On October 8th, Germany's Federal Statistical Office reported that industrial output in August fell by 4.3% month-on-month, marking the largest decline since March 2022. The office noted that production in Germany's key automotive industry dropped by 18.5% during the same period. Additionally, significant declines in the prices of machinery, pharmaceuticals, as well as electrical, computer, electronic, and optical products also weighed on the overall figures. Experts have warned that the "extremely disappointing" industrial data for August heightens the risk of another quarterly contraction in the German economy. Meanwhile, the ongoing drone incidents in Europe continue to escalate. Both Denmark and Germany have reported drone sightings within their borders. On October 2nd, an unidentified drone was spotted flying over a Belgian military base. In response, European Commission President Ursula von der Leyen stated that the Belgian Ministry of Defense is currently investigating the incident. She characterized the drone incidents as a concerning trend amid the broader escalation of various threats. Such events, along with airspace violations, are fundamentally seen as systematic actions aimed at dividing the EU and undermining support for Ukraine. The combination of weak German economic indicators and geopolitical tensions is posing a combined bearish risk to the euro. Although France's outgoing Prime Minister, Sebastien Lecornu, expressed optimism about reaching a budget agreement before the end of the year — a comment that helped ease market concerns over the possibility of snap elections in France — there are still no clear signals that could support a stable rebound for the euro. The fundamental transmission logic suggests that the currency will likely remain under bearish pressure in the short term.

The EUR/USD exchange rate managed to recover some ground during the Asian trading session on Thursday, ending a three-day losing streak. The prolonged U.S. government shutdown continues to weigh on USD/EUR. Federal Reserve Chair Jerome Powell is scheduled to deliver a speech later on Thursday. The U.S. government has been shut down since October 1st, following Congress's failure to agree on a new budget by the September 30th deadline. This marks a nine-day closure so far. The U.S. Bureau of Labor Statistics and the Bureau of Economic Analysis have suspended data collection and reporting, posing challenges for the Fed's interest rate decisions and for businesses aiming to make informed choices. This situation could drag the dollar lower and provide short-term support to major currency pairs. Besides, the minutes from the Fed's September meeting, released on Wednesday, showed that most policymakers supported the rate cut in September and signaled the possibility of further cuts later in the year. However, some officials expressed a more cautious stance due to concerns over inflation.

Based on the daily chart, the MACD shows weakening bullish momentum, with histogram bars shrinking and a death cross forming as a death cross emerges. While the highs of the signal line and the MACD line continue to decline, the corresponding price is making new highs — a classic sign of a bearish divergence. The Bollinger Bands are starting to widen downward, and the moving averages are diverging to the downside. Additionally, the RSI stands at 41, indicating a shift into a pessimistic market sentiment. If the price fails to hold above the lower Bollinger Band, it is likely to test earlier lows and the EMA 200, around 1.139 and 1.135, respectively. Furthermore, Bollinger Bands are narrowing in the weekly chart, signaling reduced volatility. The price is oscillating around the EMA12, with the RSI sitting at 56, reflecting a cautious, wait-and-see market sentiment. If the EMA12 is breached to the downside, the price may likely fall toward the Bollinger Middle Band or even the EMA50. Therefore, selling at highs is recommended in the near term.

Trading direction: Sell

Entry price: 1.1623

Target price: 1.14

Stop loss: 1.182

Support: 1.145/1.14/1.13

Resistance: 1.182/1.192/1.2

The UK economy is currently projected to grow only modestly, while inflation stubbornly hovers near the 4% mark. Market participants are keenly anticipating the release of the British fiscal budget on November 26th, which carries the significant potential for tax increases as the government attempts to comply with its fiscal rules.

Insights from the Bank of England's (BoE) Financial Policy Committee (FPC) minutes suggest that UK households and businesses have demonstrated resilience despite the considerable pressures from a higher cost of living and elevated borrowing costs.

Adding to the central bank dialogue, BoE Chief Economist Huw Pill has reiterated a firm stance, stating that monetary policy must be resolutely focused on price stability. He emphasized the need for policymakers to make a clear and credible commitment to achieving the inflation target. Traders are now looking ahead to BoE official Catherine Mann's speech on Thursday for further direction on the bank's outlook.

Shifting focus across the Atlantic, the sustained failure of U.S. Senate Democratic and Republican leaders to find common ground on resuming government funding, now in its second week, continues to dampen investor confidence. The odds of a near-term resolution have dramatically faded, with a recent Polymarket survey assigning only a 23% probability to a breakthrough this week. This protracted political gridlock has broadly eroded market sentiment, consequently boosting demand for the U.S. Dollar and other traditional safe-haven assets.

The recently published Federal Reserve (Fed) minutes have highlighted a deepening divergence among policymakers regarding how best to respond to shifting economic risks. Although a majority still cautioned against inflationary pressures, they concurrently acknowledged growing risks within the labor market. Officials expressed a commitment to protecting the job market and indicated a preference for a more accommodative, or "easier," policy stance that could potentially persist "beyond the remainder of this year."

This split is clearly visible in their federal funds rate projections. Nine officials currently lean towards two rate cuts, with Stephen Miren being an outlier projecting several more, while the other nine foresee only one or no additional rate reductions. This significant divergence underscores the complicated balancing act facing the central bank as it aims to control inflation without unduly stifling economic activity.

Meanwhile, in the fixed-income markets, U.S. Treasury yields are retreating. The benchmark 10-year Treasury yield has fallen by one and a half basis points (bps) to 4.113%. Similarly, U.S. real yields—which move inversely to Gold prices—have also slipped by nearly one basis point to 1.763%. Money market signals remain resolute, strongly indicating that the Fed is poised to enact a 25-basis-point (bp) interest rate cut at its upcoming October 29th meeting. The current probability for this action is exceptionally high at 94%, according to the Prime Market Terminal's rate probability tool.

The GBP/USD pair has reacted bearishly after peaking at the local high of 1.3791 on July 1st. Since then, the pair has failed to successfully register a higher high, a classic signal that bullish momentum may be fading, suggesting a downward correction could be the immediate next move.

Crucially, the pair has closed below the 100-period Moving Average (MA) on the daily chart, which sits at 1.3495. This adds significant bearish pressure if the price fails to immediately recover and close back above this key level. The next major support level aligns with the 200-period MA at 1.3165. In the event of continued downward movement, targets would likely be set around this 1.3165 zone.

The Relative Strength Index (RSI) is currently at a neutral 44 level, indicating that the move is still in development. Since significant price swings on larger timeframes (like the daily chart, D1) take much longer to unfold, waiting for "overbought" signals to initiate short positions may not be necessary. If the pair is indeed entering a downtrend, the movement could continue its downward trajectory as long as the price remains below the 100-period MA. Should the price breach and close above this MA, it could signal a new impulse higher, aiming for the descending trend line and a renewed attempt to forge a higher high.

Trading direction: Sell

Entry price: 1.3410

Target price: 1.3140

Stop loss: 1.3601

Validity: Oct 17, 2025 15:00:00

The ongoing inability of U.S. Senate Democratic and Republican leaders to agree on a path to resume funding as the government shutdown enters its second week continues to weigh on investor confidence. Hopes for a breakthrough this week have dropped significantly, registering only a 23% probability according to a recent Polymarket survey. This lack of political progress has begun to erode market sentiment more broadly, consequently driving increased demand for the U.S. Dollar and other traditional safe-haven assets.

Meanwhile, the newly released Federal Reserve (Fed) minutes have shed light on a deepening debate among policymakers regarding the appropriate response to evolving economic risks. While a majority of officials still expressed caution about inflationary pressures, they also acknowledged increasing risks within the labor market. The officials voiced concerns about protecting the job market and indicated a preference for a more accommodative, or "easier," policy stance that could extend "beyond the remainder of this year."

This division within the Fed is evident in their projections for the federal funds rate. Nine officials currently favor two rate cuts, with Stephen Miren outlier projecting several more, while the other nine project only one or no additional rate cuts at all. This divergence highlights the complexity facing the central bank as it balances inflation containment with the risks of an economic slowdown.

In the bond market, U.S. Treasury yields are pulling back. The benchmark 10-year Treasury yield is down by one and a half basis points (bps) to 4.113%. Similarly, U.S. real yields—which are inversely correlated with Gold prices—have also declined by nearly one basis point to 1.763%. Market expectations, as signaled by money markets, strongly suggest that the Fed will enact a 25-basis-point (bp) interest rate cut at its upcoming meeting on October 29th. The probability of this cut is currently high, sitting at 94%, according to the Prime Market Terminal's interest rate probability tool.

Further complicating the global trade landscape, reports emerged on Wednesday that European Union (EU) officials are facing new demands for concessions from the United States, a development that threatens to undermine the recent trade agreement brokered by U.S. President Donald Trump.

On the European political front, French Prime Minister Sébastien Lecornu indicated there is still room for compromise within the parliament. He noted that an absolute majority in the National Assembly is opposed to a new dissolution of parliament. Lecornu informed President Emmanuel Macron that the probability of dissolution is diminishing and that the current conditions should allow for the appointment of a new Prime Minister within the next 48 hours.

The upcoming Eurozone agenda is packed with key economic data and central bank commentary, including Germany's Trade Balance figures, the latest minutes from the European Central Bank (ECB) meeting, and a speech from its Chief Economist, Philip Lane.

EUR/USD has been undergoing a sharp bearish correction, testing the key support level situated at 1.1615. The pair has started to show some initial bullish signals from this zone. Should this critical level hold, a recovery could be on the cards, with the price potentially aiming for a retest of the descending trend line. This trend line converges with the 100- and 200-period Moving Averages (MAs) on the 4-hour chart, which are currently positioned at 1.1740 and 1.1715, respectively. Crucially, as long as the price remains below these moving averages, the overall bias suggests that downward pressure remains in control.

The Relative Strength Index (RSI) has reached the 27 level, pushing the pair into oversold territory. This significantly increases the probability that bearish traders may begin to cover their short positions, triggering a potential corrective move higher before the downtrend can resume. Upside targets for this potential correction are centered around the 1.1701 resistance level, a zone where the moving averages are also likely to converge. Conversely, a definitive break below the 1.1600 support would open the door for a much deeper bearish continuation.

Trading direction: Buy

Entry price: 1.1627

Target price:

Stop loss: 1.1570

Validity: Oct 17, 2025 15:00:00

The USD/CHF pair returned to its monthly high near 0.8010 during the Asian trading session on Wednesday, with the Swiss franc losing ground as the US dollar extended its advance. The move reflects investors’ growing preference for the greenback amid persistent political tensions in Washington and rising expectations that the Federal Reserve will press ahead with further interest-rate cuts before the end of the year.

By mid-Asian trade, the US Dollar Index, which measures the currency against a basket of six major peers, was up 0.3 percent at around 98.90, its strongest level in two months. The dollar’s renewed momentum comes even as the United States government shutdown stretches into its second week, underscoring the market’s view that political turmoil has yet to undermine the dollar’s appeal as a safe-haven asset.

Market sentiment was rattled late on Tuesday after US President Donald Trump warned that the White House could scale back some spending programs to cope with the prolonged closure of federal agencies. Trump added that he would announce details of layoffs in certain departments within the next four to five days, according to Reuters. Such prospects have weighed on equity market sentiment and are seen by many as increasing the likelihood of a slowdown in domestic growth. For currency markets, however, the implication has been that the Federal Reserve will have to maintain an accommodative stance to support the economy, which paradoxically has strengthened the dollar as investors seek refuge in its relatively higher yields.

Traders’ immediate attention now shifts to the publication of the Federal Open Market Committee’s minutes from its September policy meeting, scheduled for release at 18:00 GMT Wednesday. At that meeting, the Fed lowered its benchmark interest rate by 25 basis points to a range of 4.00 to 4.25 percent and signaled that it expects to cut rates twice more before the end of the year. According to the CME FedWatch tool, markets currently assign an 82 percent probability that the central bank will lower rates by another 25 basis points at each of its two remaining meetings in 2025. The persistence of such expectations has been one of the key drivers of the dollar’s resilience, especially against lower-yielding currencies like the Swiss franc.

Switzerland’s own economic backdrop has contributed to the franc’s softness. Data released earlier this week showed that the country’s unemployment rate rose to 3 percent in September from 2.9 percent in August, highlighting a gradual weakening in labor market conditions. Inflation also continued to cool, with the consumer price index declining by 0.2 percent month-on-month in September, faster than the 0.1 percent drop in August. The lack of inflationary pressures is likely to encourage the Swiss National Bank to maintain or even deepen its accommodative stance, possibly pushing rates further into negative territory. This widening gap between US and Swiss policy expectations has provided additional support to the USD/CHF pair.

From a market-technical standpoint, USD/CHF continues to show a bullish bias, having staged a convincing breakout within its broader upward trajectory. Price action has been gravitating near the 0.7965 support zone, which previously acted as a floor during periods of consolidation.

The pair’s ability to hold above this level has reassured buyers that the uptrend remains intact. A sustained rebound from this area would reinforce expectations of further gains, with the next notable resistance points anticipated around 0.8035, followed by 0.8050, which carries both psychological and structural significance.

An extended move higher could even test the 0.8070 region on the longer-term charts. Analysts suggest that as long as the pair trades comfortably above the 0.7965 zone, dips are likely to attract fresh buying interest.

BUY USDCHF

ENTRY PRICE: 0.8020

STOP LOSS: 0.7980

TAKE PROFIT: 0.8070

WTI crude oil prices edged lower to around US$61.00 on Wednesday before rebounding. OPEC+'s production increase of 137,000 barrels per day fell short of expectations, easing supply concerns but failing to fully lift oil prices. Despite gains in early trading, prices remained within a narrow range overall as investors weighed mounting worries about impending global supply glut.

The U.S. Energy Information Administration raised its forecast for U.S. crude oil production and stated that global crude inventories could exert significant downward pressure on oil prices in the coming months. Investors may downplay the impact of increased production until the physical market shows signs of weakness through rising inventories.

Market observers are currently awaiting the release of weekly U.S. crude oil and gasoline inventory data later on Wednesday—the figures will offer further clues about demand trends in the world's largest oil-consuming nation, the U.S.; However, a significant increase in inventory may signal weak consumer demand.

WTI crude oil has completed an inverted “head-and-shoulders bottom” pattern on its short-term chart, indicating that the recent downtrend may be reversing.

The price has broken through the neckline resistance level around US$62.00 per barrel, confirming a bullish reversal signal, and is currently trading at US$62.26.

However, the 100-day SMA remains below the 200-day SMA, indicating that the path of least resistance still leans downward, suggesting bearish pressure may persist. Nevertheless, the gap between the two SMAs is narrowing, implying that a bullish crossover could emerge if bulls maintain control.

The stochastic oscillator is approaching the overbought zone, indicating heightened bullish momentum, but this also suggests the market may soon show signs of exhaustion. The indicator still has room to rise before reaching extreme levels, so buyers may remain in control for now. A pullback from the overbought zone could signal a resurgence of selling pressure and potentially trigger a correction.

The Relative Strength Index is climbing northward, but it still has considerable room to rise before reaching overbought territory. Therefore, as long as bulls maintain control, prices are likely to continue following suit.

Trading Direction: Buy

Entry Price: 61.50

Target Price: 71.72

Stop Loss: 58.30

Valid Until: October 23, 2025 23:55:00

Support: 60.48, 60.19, 59.44

Resistance: 62.90, 64.48, 66.17

On Monday, French Prime Minister Lecornu unexpectedly resigned less than a month into his tenure, deepening France's political crisis. The euro fell to its lowest level in over a week as investors began reducing their long positions.

This stands in stark contrast to France's last major political risk outbreak, when then-Prime Minister Bayrou lost a confidence vote on September 8th, yet market sentiment toward the euro remained resilient. One factor driving this shift is the reduced number of catalysts capable of moving markets during the U.S. government shutdown, amplifying the impact of euro-centric news.

Gambling market data indicates a 57% probability of an early election this month, though it remains unclear whether such an election could resolve the current issues. Foreign exchange traders may closely monitor the yield spread between French and German government bonds. If the spread between 10-year French and German bonds widens from the current 86 basis points to 90 basis points, it would sound an alarm and further intensify downward pressure on the euro itself.

The EURUSD is currently trading below 1.17, heading for a third consecutive day of losses. A widely watched options directional indicator has flipped bearish after previously signaling bullish sentiment, indicating traders are betting on further euro weakness.

Meanwhile, the U.S. dollar is gaining support from France's political turmoil as investors seek safer assets. The U.S. Dollar Index, which tracks the USD against a basket of major currencies, is currently hovering around 98.40, up nearly 0.30% for the day and hitting its highest level since September 25.

The resurgence in demand for the U.S. dollar underscores market caution, as traders bet the greenback will remain resilient amid global political and economic uncertainties. However, the prolonged U.S. government shutdown has disrupted the release of key economic data, adding another layer of risk to the market.

The EURUSD extended its decline from 1.1917, breaking below 1.1644 and resuming its downward trend during the session. Additionally, the breach below the 55-day SMA (currently at 1.1679) indicates that the daily MACD indicator has formed a medium-term top under bearish divergence conditions. Further declines could target the 1.1390 support level, or extend to the 38.2% retracement of the 1.0176 to 1.1917 range at 1.1252.

On the upside, a break above the minor resistance level at 1.1682 would first shift the intraday trend to neutral. However, as long as the 1.1778 resistance level holds, downside risks will persist.

Trading Direction: Sell

Entry Price: 1.1670

Target Price: 1.1441

Stop Loss: 1.1785

Valid Until: October 23, 2025 23:55:00

Support: 1.1573, 1.1525, 1.1447

Resistance: 1.1712, 1.1759, 1.1786