The EUR/USD pair remains under pressure due to the political and debt crisis in France, high energy prices, and the risk of a slowdown in the eurozone economy amid accelerating inflation. Meanwhile, the US dollar has yet to find sustained support, as the market has adopted a wait-and-see stance ahead of the release of US inflation data.
Possible technical scenarios:
On the daily chart, the EUR/USD pair has broken out the 1.1191 level from top to bottom and reached the support of a broad descending channel, so a local price recovery toward the horizontal resistance at 1.1399 cannot be ruled out. If the pair consolidates below 1.1191, the next downside target will be the horizontal level of 1.0938.
Fundamental drivers of volatility:
In the short term, the pair’s performance will depend on a combination of European economic risks and cues regarding the Fed’s future policy path.
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 situation in France remains the primary drag on the euro. Soaring government debt has driven borrowing costs to levels not seen since the 2009–2011 debt crisis. The government is struggling to push through a fiscal austerity plan due to insufficient political support, while student protests are adding to domestic tensions. As long as prospects for stabilizing public finances remain uncertain, French risks will continue to limit demand for the euro.
Elevated oil prices are creating additional pressure. Although Brent has retreated slightly from monthly highs above $105 per barrel, prices remain above $100 against the backdrop of Middle East tensions. For the energy-import-dependent eurozone, this translates into higher costs and mounting inflationary pressure alongside the risk of slowing economic activity. This combination heightens the threat of stagflation and complicates the stance of the ECB, which must factor in both rising prices and economic risks.
German inflation data confirms growing price pressures across the region. According to final figures, the Harmonised Index of Consumer Prices rose by 0.6% month-over-month and 3.3% year-over-year in September, up from 0.2% and 2.9% in August, respectively. Accelerating inflation could cloud prospects for ECB policy easing, but on its own, it does not guarantee euro strength: high energy prices simultaneously deteriorate the eurozone’s economic outlook.
The upcoming US inflation release will serve as the key short-term driver. Markets expect annual consumer price growth to accelerate from 3.4% to 3.7% in September, while core inflation is projected to pick up from 2.4% to 2.5%. Producer price data (PPI) is due Thursday: headline PPI is forecast at 5.4%, while the core reading is expected to slow to 4.4% from 4.6%. Hotter inflation could tilt the scales in favor of the dollar, whereas softer figures may give EUR/USD room to recover.
Intraday technical picture:
The 4H chart shows EUR/USD attempting to confirm the 1.1191 level as resistance; however, the support of the broad downtrend remains intact. If it is also broken out, the medium-term decline could extend toward the 1.0938 target. An alternative scenario would see an upward correction toward the dotted resistance at 1.1324, and a breakout above it could pave the way for a continued rise toward the 1.1399 level.
The GBP/USD pair has been stuck in a sideways range for a third week in a row. The pound draws support from expectations of Bank of England policy tightening. That being said, a strong dollar is capping its upside potential.
Possible technical scenarios:
As evidenced by the daily chart, the GBP/USD pair continues to trade around the 1.3215 level. A breakout and consolidation below it would open the path toward the 1.3158 level marked by the dotted line. If support at 1.3215 holds, a recovery within the current broad sideways range is possible.
Fundamental drivers of volatility:
Over the coming days, market attention will focus on speeches by Bank of England officials, US inflation statistics, and sentiment ahead of the UK budget.
Key support for sterling stems from expectations of a Bank of England rate hike. Markets are pricing in an approximately 90% probability of an interest rate increase at the November 5 meeting and are entertaining a series of hikes in 2027, potentially reaching up to 4.75% from the current 3.75%. However, economists polled by Reuters expect rates to remain on hold until later in 2027 and anticipate that the next policy move will likely be a rate cut. This gap in expectations creates the risk of downward revisions to market pricing if the central bank’s rhetoric turns out to be less hawkish.
Speeches by BoE representatives, including Chief Economist Huw Pill and Governor Andrew Bailey, will serve as critical short-term catalysts. Their commentary will provide clues as to how concerned policymakers are about inflation driven by the Middle East conflict and whether they are genuinely prepared to keep hiking rates. Reaffirmation of a hawkish trajectory could underpin sterling, whereas cautious remarks may dampen rate-hike expectations and bring renewed pressure onto GBP/USD.
As far as the dollar goes, the currency retains an advantage ahead of the US consumer inflation report. The data will help the market assess the trajectory of Fed rates through year-end while shaping expectations for other central banks. Persistent inflationary pressure could bolster the dollar and restrict GBP/USD gains, particularly if markets begin pricing in a more aggressive Fed stance. Conversely, softer figures could weigh on the greenback and offer the pound room to rebound.
Additional uncertainty surrounds the UK budget and geopolitical developments. Pre-budget ambiguity is curbing investor activity, even though current strain on the French debt market makes the pound look relatively more attractive than the euro. At the same time, expensive oil amplifies inflationary risks and could support expectations of higher interest rates, but it simultaneously raises the likelihood of tighter Fed policy. Consequently, the pair’s next directional move will hinge on whose monetary policy—the BoE’s or the Fed’s—is perceived by the market as more hawkish.
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 caught between conflicting drivers: prospects of further rate hikes from the Bank of Japan are supporting the yen, while anticipation of fresh signals from the Fed is muting FX market activity.
Possible technical scenarios:
The USD/JPY pair has shifted into consolidation within a sideways range of 157.90–158.93. An upside breakout could see gains extend toward the 160.41 level marked by the dotted line.
Fundamental drivers of volatility:
The immediate catalysts for the pair will be US inflation data and subsequent remarks from Japanese monetary authorities.
Bank of Japan Governor Kazuo Ueda stated that core inflation is nearing the 2% target and reaffirmed the intention to keep it anchored near that mark. This leaves the door open for additional rate hikes, though the Governor’s comments had little impact on the yen’s exchange rate. In September, the BoJ raised its key policy rate to 1.25%—a 31-year high—and signaled its readiness to proceed with further tightening.
The IMF also expects Japanese rates to gradually rise toward a neutral level despite an economic slowdown. The fund forecasts Japan’s GDP growth at 0.7% in 2026 and 2027, down from 1.2% last year. Fiscal support measures should partially cushion the impact of surging energy prices; however, the country’s heavy dependence on imported fuel and raw materials heightens economic vulnerability to energy shocks and yen depreciation.
The dollar edged slightly lower during the Asian session. Investors are adopting a wait-and-see approach ahead of the US CPI and PPI prints, which could clarify the timing of the Fed’s next rate decision. Hotter inflation data could bolster the dollar and ramp up pressure on USD/JPY, whereas signs of easing price growth could solidify expectations for a more cautious stance from the US central bank.
The threat of currency intervention remains an additional factor for the yen. The IMF highlighted elevated FX volatility across Asia and noted the possibility of official market intervention in the event of disorderly market conditions, severe liquidity crunches, or threats to price stability. That prospect may cap the upside in USD/JPY, especially if the Japanese currency weakens further.
Intraday technical picture:
The 4H USD/JPY chart demonstrates that the pair is holding above the 157.90 level, keeping the door open for price gains toward the 158.93 target.
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The USD/CAD pair has entered a consolidation phase near its recent highs. Upside potential remains supported by hawkish Fed rhetoric and firm expectations of further US monetary policy tightening.
Possible technical scenarios:
Given what we see on the daily chart, the USD/CAD pair continues to trade just below the resistance of the 1.4179–1.4275 range, struggling to clear its upper boundary for now. If price manages to overcome 1.4275 and consolidate higher, the next bullish target will be the horizontal level of 1.4417. Otherwise, we could see a decline within the existing range.
Fundamental drivers of volatility:
USD/CAD price action is currently sensitive to Fed commentary and the prospects of further monetary tightening in the US. Cleveland Fed President Beth Hammack advocated for higher interest rates and continued restraint on economic activity, pointing to broad-based inflationary pressures, resilient demand outside the energy sector, and the risk of elevated inflation expectations becoming entrenched.
In the meantime, markets have reassessed expectations for the upcoming Fed rate decision. The probability of rates remaining unchanged in October jumped to 80% from 51% a month earlier, following calls by several Fed officials to gather more data before taking the next step. Investors are awaiting the September CPI release: accelerating inflation could reinforce expectations of a December rate hike, though a single report is unlikely to drastically alter the baseline outlook on its own.
The dollar pulled back from its highest levels since April 2025 amid lower oil prices and expectations that the US will attempt to avoid an escalation of conflicts in the Middle East and Ukraine ahead of the midterm elections. Cheaper energy commodities temper support for the greenback while putting pressure on the oil-sensitive Canadian dollar.
For USD/CAD, hawkish Fed signals and the prospect of tighter US policy continue to provide a bullish backdrop. However, short-term performance will hinge on inflation data, shifting interest rate expectations, and developments in the crude oil market. The dollar’s pullback currently looks like a correction following a strong rally, but fresh cues from the Fed could spark momentum in either direction.
Intraday technical picture:
As it appears from the current developments on the 4H USD/CAD chart, there is another downward reversal from the 1.4275 resistance level, clearing a path lower toward 1.4201 and 1.4179.
The gold price went up locally within its sideways range amid retreating oil prices and in anticipation of US inflation data, which could guide the Fed’s next policy moves. Persistent inflationary pressures and hawkish rhetoric from Fed policymakers continue to underpin high-rate expectations, diminishing the appeal of gold.
Possible technical scenarios:
The gold price has spent a third consecutive week consolidating below the 4209.95 level, leaving the door open for a test of last week’s lows and the next support level at 4002..
Fundamental drivers of volatility:
US inflation figures will act as the primary near-term catalyst for gold. The Consumer Price Index is scheduled for release on Wednesday, followed by the Producer Price Index on Thursday. If core inflation exceeds forecasts, markets could adjust Fed rate projections toward a more aggressive stance, putting pressure on gold. Softer data, by contrast, would ease concerns over further rate hikes and support the quotes.
Monetary policy expectations remain a restricting factor. The market currently prices in only a 19% probability of an October rate hike by the Fed, but assigns an 85% chance to an increase in December. Cleveland Fed President Beth Hammack supports a relatively swift return to tighter policy, citing broadening inflation pressures and their impact on corporate pricing decisions. Such rhetoric limits gold’s recovery potential, as higher yields enhance the allure of interest-bearing assets.
Softening crude oil prices provide some relief to gold by tempering worries over accelerating inflation and the need for more aggressive central bank tightening. Earlier, the surge in oil prices triggered by Middle East tensions had stoked inflation risks and weighed on the precious metal. Geopolitical risks continue to underpin safe-haven demand. Saudi Arabia reported a fresh wave of missile and drone strikes, and Riyadh’s airport remains closed following a recent terminal attack claimed by Iran-aligned Houthi militants. Escalation could fuel demand for gold as a defensive hedge, but this impact will remain contained if oil prices, bond yields, and expectations of tighter Fed policy simultaneously move higher.
Intraday technical picture:
Judging from the look of things on the 4H XAU/USD chart, the price is consolidating within the 4110.87–4209.95 range. A pullback from the 4209.95 resistance could push gold back down toward local dotted support at 4110.87.
Brent crude prices edged lower on Tuesday but remain entrenched in an uptrend. The market is weighing prospects of higher Russian diesel exports against persistent supply disruption risks in the Middle East. The potential expansion of supply is capping price gains, yet attacks on regional energy infrastructure and oil tankers continue to maintain a geopolitical risk premium.
Possible technical scenarios:
On the daily chart, Brent crude is approaching the dotted resistance at 106.40. A breakout with consolidation above this level would make 113.99 the next upside target. Otherwise, prices could pull back toward the 95.18 support level.
Fundamental drivers of volatility:
A key factor weighing on oil prices was Donald Trump’s statement regarding Russia’s readiness to supply diesel fuel to the global market. The US has temporarily eased sanctions on Russian fuel. Additional volumes could alleviate refined product deficits and ease price pressure. However, analysts remain skeptical that Russia can reach the stated export target of 3–3.5 million tons per month by year-end due to headwinds in its domestic refining sector.
Supply disruption risks persist amid ongoing strikes on regional transport routes and infrastructure. Following a Houthi strike on Riyadh International Airport and reports of tanker attacks near the Strait of Hormuz, security concerns over energy supply lanes have intensified. A lack of progress in de-escalating tensions across the Middle East and Eastern Europe is sustaining the risk premium in oil prices.
Surging shipping and insurance costs present an additional bottleneck for crude flows. According to representatives from OPEC and non-OPEC partner nations, these expenses now exceed one-third of the cargo’s value. Rising logistics costs complicate the movement of crude and refined products, constraining exporters’ ability to scale up deliveries.
At the same time, OPEC has slashed its 2026 global oil demand growth forecast to 400,000 barrels per day, down from 1.4 million bpd projected earlier in the year. The downward revision signals softening demand and creates an additional headwind for the market. Ultimately, price prospects will be dictated by the tug-of-war between expanding Russian fuel supplies and lingering export disruption risks from the Middle East.
Intraday technical picture:
On the 4H Brent chart, price consolidation above the dotted level of 101.95 has opened the path toward the nearest resistance at 106.40. The asset’s next directional move will depend on which side of the 106.40 level the price settles.
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