Early morning of October 23 (Vietnam time), on the London floor, the price of Robusta coffee futures for November 10 delivery was trading at 11 USD/ton, down 2024 USD/ton compared to early morning yesterday. The price of January 4.487 delivery was trading at 90 USD/ton, down 1 USD/ton compared to the previous day.
Arabica coffee prices on the New York floor for December 12 delivery were trading at 2024 cents/lb, down 249 cents/lb from the previous trading session. Futures for March 2 delivery were trading at 3 cents/lb, down 2025 cents/lb.
Coffee prices fell across the board today. (Illustration photo)
Coffee prices in the country
Domestic coffee prices today recorded a general decrease, fluctuating between 111.000 – 111,600 VND/kg.
Specifically, today’s coffee price in Dak Lak is trading at 111.300 VND/kg, down 200 VND/kg compared to yesterday’s trading session.
Today’s coffee price in Lam Dong is recorded at 111.000 VND/kg, down 200 VND/kg.
Coffee price in Gia Lai today recorded transactions at 111.400 VND, down 200 VND/kg from the previous trading session.
Coffee prices today in Dak Nong also recorded a decrease of 200 VND/kg, trading at 111.600 VND/kg.
Rains returned to most of Brazil’s major coffee-growing regions last week, weather agencies reported, improving growing conditions and raising hopes that the 2025-2026 crop could improve after a record-breaking dry spell.
Rains are forecast to continue at least through October. Increased rainfall in the southeast of Brazil, combined with cooler temperatures, will create ideal conditions for coffee plants to continue to recover and grow. However, farmers and analysts still predict that Brazil’s coffee harvest in 10 will continue to be lower than this year because late rains will prevent the crop from fully recovering.
In addition, the information that many investors, exporters and importers of coffee in the world are interested in is the latest announcement of the EU deforestation-related import regulations (EUDR). Accordingly, the European Union ambassadors have agreed to extend the implementation of the EUDR regulation for another year until the end of December next year. This delay is expected to help stabilize the supply and demand of coffee in the market as coffee importers in Europe will restrain the recent surge in purchases. At the same time, coffee exporters have time to ensure the regulations, thereby ensuring supply for the market when the EUDR officially takes effect.
In addition, the Dollar Index increased by 0,5%, causing the USD/BRL exchange rate to skyrocket right at the opening. The USD/BRL price gap was larger, causing the market to worry that Brazil would boost exports due to earning more foreign currency, which increased pressure on coffee prices.
Gold price corrects from near record highs of $2,749 on cautious optimism.
The US Dollar stays firm with Treasury bond yields on potential Trump win and less aggressive Fed easing.
BRICS Summit could cap Gold price downside, as extremely overbought RSI conditions ease.
Gold price is seeing a minor correction early Wednesday, having hit a fresh record high of $2,749 in the US last session. The sustained strength in the US Dollar (USD) and the US Treasury bond yields weigh on the Gold price.
Gold price suffers from Trump win expectations
The ongoing advance in the US Treasury bond yields and hence, the Greenback could be attributed to two fundamental factors, affecting the yieldless Gold price. With the US presidential election approaching, the market’s expectations for a Trump win are rising, Trump’s potential trade and fiscal policies are seen as inflationary, suggesting higher interest rates. These expectations have triggered a big sell-off in the US government bonds, spiking up US Treasury bond yields across the curve.
Additionally, increased odds that the US Federal Reserve (Fed) will be on a gradual interest-rate reduction path also act as a tailwind to the US yields, boosting the USD at the expense of the Gold price. Markets wager a 91% chance of a 25-basis points (bps) cut in November, the CME Group’s FedWatch tool showed.
The latest comments from San Francisco Fed President Mary Daly backed the expectations of a gradual policy easing by the Fed. Daly said late Tuesday that the economy is clearly in a better place, inflation has fallen substantially and the labor market has returned to a more sustainable path.
Despite, the persistent strength in the US Treasury bond yields and the Greenback on Tuesday, Gold price defied the bearish odds and recorded a new all-time high at $2,749. Escalating geopolitical tensions between Iran and Israel and the revival of the de-dollarization talks underpinned the sentiment around the bright metal.
With a three-day BRICS Summit underway, speculations resurfaced of a gold-backed currency to rival the US Dollar, as central banks from BRICS nations aim to shift to de-dollarization. BRICS countries account for about 20% of global Gold reserves.
That said, any further decline in Gold price could find some support, as day 2 of the BRICS Summit kicks off. Gold traders will also focus on the mid-tier US housing data and Fedspeak for fresh trading impetus.
In the meantime, risk trends and dynamics of the US Treasury bond yields will continue to drive the Gold price action.
Gold price technical analysis: Daily chart
Gold price looks to test the $2,730 round level on its retracement from the record high of $2,749.
A sustained move below the latter could threaten the previous day’s low of $2,719.
The last line of defense for Gold buyers is seen at the $2,700 threshold.
The 14-day Relative Strength Index (RSI) has turned south, easing from the extreme overbought conditions, currently trade near 72.00. The leading indicator backs the latest downside in Gold price but keeps buyers hopeful.
In case of a rebound, Gold price need to take out the lifetime high at $2,749 to ensure a fresh advance toward the $2,800 psychoogical mark.
Ahead of that the rising trendline resistance at $2,756 could act as a stiff resistance.
BRICS FAQs
The BRICS is the acronym denoting the grouping of Brazil, Russia, India, China and South Africa. The name was created by Goldman Sachs’ economist Jim O’Neill in 2001, years before the alliance between these countries was formally established, to refer to a group of developing economies that were predicted back then to lead the global economy by 2050. The bloc is seen as a counterweight to the G7, the group of developed economies formed by Canada, France, Germany, Italy, Japan, the United Kingdom and the United States.
The BRICS is a bloc which intends to give voice to the so-called “Global South”. The alliance tends to have similar views on geopolitical and diplomatic issues, but still lacks a clear economic integration as the governing systems and cultural divergence between its members is significant. Still, it holds yearly summits at the highest level, coordinates multilateral policies and has implemented initiatives such as the creation of a joint development bank. Egypt, Ethiopia, Iran and the United Arab Emirates joined the group in January 2024.
The five founding members of the BRICS alliance account for 32% of the global economy measured at purchasing power parity as of April 2023, according to data from the International Monetary Fund. This compares with the 30% of the G7 group.
There has been increasing speculation about the BRICS alliance creating a currency backed by some sort of commodity like Gold. The proposal is meant to reduce the use of the dominant US Dollar in cross-border economic exchanges. In the BRICS’ 2023 summit, the group stressed the importance of encouraging the use of local currencies in international trade and financial transactions between the members of the bloc as well as their trading partners. The group also tasked finance ministers and central bank governors “to consider the issue of local currencies, payment instruments and platforms” for this purpose. Even if the bloc’s de-dollarization strategy looks clear, the creation and implementation of a new currency seems to have a long way to go.
This week, crude oil prices faced sharp declines due to a confluence of factors that weighed heavily on market sentiment. Concerns over weak demand, particularly from China, and the easing of supply risks in the Middle East were central to the downward pressure on prices. Simultaneously, a series of reports from major institutions like the International Energy Agency (IEA) and the Organization of the Petroleum Exporting Countries (OPEC) lowered global demand forecasts for 2024, reinforcing the bearish outlook.
One of the most significant drivers behind the drop in oil prices was renewed concern over China’s slowing economy. China, as the world’s largest importer of crude oil, plays a pivotal role in shaping global demand. Throughout the week, weak economic data from China, including persistently low inflation and sluggish consumer demand, added to fears that the country’s oil consumption might underperform expectations. Despite Chinese government promises of stimulus measures, the lack of concrete action or significant fiscal boosts left markets jittery. This uncertainty, combined with the deflationary signals from the world’s second-largest economy, prompted investors to downgrade their outlook on future oil demand??.
OPEC echoed these concerns, cutting its demand forecast for China. The organization now expects China’s oil demand growth to reach only 580,000 barrels per day (bpd) in 2024, down from a previous estimate of 650,000 bpd. This revision played a major role in sending both Brent and West Texas Intermediate (WTI) prices down, as markets adjusted to the prospect of weaker consumption growth in the year ahead??.
Middle East Geopolitical Tensions Ease, Supply Fears Subside
Geopolitical risks also played a notable role in oil price movements this week. Tensions between Israel and Iran, which had previously buoyed oil prices on concerns of potential supply disruptions, began to ease. Reports emerged that Israel might refrain from targeting Iranian oil infrastructure, a move that would have potentially disrupted global oil flows. This news significantly reduced the “war premium” that had been factored into prices in recent weeks?. As a result, the market began to unwind some of the recent gains, sending prices lower as the risk of an immediate supply shock diminished.
The easing of Middle East tensions coincided with a broader assessment of global oil supplies, with analysts pointing out that despite ongoing geopolitical concerns, the market remains well-supplied. U.S. crude oil production hit a record high of 13.5 million bpd, further reassuring markets that any disruptions could be mitigated by robust production levels from non-OPEC producers?.
Lower Demand Projections Weigh on Market Sentiment
Both OPEC and the IEA issued reports this week downgrading their global oil demand forecasts for 2024 and 2025. OPEC reduced its forecast for global demand growth to 1.93 million bpd for 2024, marking the third consecutive downward revision. The IEA was even more bearish, projecting demand growth of just 900,000 bpd next year. These lower expectations are primarily driven by weak demand in China, a slowing global economy, and a shift towards cleaner energy sources such as natural gas and renewables??.
The divergence between the OPEC and IEA forecasts highlights differing perspectives on the pace of demand recovery, but both reports point to a well-supplied market in 2024, which adds to the downward pressure on prices. The IEA specifically pointed to increasing production from countries like the U.S., Brazil, and Canada as key contributors to the expected surplus next year??.
U.S. Inventory and Production Data: A bullish sliver of news?
In addition to demand concerns, U.S. inventory data also played a role in shaping the week’s price action. The Energy Information Administration (EIA) reported a drawdown in U.S. crude inventories, with stocks falling by 2.2 million barrels. This would typically provide support for prices; however, the overall market response was muted due to the broader demand outlook. Despite the drawdown, U.S. production continues to rise, further dampening any bullish sentiment. Weekly EIA crude production data suggest that output has risen to a record 13.5 million bpd, signaling that supply remains abundant even in the face of geopolitical risks?.
The drop in inventories, while providing some short-term relief, was overshadowed by the larger narrative of oversupply in the coming year. This reinforced the prevailing bearish sentiment, with traders more focused on the bigger picture of global supply and demand balances rather than temporary inventory fluctuations.
Weekly Light Crude Oil Futures
Trend Indicator Analysis
The main trend is down. It will change to up on a trade through $80.71. A trade through $64.04 will negate the reversal bottom and signal a resumption of the downtrend.
The long-term range is $88.21 to $61.98. The market is currently trading on the bearish side of its 50% level at $75.10. The price level is a potential trigger point for an acceleration to the upside.
The intermediate-term range is $61.98 to $82.43. The market is currently testing its retracement zone at $69.79 to $72.21. Bullish counter-trend traders are trying to defend this zone in an effort to form a potentially bullish secondary higher bottom. Bearish trend traders are hoping for an acceleration to the downside through $69.79.
Weekly Technical Forecast
The direction of the Weekly Light Crude Oil Futures market the week-ending October 25 is likely to be determined by trader reaction to $72.21.
Bullish Scenario
A sustained move over $72.21 will signal the presence of strong counter-trend buyers. If this creates enough near-term momentum then we could see a test of the major 50% level at $75.10. Overcoming this level with conviction could put potential upside targets at $77.76, $80.71 and $82.43 on the radar.
Bearish Scenario
A failure to hold $72.21 will indicate that strong selling pressure is building. It will also confirm that the market is still in “sell the rally” mode. This could drive prices toward support at $69.79. If this fails then prices could collapse down to $64.04.
Outlook: Bearish Near-Term Forecast
Given the combination of weak demand expectations from China, lower global demand forecasts from both OPEC and the IEA, and the easing of Middle East supply risks, the outlook for crude oil prices remains bearish in the near term. While geopolitical factors and U.S. inventory data may provide intermittent support, the broader trends suggest that prices are likely to face continued downward pressure.
With China’s economic recovery still in question and global production levels remaining high, traders should prepare for the possibility of crude prices testing lower support levels in the weeks ahead. If Chinese stimulus measures fail to materialize or U.S. production continues to hit record levels, oil prices could face further declines, potentially moving into the $64 to $62 per barrel range??.
In the absence of any significant geopolitical disruptions or unexpected demand surges, the crude oil market is likely to remain under pressure heading into 2025.
UBS are not overly bearish on EUR/USD. Analysts at UBS Global Wealth Management expect that while eurozone economic data is likely top be missed, the see stronger data impacting euro more than weak data will.
investor sentiment is very downbeat, and thus better data would be the bigger surprise
a series of European Central Bank rate cuts is expected
eurozone growth to recover in 2025
Forecasts above 1.10 for EU/US and towards 1.16 later in 2025.
United States Presidential election spurs concerns about the future of interest rates.
US Treasury yields extend their weekly gains amid a continued run to safety.
XAU/USD keeps reaching higher highs, bulls in full control of the pair.
Gold Price held at record levels on Tuesday, with XAU/USD trading as high as $2,745.01 during American trading hours. The bright metal maintains the positive tone amid the dismal market mood, given tensions in the Middle East and looming US elections.
Speculative interest began pricing in a slower pace of Federal Reserve (Fed) interest rate cuts amid concerns former President Donald Trump may win the presidential race. Trump’s policies on taxes and tariffs are seen as a potential booster for inflation and even increased odds for interest rate hikes. Government bond yields extended their advance, with the 10-year Treasury note currently yielding 4.20%, its highest since late in July. The 2-year note currently offers 4.05%, also a fresh multi-week high.
Meanwhile, stock markets are in retreat mode, with most Asian and European indexes having closed in the red. Wall Street trades mixed, with the Dow Jones Industrial Average posting sharp losses and only the Nasdaq Composite trading in the green.
XAU/USD short-term technical outlook
The risk-averse environment suggests the bright metal will continue posting higher highs, with no signs of bullish exhaustion despite technical readings suggesting overbought conditions.
From a technical point of view, XAU/USD is poised to extend its advance. The daily chart shows that the pair trades a handful of cents below its daily high, with technical indicators reaching fresh highs while heading north. Meanwhile, the bright metal runs well above bullish moving averages, with the 20 Simple Moving Average (SMA) currently at around $2,668, far above the longer ones.
The near-term picture supports an upward extension. In the 4-hour chart, technical indicators resumed their advances, maintaining upward slopes, with the RSI indicator heading north despite being in overbought territory. At the same time, the pair develops above bullish moving averages, with the 20 Simple Moving Average (SMA) currently at around $2,718.
Potential resistance around the 50-Day MA lurks just above today’s high at 2.40. It can be considered along with the interim swing high of 2.44, thereby generating a potential resistance zone from 2.40 to 2.44. Once the 50-Day line is exceeded to the upside, natural gas will have a chance of continuing to rally. In general, Fibonacci ratio analysis considers the 38.2% retracement as a minimum normal retracement. Natural gas reaches its minimum 38.2% retracement target at 2.52.
Correction of 26.8% May be the End
Monday’s low of 2.21 completed a 0.81 point or 26.8% correction from the 3.02 swing high reached in early-October. During the decline, the 61.8% retracement at 2.31 was broken to the downside before support was seen from the 2.21 low, a little shy of a 78.6% retracement at 2.12. Given the sharp drop and signs of support at a potentially significant support zone, it looks like there is a real possibility of a bottom. However, further signs of strength are needed, starting with a clear bullish reversal.
Decisive Breakout Above 2.375 Needed
A more decisive bullish breakout than seen today is needed next with a rally above today’s high of 2.375, followed by a daily close above the high. Subsequently, upward momentum should improve at that point if the reversal takes hold. Yet, yesterday’s wide range day may lead to further backing and filling before the ascent kicks in. Until there is a daily close above today’s high the potential for lower prices and possibly a continuation of the downtrend remains. If the 2.21 fails to retain support, the 78.6% retracement at 2.12 becomes the next lower target.
For a look at all of today’s economic events, check out our economic calendar.
I believe this point in time, if we can break above the 50 Day EMA, I’d be a buyer of this pair. I would have a stop loss at the 1.2975 level, aiming for a move to the 1.33 level.
During my daily analysis of the GBP/USD pair, the first thing I understood by looking at the chart is just how hesitant we are to make a bigger move.
That being said, we also get PMI numbers later this week on Thursday, which could have a major influence on both of these currencies as both the United States and the United Kingdom or release those announcements at different points in the day.
Because of this, think you have got a situation where we might see a bit of volatility between now and then, but ultimately, we will make a bigger decision.
If we can break above the 50 Day EMA, presently trading right around the 1.31 level, then it’s likely that we would see quite a bit of upward momentum in the British pound. Keep in mind that the US dollar is considered to be a bit of a “safety currency”, so therefore you need to be cautious about the overall risk appetite. After all, if we start to see risk appetite get eviscerated, that will help the US dollar strengthen, and that should, at least in theory, drive this pair lower. At that point, I think you have to look at the 200 Day EMA for potential support near the 1.2850 level. Anything below there could be catastrophic for the British pound, but I think it probably would be more or less a result of the US dollar strengthening against almost everything, not necessarily Sterling.
I do believe that we have a lot of noise ahead of us, and I do think that this is a market that will continue to be difficult to get your hands on, so like many of the other major currency pairs, I think that we are essentially in a bit of a “holding pattern.” This is because we are waiting for some type of fundamental analysis and news to get the markets moving. As things stand right now, I think we are simply treading water.
Silver price soars to near $34.50 due to growing uncertainty over US elections and escalating Middle East tensions.
PBoC’s larger-than-expected interest rate cut has improved Silver’s demand as a metal.
The US Dollar refreshes an 11-week high on expectations of moderate interest rate cuts from the Fed.
Silver price (XAG/USD) surges to near $34.50 in Tuesday’s North American session, the highest level seen in over 12 years. The white metal strengthened after Israel launched missiles at Hezbollah’s financial institutions situated in the southern Lebanese cities of Tyre and Nabatiyeh. Escalating tensions in the Middle East region has improved Silver’s appeal as a safe haven.
In the United States (US) economy, growing uncertainty over presidential elections, which are just two weeks away has also strengthened the Silver price appeal. Latest national polls have shown that competition between former US President Donald Trump and current Vice President Kamala Harris is very stiff. Market experts worry that Trump’s victory could undermine the currencies of the US’s trading partners. Trump promised to raise tariffs and lower taxes if he wins elections.
The demand outlook of the Silver as metal has improved after the People’s Bank of China’s policy announcement on Monday in which the central bank reduced one-year and five-year Loan Prime Rate (LPR) by larger-than-expected size of 25 basis points (bps). Silver as a metal has applications in various industries such as Electric Vehicles (EV), wires and cables, and mining etc. The PBoC cuts its key borrowing rates with an outsize margin to boost households’ consumption and spending on infrastructure and to revive the housing sector.
Meanwhile, the US Dollar (USD) posts a fresh 11-week high as investors expect the Federal Reserve (Fed) to reduce interest rates gradually. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, climbs above 104.00.
Silver technical analysis
Silver price strengthens after a breakout above the horizontal resistance plotted from May 21 high of $32.50 on a daily timeframe. Upward-sloping 20- and 50-day Exponential Moving Averages (EMAs) near $30.70 and $31.70, respectively, signals more upside ahead.
The 14-day Relative Strength Index (RSI) oscillates above 60.00, points to an active bullish momentum.
Silver daily chart
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold’s. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold’s moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
USD/JPY flirts with the 151.00 level, driven by rising US Treasury yields but held back by key resistance at the top of the Ichimoku Cloud.
Momentum remains bullish, with the RSI hitting a new high, suggesting further upside towards the 200-DMA at 151.36 and beyond.
A break below 151.00 could see support at 149.68, with further downside risks targeting the October low at 149.09.
The US Dollar prints back-to-back gains against the Japanese Yen on Tuesday but struggles to clear the 151.00 figure decisively. At the time of writing, the USD/JPY trades at 150.92, as the US 10-year T-note yield keeps the pair contained at around current exchange rates.
USD/JPY Price Forecast: Technical outlook
The USD/JPY is testing key resistance at the top of the Ichimoku Cloud (Kumo) at around 150.80/95, with buyers eyeing the 200-day moving average (DMA) at 151.36.
From a momentum standpoint, buyers are in charge. The Relative Strength Index (RSI) is reaching a new higher high, signaling bulls are gathering steam.
A daily close above the 151.00 figure could sponsor a test of the 200-DMA at 151.36. On further strength, the pair could test the July 25 swing low turned resistance at 151.93 before cracking 152.00.
Conversely, if USD/JPY dives beneath 151.00, the first key support would be the Tenkan-Sen at 149.68, ahead of the October 21 low of 149.09.
USD/JPY Price Chart – Daily
Japanese Yen PRICE Today
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the strongest against the British Pound.
USD
EUR
GBP
JPY
CAD
AUD
NZD
CHF
USD
0.02%
0.04%
0.09%
-0.05%
-0.37%
-0.26%
-0.14%
EUR
-0.02%
0.03%
0.08%
-0.07%
-0.41%
-0.27%
-0.16%
GBP
-0.04%
-0.03%
0.04%
-0.08%
-0.43%
-0.31%
-0.19%
JPY
-0.09%
-0.08%
-0.04%
-0.13%
-0.47%
-0.37%
-0.23%
CAD
0.05%
0.07%
0.08%
0.13%
-0.32%
-0.22%
-0.10%
AUD
0.37%
0.41%
0.43%
0.47%
0.32%
0.11%
0.24%
NZD
0.26%
0.27%
0.31%
0.37%
0.22%
-0.11%
0.13%
CHF
0.14%
0.16%
0.19%
0.23%
0.10%
-0.24%
-0.13%
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).
The Dollar and is Euro is trending downward against the US likely to incur further losses over the next five days.
According to forex market trading, the EUR/USD exchange rate fell below the 200-day simple moving average last week, which equates to a significant technical deterioration.
Our forecast model for this week sees the 200-day moving average as a key line, where the exchange rate is in a downward trend when declining and an upward trend when rising.
Commenting on the pair’s performance, W. Brad Bechtel, an analyst at Jefferies, an investment banking and capital markets firm, explains: “200-day moving averages can be key pivot points over long horizons, and currencies, along with other assets, tend to get ‘stuck’ above or below their moving averages for several months at a time.”
EUR/USD Technical analysis and forecast:
Technically, the 200-day moving average is at 1.0871, and early indications suggest that the technical level is now acting as a ceiling, as last week’s bounces failed to clear the hurdle. Therefore, the coming days could see EUR/USD struggle with the pair below the 200-day moving average, and it could be vulnerable to retesting last week’s low of 1.0810.
Fundamentally, the euro is under pressure as financial markets now believe that the European Central Bank will cut interest rates more, and faster, than the US Federal Reserve. This has led to a decline in eurozone bond yields relative to US bond yields, providing a fundamental narrative for the EUR/USD decline. According to analysts at Société Générale, “near-term support for the euro-dollar is at 1.0778, the low of early August. A deeper decline in a repeat of 2016 cannot be ruled out if US yields gain upward momentum after the presidential election.”
Furthermore, the European Central Bank responded last week to the deteriorating inflation dynamics in the eurozone by cutting interest rates by another 25 basis points. This week will see several speakers from the ECB, including ECB President Christine Lagarde herself, who will address this decision and what the future holds. Upside risks for the euro include ECB members seeking to temper expectations about the pace of future cuts, a possibility given how aggressive pricing has been recently.
According to the market, the ECB is now more hawkish than the US Federal Reserve; financial markets are less convinced that there is an urgent need for a US rate cut due to better-than-consensus economic data suggesting that the US economy has gained momentum heading into the final quarter of the year. The Fed will cut US rates again in early November, but not by as much as previously expected (25 basis points, not 50 basis points) and there is a good chance that the Fed will call for caution on future rate cuts.
On another factor influencing the forex market, the US election is less than two weeks away, and analysts say the recent outperformance of the US dollar is linked to signals that Donald Trump is the Favorite to win the vote. His tariff-heavy trade policy and generous tax-cut agenda are believed to support dollar expectations. In this regard, Fouad Razakzada, an analyst at City Index, says: “With Donald Trump gaining ground in the polls, markets have begun to factor in a possible win, which could keep the US dollar supported.”
