar is being partially restricted by geopolitical tensions in the Middle East and deteriorating sentiment in sovereign bond markets fueled by France’s fiscal strains. These factors continue to support demand for safe-haven assets and keep US yields elevated.
Despite the recent GBP/USD bounce, fundamentals have yet to confirm a sustainable trend reversal. Further upside will require stronger buying momentum, whereas shifting Fed rate expectations and Treasury yield dynamics remain the primary risk factors.
Intraday technical picture:
The 4H chart shows that GBP/USD is fluctuating near the midpoint of the 1.3158–1.3276 sideways range (bounded by two dotted lines), leaving room for a move toward either extreme. This sideways dynamic is likely to persist until a definitive volatility catalyst emerges.
The USD/JPY pair remains supported by a strong dollar, despite the prospect of further monetary tightening from the Bank of Japan. While markets anticipate a BoJ rate hike in December, the central bank’s cautious rhetoric makes a policy move in October less probable. The pair’s trajectory will largely depend on rhetoric from both the Fed and the BoJ.
Possible technical scenarios:
USD/JPY has resumed its upward trajectory, rebounding from the dotted mirror-like support level at 156.41. The immediate upside target stands at 158.93, a breakout above which could extend the climb toward 160.41, marked by a dotted line.
Fundamental drivers of volatility:
The US Dollar Index climbed toward its highest levels since April 2025, offering underlying support to the pair. Although recent US macro figures reflect cooling inflation and a cooling labor market, market pricing for a Fed rate hike before year-end remains above 85%. Robust US sovereign yields alongside heightened geopolitical friction provide an additional tailwind for the greenback.
Meanwhile, the Bank of Japan could confirm in October that core inflation has sustainably reached its 2% target, cementing expectations for a December rate hike. However, following its September tightening move, the central bank appears keen to evaluate the transmission of previous decisions, reducing the likelihood of back-to-back rate increases this month.
Tokyo consumer inflation, rising wholesale prices, steady wage gains, and elevated oil costs all strengthen the case for continued policy normalization. At the same time, Tankan survey data does not point to an acute spike in corporate pricing pressures, granting the BoJ room for a measured, gradual approach.
Concerns regarding Japan’s fiscal policy and massive sovereign debt continue to weigh on the yen. Nevertheless, the lingering threat of currency intervention limits aggressive upside in USD/JPY. Market participants are also turning their attention to the FOMC minutes and upcoming policymaker remarks to clarify the US interest rate outlook.
Intraday technical picture:
Judging by the look of things on the 4H chart, USD/JPY is consolidating above the 157.90 level, forming preconditions for an extension toward the 158.93 target.
The USD/CAD pair maintains upside momentum, driven by a weak Canadian dollar, resilient demand for the US dollar, and declining crude prices. The loonie is also under pressure from the Bank of Canada’s dovish stance and ongoing US-Canada trade tensions. Geopolitical uncertainty, along with elevated US Treasury yields, continues to strengthen the US currency.
Possible technical scenarios:
On the daily chart, USD/CAD has reached the resistance of the 1.4179–1.4275 range and is testing its upper boundary. Should the price break above 1.4275 and consolidate, the next bullish objective lies at the horizontal level of 1.4417. Failing to clear this barrier would likely trigger a pullback within the existing range.
Fundamental drivers of volatility:
Oil prices retreated as immediate supply disruption concerns subsided. Steady Middle Eastern crude flows and the G7 decision to release oil and diesel reserves have improved the near-term supply outlook. For the oil-sensitive Canadian dollar, this dynamic serves as a distinct negative catalyst.
The US dollar continues to draw support from risks of an escalating Middle Eastern conflict. Houthi forces claimed strikes against Saudi Arabian airports, an oil facility, and military sites, while reports of potential Israeli retaliatory actions against Iran have exacerbated regional uncertainty. This backdrop sustains safe-haven flows into the US currency. In addition, the fiscal crisis in France triggered wider bond market selling, keeping US yields anchored near multi-year highs.
Weak employment data and easing inflation in the US have made an October Fed rate hike less likely. That said, the odds of policy tightening before the end of the year remain above 80%, limiting the scope for any meaningful dollar correction. Market players now look to the FOMC minutes and upcoming official rhetoric for directional clarity on interest rates.
In the short term, lower energy prices, trade disputes, and the Bank of Canada’s dovish stance point to continued pressure on the Canadian dollar. USD/CAD retains an upward trajectory, though subsequent moves will depend on Fed signals and Middle Eastern geopolitical developments.
Intraday technical picture:
Given the current developments observed on the 4H chart, USD/CAD has so far struggled to overcome the 1.4275 resistance, leaving the door open for a corrective decline toward the 1.4179 support level.
Gold remains under pressure from a firm US dollar and elevated US Treasury yields. The precious metal’s next directional impulse will depend on incoming US macroeconomic signals regarding inflation and interest rates, as well as the unfolding geopolitical situation in the Middle East.
Possible technical scenarios:
Gold prices continue to consolidate below the 4209.95 level, leaving the path open toward the next support at 4002.27. However, a local upward correction toward resistance at 4209.95 cannot be ruled out.
Fundamental drivers of volatility:
A stronger dollar dampens demand for gold among foreign currency holders. An additional headwind stems from 10-year and 30-year US Treasury yields, which climbed to their highest levels in 24 years on Monday. The surge in risk-free yields undermines the investment appeal of non-yielding assets like gold.
The monetary policy outlook for the Federal Reserve remains mixed. Following weaker-than-expected September US payroll figures and downward revisions to the preceding two months, the probability of an October rate hike declined. At the same time, financial markets price in an 87% chance of a December hike, ensuring interest rate risk remains a notable headwind for bullion.
September US services data pointed to slowing economic activity while simultaneously signaling a resurgence in price pressures. Robust domestic demand strained supply chains, driving business input costs to their highest levels in over four years. Persistent cost pressures could point to entrenched inflation, complicating future Fed decisions.
Investors are also paying close attention to developments around the Bab-el-Mandeb Strait. Saudi-backed Yemeni government forces have recaptured sections of the coastline, pushing Iran-backed Houthi forces out of most positions seized over the past month. Geopolitical shifts across the Middle East remain a key source of uncertainty capable of reigniting defensive demand for gold.
Intraday technical picture:
The 4H chart suggests that XAU/USD is consolidating within a 4110.87–4209.95 range. A consolidation below 4110.87 would open the way toward the next support level at 4002.27.
Brent crude prices retreated early in the week as Persian Gulf export volumes normalized and G7 nations agreed to tap strategic petroleum reserves. That said, maritime security threats and ongoing tensions across the Middle East limit broader losses, as the market is reluctant to fully price out potential supply interruptions.
Possible technical scenarios:
The daily chart shows Brent continuing to consolidate near the 95.18 support level, with a potential rebound toward the dotted resistance at 106.40. If 95.18 is broken out to the downside and the price consolidates below it, the decline could extend toward the $92 per barrel zone, where the support line of the medium-term ascending channel is at.
Fundamental drivers of volatility:
A major pressure factor for crude prices has been the resurgence of export shipments from Persian Gulf producers. Shipping data indicates that crude outflows exceeded pre-conflict levels on several days in late September. Aggregate September exports from Gulf countries (excluding Iran) recovered to more than 81% of pre-crisis volumes, driven largely by higher Saudi Arabian output. Kuwait similarly reported crude production at 75% of its pre-conflict capacity.
Improving supply dynamics were further underscored by Saudi Arabia lowering its official selling price (OSP) for November Arab Light deliveries to Asian buyers, signaling easing physical tightness. However, elevated export volumes do not equate to complete normalization: attacks on tankers near the Strait of Hormuz have become more frequent, while vessel insurance premiums, rerouting expenses, and maritime security costs remain exceptionally high.
Crude’s upside is also constrained by the G7 decision to release 100 million barrels of crude oil and diesel from strategic reserves. Member states also pledged to refrain from imposing export restrictions on energy products following pressure from US President Donald Trump. These actions are intended to soothe deficit fears and mitigate future disruption risks.
At the same time, regional developments in the Middle East keep geopolitical risk premia elevated. Saudi-backed Yemeni forces advanced along the coast near the Bab-el-Mandeb Strait toward the city of Mokha, after which Houthi militants reported strikes on high-value targets across Saudi Arabia, including an Aramco refinery in Rabigh. These claims currently lack independent verification. As US-Iran negotiations show no meaningful progress and threats to shipping infrastructure persist, oil prices continue to reflect a geopolitical risk premium.
Intraday technical picture:
Brent crude is trading in a sideways range between 92.88 and 101.95 on the 4H chart, with the range marked by two dotted lines. The price has turned lower from range resistance, retaining downside room toward the 95.18 and 92.88 support targets.
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