The EUR/USD pair remains under pressure as the fundamental backdrop stays unfavorable for the euro. Fiscal risks in France, weak economic growth prospects for the eurozone, and the relative strength of the US dollar continue to weigh on the pair ahead of upcoming interest rate decisions from the Fed and the ECB.
Possible technical scenarios:
Judging by the look of things on the daily chart, EUR/USD continues to trade within a broad descending channel, though the strength of its support line remains questionable. Consolidating below the October 14 low of 1.1112 would open the door for a decline toward 1.0938. Otherwise, the pair could stage a recovery toward local resistance levels at 1.1269 and 1.1324 marked with dotted lines.
Fundamental drivers of volatility:
The primary source of pressure on the euro stems from fiscal risks in France and lingering concerns over the country’s budgetary sustainability. This continues to create more tension in the European bond market, leaving the single currency vulnerable. On top of that, sluggish eurozone growth prospects and elevated energy prices are increasing business costs and weighing on overall economic activity.
The US dollar is drawing support from cautious expectations ahead of the FOMC meeting and the Federal Reserve's sustained hawkish stance. Markets are currently pricing in roughly an 89.5% probability that the central bank will keep rates unchanged in the 3.75–4.00% target range on Wednesday. Fed Chair Warsh emphasized the critical importance of price stability while noting the impact of investment and artificial intelligence on aggregate demand. That said, he declined to commit to a preset policy trajectory. This position tempers expectations of aggressive rate cuts, helping the dollar maintain its firm footing.
In the eurozone, the ECB is widely expected to keep its deposit rate at 2.50% on Thursday. Still, accelerated inflation—which remains nearly double the 2% target—supports expectations for a 25-basis-point rate hike in December. While potential ECB tightening could offer some support to the euro, its impact is currently capped by weak economic fundamentals and regional fiscal risks. Consequently, a rate hold without hawkish forward guidance is unlikely to trigger a sustained rally in the euro.
The pair is also reacting to dynamics in energy markets and US Treasury yields. A pullback in Brent crude from recent highs following diplomatic contacts between the US and Iran has slightly eased fears of spiraling European energy costs. Meanwhile, a modest uptick in short-term Treasury yields and general dollar resilience keep pressure on EUR/USD. Overall, the fundamental balance favors the dollar, leaving the pair’s trajectory dependent on incoming signals from the Fed and the ECB, alongside developments surrounding France's fiscal position.
Intraday technical picture:
The 4H chart suggests that EUR/USD is trading near the bottom of the 1.1112–1.1269 range between two dotted lines. If support holds, a recovery within this range is possible. Given this week’s dense economic calendar, however, a breakout of 1.1112 and consolidation below it cannot be ruled out.
The GBP/USD pair is trending lower this week, driven by a resilient US dollar and moderate pressure on the British pound ahead of the UK budget announcement.
Possible technical scenarios:
On the daily chart, GBP/USD reached the midpoint of the 1.3215–1.3630 trading range during its recent recovery, but its increase stalled at the dotted resistance level of 1.3400. A bearish reversal from this level could push the pair back down toward the 1.3215 support level.
Fundamental drivers of volatility:
Market focus is centered on UK Chancellor John Healey's autumn budget, scheduled for presentation on Wednesday. Investors are anticipating a restrained spending plan that adheres to fiscal rules and rebuilds the fiscal buffer to roughly £15 billion. Such measures could mitigate fears surrounding national debt and bolster investor confidence in UK assets. However, because market expectations have already shifted in a positive direction, any unexpected expansion in spending or deterioration in fiscal metrics could trigger disappointment and intensify selling pressure on the pound.
Relative resilience in economic data provides additional support for the pound, enabling the Bank of England to maintain a comparatively tight monetary policy stance. Nonetheless, investors are refraining from taking large positions ahead of the budget release, limiting short-term upside for GBP/USD.
The US dollar’s trajectory will depend heavily on Wednesday's FOMC rate decision and subsequent central bank commentary. While an expected rate hold may not spark a strong market reaction on its own, the Fed's assessment of inflation risks and future policy path will be crucial. If the Fed adopts a cautious or hawkish tone and dampens expectations of near-term policy easing, the dollar could strengthen further, adding pressure to GBP/USD. Conversely, dovish signals could give the pound room to recover.
Should the UK budget confirm a commitment to fiscal discipline while the Fed refrains from toughening its rhetoric, the pound may remain resilient. Conversely, a negative fiscal surprise or a more hawkish Fed stance will create conditions for further downside in GBP/USD.
Intraday technical picture:
Given the current developments on the 4H chart, GBP/USD remains halfway to the support boundary of the 1.3276–1.3400 range. Locally, the pair’s next move depends on whether the 1.3276 level holds. A breakout and consolidation below this support will open the way toward 1.3215 and potentially lower.
The USD/JPY pair has recovered a portion of last week's losses. The US dollar gained support from inflation risks, geopolitical tensions, and expectations of a hawkish Fed, whereas the yen remains under pressure due to the Bank of Japan's cautious stance on interest rate hikes.
Possible technical scenarios:
USD/JPY is rebounding within the 156.41–158.93 range. If the price fails to overcome intermediate resistance at 157.90, another pullback toward the dotted support line at 156.41 is possible.
Fundamental drivers of volatility:
This week's primary market focus is on the rate decisions from both the Federal Reserve and the Bank of Japan. On Wednesday, investors will digest the Fed’s rate decision alongside its policy statement and comments from Fed Chair Kevin Warsh. Against a backdrop of elevated energy prices and associated inflation risks, the central bank may maintain a hawkish tone even if it keeps rates unchanged as expected. Such a signal could boost US asset yields and dollar demand, setting the stage for further upside in USD/JPY.
Upcoming US economic releases—including Q3 GDP and Personal Consumption Expenditures (PCE) price index data on Thursday—will provide additional direction. Strong economic growth and persistent inflationary pressures would reinforce expectations that the Fed will keep interest rates higher for longer. Conversely, signs of an economic slowdown or easing inflation could weigh on the dollar and limit the pair's upside. Thus, market reaction will hinge on how closely the data aligns with current monetary policy expectations.
The Japanese yen remains under pressure ahead of the Bank of Japan’s decision on Friday. Expectations that the central bank will refrain from aggressive rate hikes continue to support carry trade strategies, where investors borrow in low-yielding currencies to fund purchases of higher-yielding assets. This limits demand for the yen, particularly while the spread between US and Japanese interest rates remains wide. Should the Bank of Japan confirm a cautious approach toward policy tightening, pressure on the yen could intensify. Conversely, hawkish signals could trigger a rally in the Japanese currency.
Geopolitical tensions in the Middle East are providing supplementary support to the greenback by driving safe-haven demand. The combination of a persistent risk premium and energy-driven inflation fears enhances the appeal of the US dollar while clouding the outlook for the yen.
Overall, the fundamental balance remains tilted toward further climb in USD/JPY, though a dense calendar of key events elevates the potential for sharp market volatility.
Intraday technical picture:
The 4H chart demonstrates that USD/JPY sits at a crossroads just below the 157.90 level. The price will either break it out and consolidate above it—opening the way toward the target at 158.93—or reverse downward to test the dotted support level at 156.41.
The USD/CAD pair has seen its decline slow down due to broad strength in the US dollar, even as rising oil prices continue to support the Canadian dollar.
Possible technical scenarios:
On the daily chart, the USD/CAD drop was halted by support at 1.4013. If this level holds, a recovery move could take shape, with 1.4108 serving as the immediate target. Otherwise, the decline could continue systematically toward 1.3958, 1.3908, and 1.3861.
Fundamental drivers of volatility:
Market focus this week centers on rate decisions from both the Bank of Canada and the Federal Reserve on Wednesday. Investors are pricing in the possibility of a 25-basis-point rate hike by the Bank of Canada, which could support the Canadian dollar on expectations of tighter monetary policy. However, the ultimate CAD reaction will depend on the central bank's accompanying statement and whether the decision matches market expectations. If the Bank of Canada signals that further tightening will be limited, any CAD appreciation could prove short-lived.
The US dollar continues to draw support from expectations that the Fed might hike rates once more before the end of the year. Rising energy prices are stoking inflation fears, leading investors to pay close attention to Fed Chair Kevin Warsh's post-meeting press conference. Third-quarter US GDP and PCE price index data due Thursday will also be critical. Robust economic indicators and hawkish Fed commentary could strengthen the dollar and cap losses in USD/CAD, whereas dovish signals would increase pressure on the pair.
Geopolitical developments remain an additional factor for the American dollar. Stalled negotiations between the US and Iran, coupled with renewed attacks on Saudi Arabia, are sustaining safe-haven demand. At the same time, the crude oil market continues to underpin the Canadian dollar, given Canada's status as a major oil exporter. As a result, geopolitical factors present a mixed picture for the pair, as demand for the US dollar safe-haven asset counterbalances the CAD support derived from elevated oil prices.
Overall, current fundamental factors do not offer a clear directional bias for USD/CAD. Clarity is likely to emerge following the central bank rate decisions, the Fed’s press conference, and the release of US macroeconomic data.
Intraday technical picture:
Judging by the unfolding scenario on the 4H chart, USD/CAD is attempting to consolidate above the 1.4013 level, setting the stage for a potential price recovery toward the 1.4108 target.
Gold remains under pressure amid a stronger dollar and rising US Treasury yields. Persistent inflation risks are fueling expectations that the Federal Reserve will maintain a restrictive monetary policy stance.
Possible technical scenarios:
Gold prices have pulled back to the key support level of 4002.27, and its stability remains in question. If this horizontal line fails to hold, the decline could extend toward 3886.25.
Fundamental drivers of volatility:
A strengthening US dollar remains a primary pressure factor for the precious metal. The US Dollar Index has reached a near two-week high, making gold more expensive for holders of other currencies and limiting its demand. Further pressure comes from elevated US Treasury yields; because gold yields no interest, it loses relative appeal in an environment of high interest rates and competitive yields on alternative assets.
Surging crude oil prices are exacerbating inflation concerns and raising the odds of further Fed tightening. Expensive oil increases the likelihood of sticky inflation, forcing the US central bank to keep restrictive policy in place for longer. This combination supports both the dollar and bond yields, keeping gold under pressure.
Investor attention is fixed on Wednesday's FOMC meeting. While the market expects rates to stay unchanged at this meeting, the probability of a rate hike in December is currently priced at around 80%. As a result, the central bank's forward guidance will be critical. If the Fed indicates that the pause is temporary, expectations of monetary tightening will solidify, putting additional pressure on gold. Conversely, a dovish shift in tone could weaken the dollar and lift the metal.
Thursday's release of the US Personal Consumption Expenditures (PCE) price index will provide another key reference point. As the Fed's preferred inflation metric, a stronger-than-expected reading would strengthen the case for further rate hikes and accelerate gold's decline, while a cooling inflation print would soften those expectations.
Intraday technical picture:
On the 4H chart, XAU/USD is consolidating around 4002.27. The precious metal stands at a crossroads, balanced between a recovery toward dotted resistance at 4110.87 and a further decline toward the 3886.25 support level.
Brent crude oil continues to strengthen due to lingering supply disruption risks in the Middle East, despite hopes for a diplomatic solution and periodic profit-taking by investors.
Possible technical scenarios:
As evidenced by current developments on the daily chart, Brent crude has consolidated above the dotted 106.40 level and nearly reached the next target at 113.99. The current downward turn creates preconditions for a pullback toward the 106.40 support level. If the upward trend resumes, a consolidation above 113.99 will point toward the next upside target at 120.08.
Fundamental drivers of volatility:
The threat of further escalation in the Middle East remains the primary bullish catalyst for the oil market. Renewed Houthi attacks on Saudi Arabia have reignited concerns over the safety of oil production and transport infrastructure. Given the region's strategic importance to global energy supplies, any worsening of the conflict could expand the geopolitical risk premium priced into crude futures.
Developments surrounding the Strait of Hormuz—a transit route that handled roughly one-fifth of global energy supplies prior to the conflict—remain a major point of focus. Oil flows through the strait are currently operating at about 60% of normal volume, with crude exports from Gulf countries contracting for a fourth consecutive week. These disruptions affect not only delivery volumes, but also logistics, inventory levels, and refinery operations. Furthermore, global middle-distillate inventories remain nearly 5% below their five-year average, exacerbating fears of refined product shortages.
At the same time, diplomatic engagements among Saudi Arabia, Turkey, Pakistan, and Iran have temporarily eased fears of a broader regional crisis. The involved parties agreed to continue talks on peace and security, offering hope for a reduction in tensions. Expectations of diplomatic progress sparked an initial pullback in prices and prompted profit-taking following Brent's recent rally. However, the long-term outlook for a resolution remains uncertain, and new attacks on Saudi Arabia highlight persistent supply risks.
In the near term, Brent price dynamics will depend on the balance between diplomatic signals and real-world conditions affecting oil production and logistics. Sustained diplomatic progress could erode the geopolitical risk premium and trigger a deeper price correction. Conversely, new attacks, worsening conditions in the Strait of Hormuz, or further export reductions will heighten deficit concerns and support higher crude prices.
Intraday technical picture:
Based on what we observe on the 4h chart, Brent crude has entered a consolidation phase in the upper portion of the 106.40–113.99 range. The local uptrend remains intact, leaving the door open for a retest of the 113.99 resistance level.
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