Dollar Index: Inflation Test Keeps Fed Policy in Focus
The dollar remains supported by elevated U.S. borrowing costs and geopolitical tensions, while the focus is on the U.S. inflation report for next direction. Traders currently give a 81% probability of the Fed not changing policy rates at their October meeting, after weaker jobs data lessened the case for an immediate policy hike. Further increases in December or early 2027 remain a possibility if inflation doesn’t decline.
Inflation forecasts are for U.S. headline inflation to hit 3.7% and core to be around 2.5% this month. Inflation data this week will be key for the dollar’s outlook.
EUR: French Debt Risk Counters ECB Tightening Expectations
These forecasts were made by market participants or market analysts and reported by the source. Forecasts are not guaranteed to actually occur. Forecasts are not a reliable indicator of future performance.
France’s fiscal situation still casts a shadow on the euro. The spread on 10-year bonds between France and Germany has risen to about 137 basis points and is approaching the levels last seen in 2012. This highlights the uncertainty in the market regarding France’s ability to bring more budgetary discipline in the run up to the 2027 presidential elections.
Some help on monetary policy is expected. A Reuters poll showed that nearly 90% of economists expect the ECB to raise its 2.50% deposit rate by 25 basis points in December following a surge in euro-area inflation.
GBP: Rate-Hike Expectations Meet a Difficult Budget Test
Monetary policy is expected to be tightened in the UK as well with an above 80% chance of a Bank of England rate hike in November.
EUR/USD Price Forecast
Every new EUR/USD analysis as it publishes, today's technical signal and key levels, live price — on one page.
See all EUR/USD forecastsFiscal policy is expected to be implemented to help ease the UK’s cost-of-living concerns. The IFS estimates the government will need to find about £36 billion through tax rises or welfare cuts in the upcoming Budget on the 28th of October due to higher inflation, pressure on public services and increased defence spending.
U.S. Dollar Index Technical Analysis: DXY Holds Above 102.10 as 102.49 Remains the Key Breakout Level
Currently, the U.S. Dollar Index is trading around 102.24 on the 2-hour chart, and what catches my eye is how price is holding above the rising trendline and both moving averages. The large picture trend remains up, although price repeatedly failing around 102.49 shows that price still needs a clear breakout to push to higher levels.
102.49 is the first major level of resistance, and a break above that would likely bring 102.70, and 102.95 into the picture. Again, 102.10 is a key support, and if price continues to drop, 101.75 and 101.43 would come into play.
RSI is holding about the middle line, and overall remains flat, indicating a lack of clear directional momentum. However, I do have a bullish bias, as long as price holds above 102.10 and the rising trendline. I think a break below 101.75 would bring a more bearish bias, and a clear break above 102.49 would strengthen the bias towards the 102.70-102.95 region.
GBP/USD Technical Analysis: Sterling Holds 1.3222 as 1.3284 Remains the Main Recovery Barrier
GBP/USD is trading around 1.3242 on the 2-hour time frame. It is currently building a consolidation above the 1.3180-1.3222 support zone. Price is trying to recover after failing to break above the falling trendline and the longer-term moving average. From a broader perspective, the trendline and the moving average also capping the upside which keeps the overall structure bearish.
The first level of resistance is at 1.3284. A clear break above this level would open 1.3323 and 1.3368. The first support is at 1.3222, followed by 1.3180, 1.3147 and 1.3113.
The RSI is currently neutral but improving. From a short-term perspective, I am neutral to slightly bullish and from a longer-term perspective the structure remains bearish. I would take a more bullish view if price breaks above 1.3284 and a more bearish view if price breaks below 1.3180.
EUR/USD Technical Analysis: Euro Stays Below 1.1233 as 1.1180 Support Remains Critical
EUR/USD is around 1.1205 on the 4-hour chart. What I’m focusing on is the fact that price is below a descending trendline and both moving averages. Price has been consolidating above the 1.1180 support zone, but the longer term view is still in favor of the sellers and rallies continue to stall below 1.1233.
The first support that I’ll look for is 1.1180. A break below that would open 1.1161 and then 1.1137. On the other hand, 1.1233 is the first level of resistance and 1.1265 and then 1.1286 become important if the bullish pressure continues.
RSI is in the lower part of its range, indicating that the momentum is still to the downside, but improving, despite the recent consolidation. I’m looking for sell opportunities, especially under 1.1233 and the descending trendline. A break above 1.1265 would improve the situation on the short term, and a drop below 1.1180 would open 1.1161.
