The euro remains under pressure in Thursday’s European session, holding just above its one-month lows near 1.1600, as persistent political uncertainty in France and renewed caution from the Federal Reserve keep traders on edge. At the time of writing, EUR/USD trades around 1.1615, with every attempt to regain ground meeting renewed selling interest. Investors appear reluctant to build long positions in the common currency ahead of a highly anticipated speech by Federal Reserve Chair Jerome Powell, who is scheduled to speak later today at a banking event in Washington.

The muted tone in the pair underscores the delicate balance between diverging monetary policy expectations in the U.S. and the euro area. While the Fed’s recent commentary suggests a cautious path toward further easing, the European Central Bank (ECB) remains hesitant to alter its current stance despite rising geopolitical uncertainty and slowing economic momentum across the bloc.

Earlier on Thursday, New York Fed President John Williams added to dovish sentiment by signaling support for additional monetary easing in the coming months. Speaking in an interview with The New York Times, Williams emphasized that underlying inflation is gradually declining, while labor market conditions are showing early signs of softening, particularly in hiring momentum and wage growth.

His remarks have reinforced market expectations that the Fed could deliver two more rate cuts before the end of the year, aligning with investors’ view that the central bank may err on the side of caution as economic growth moderates. Futures markets now imply a near 80% probability of a rate cut in December, with traders closely watching Powell’s tone for further confirmation.

Williams’ comments follow a series of cautious statements from other Fed officials, suggesting that policymakers are increasingly concerned about maintaining economic stability amid global headwinds. However, despite this dovish undertone, the dollar has remained resilient, buoyed by safe-haven demand and its interest rate advantage relative to other major currencies, particularly the euro.

Across the Atlantic, the European Central Bank’s Monetary Policy Meeting Accounts, released earlier today, highlighted growing unease among policymakers over the uncertain global economic outlook. While the governing council acknowledged downside risks to growth from sluggish global trade and persistent geopolitical tensions, members appeared divided over the direction of inflation.

Some officials pointed to persistent upside risks to price growth, arguing that energy volatility and wage gains could sustain inflation above the ECB’s target for longer. Others, however, viewed the current uptick as transitory, citing weak domestic demand and fiscal restraint across several member states.

Overall, the minutes reaffirmed that there is no immediate pressure for policy adjustments, with the ECB likely to remain on hold in the near term. The euro’s reaction was muted, as traders remain primarily focused on U.S. data and policy commentary to gauge near-term direction.

Adding to the euro’s fragility, France’s political scene continues to unsettle investors. The ongoing uncertainty surrounding government stability and fiscal plans has weighed on European assets, particularly sovereign bonds and the common currency. Markets fear that extended gridlock or populist pressure could delay key reforms and limit fiscal coordination within the eurozone, amplifying the region’s economic vulnerability.

For now, traders remain wary of holding euro-denominated positions until the domestic situation in France stabilizes. This political risk premium has been a recurring drag on the euro since early September, overshadowing otherwise resilient data from Germany and southern Europe.

From a technical standpoint, EUR/USD maintains a bearish tone in the short term, having decisively broken below its recent rising channel. The pair continues to trade below the 50-day Exponential Moving Average (EMA50), a sign that downward momentum remains intact.

Momentum indicators echo this weakness. The Relative Strength Index (RSI) has shown negative divergence, retreating from overbought levels and reinforcing the potential for further downside. The pair’s failure to sustain gains above 1.1650 suggests that sellers are still dominant, with near-term support located around 1.1600—a psychological level that, if breached, could expose 1.1550 and eventually 1.1500 as the next key targets.

On the upside, the area between 1.1800 and 1.1850 remains a formidable resistance zone, as price action in recent weeks has repeatedly rejected attempts to break higher. For any meaningful reversal to take shape, the pair would need to reclaim the 1.1700 handle on a daily closing basis, supported by stronger European fundamentals or a broader decline in the U.S. dollar.

SELL EURUSD

ENTRY PRICE: 1.1600

STOP LOSS: 1.1700

TAKE PROFIT: 1.1400

The Ministry of Labour officials noted that August's special payments exhibited significant volatility, primarily due to the majority of bonuses being disbursed in the first two months. Following the Bank of Japan's (BOJ) recent monetary policy meeting, where interest rates were maintained, Governor Kazuo Ueda indicated that the upward trend in wages is expected to persist into next year. However, uncertainties surrounding U.S. tariffs could disrupt corporate operating environments. In this context, former BOJ executive Kazuo Momma warned that recent substantial depreciation of the yen might prompt the central bank to consider tightening monetary policy. Since Sanae Takaichi's victory in the Liberal Democratic Party leadership election, the yen has depreciated, raising market concerns that her potential premiership could pressure the BOJ to delay rate hikes. In an interview with Reuters, Kazuo Momma pointed out that rising bearish sentiment towards the yen could motivate the BOJ to act at its October 29-30 meeting. Despite Governor Kazuo Ueda's cautious outlook on the U.S. economy and his reluctance to accelerate rate increases, persistent yen weakness could shift policy stances. He emphasized that yen depreciation primarily harms government interests by increasing import costs and fueling inflation, potentially eroding support for the ruling party. If the yen's decline accelerates, Sanae Takaichi might tacitly accept an earlier rate hike. With experience in drafting monetary policy and maintaining communication with decision-makers, Kazuo Momma considers yen weakness the sole factor likely to trigger an earlier tightening of monetary policy. Furthermore, Israel and Hamas have reached an agreement on the first phase of the peace protocol, which has bolstered global risk sentiment and may constrain the appreciation potential of safe-haven currencies such as the Japanese yen.

Federal Reserve officials at the September 16-17 policy meeting assessed that the risks to the U.S. labor market have increased sufficiently to warrant rate cuts, yet many participants remained cautious about elevated inflation while discussing the impact of current borrowing costs on economic activity. The minutes indicated that most attendees considered adjusting the federal funds rate target range to a more neutral level appropriate due to rising downside risks to employment. The minutes also reflected a renewed debate among Fed officials, with newly appointed Board member Stephen Miran and others prioritizing labor market protection and showing relative indifference to inflation, while some officials expressed concern that inflation could remain above the 2% target. In September, the Fed lowered the benchmark policy rate by 25 basis points to a range of 4.00%-4.25%. Forecast indicates that among the 19 participants, 9 anticipate two rate cuts, with Miran expecting more substantial easing; the remaining 9 expect a single rate reduction or no further cuts. Federal Reserve Chair Jerome Powell stated that monetary policy remains restrictive but did not commit to additional easing. The Fed's next policy meeting is scheduled for October 28-29, with markets pricing in a 25 basis point cut. Due to the federal government shutdown, the September employment report and next week's consumer price data may be delayed.

In the 1D timeframe, the USDJPY has broken above the ascending trendline and is forming a bullish alignment at the upper Bollinger Band. The MACD has formed a golden cross without signs of weakening momentum, and the RSI is at 71, indicating overbought conditions and a strong bullish sentiment. If the price sustains above 150, it is likely to challenge the previous high near 158.8; failure to hold may lead to a decline toward 148. In the 1W timeframe, the Bollinger Bands are widening upward, with SMAs diverging upward and the MACD line and signal line crossing above the zero-axis, suggesting a potential shift to an uptrend. The RSI at 64 indicates strong bullish momentum. Overall, the upward trend is expected to continue, pending confirmation of sustained bullish weekly candles, which would affirm the strength of the trend. It is recommended to go long at the lows in the short term.

Trading Direction: Buy

Entry Price: 153.03

Target Price: 158.8

Stop Loss: 150

Support: 150, 148.5, 146.6

Resistance: 155, 156.7, 158.8

The main drivers currently influencing the USD/CAD exchange rate remain oil prices and Canadian macroeconomic data. Recently, OPEC's decision to ramp up production again, along with easing geopolitical tensions, has put downward pressure on crude oil. WTI fell back to around $62 per barrel, weakening short-term risk premiums and creating a notable relative headwind for the Canadian dollar. If oil prices continue to decline, support for the Canadian dollar as a commodity-linked currency will erode, likely driving USD/CAD higher.

On the other hand, Canada's economic and inflation pressures are showing signs of a moderate decline — labor market and capacity indicators suggest that the economy is slowing (with metrics such as the unemployment rate and output gap weakening). This paves the way for the Bank of Canada to maintain its interest rate cuts in the coming months.

From the daily chart perspective, USD/CAD shows a clear bullish trend, as seen in the successive higher highs and higher lows of the price candles. Additionally, the 10-day and 20-day moving averages both cross above the 144-day moving average, forming a golden cross, which further strengthens the bullish momentum.

At present, with the price breaking above 1.3910, there is potential for an upward test of the 1.4000 level in the short term. If the pair can decisively break above and hold above this level in the near term, the upside could extend toward 1.4160.

Trading direction: Long

Entry price: 1.3950

Target price: 1.4150

Stop-loss: 1.3880

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

Support: 1.3910/1.3870

Resistance: 1.4000/1.4160

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