Published: 10/16/2025

Overall Market Sentiment: Cautious risk-on. Markets lean into a near-certain late-October Fed cut while watching China’s rare-earth export controls and the rescheduled U.S. CPI on Oct 24 for curveballs.

Currency Outlooks

🔻 USD: Fed funds futures imply a very high chance of a 25 bp cut on Oct 29 and solid odds of another move by year-end. The 10-year sits near ~4.02–4.05% and the 2-year near ~3.49–3.51%, leaving 2s10s around +55 bp, a backdrop that usually caps sustained USD rallies when policy is easing. Key DXY pivots: 98.20 and 98.80 topside, 98.50 area as a tactical pivot, 97.70 support. A hotter-than-expected CPI on Oct 24 would trim cut odds and lift the front end.

🔺 EUR: Political risk premium eased after France cleared no-confidence hurdles and the OAT–Bund 10y spread moved back inside ~80 bp. Into next week’s euro-area flash PMIs, EURUSD is basing above 1.1550; topside supply likely near 1.1685–1.1730. Risks include a re-widening in French spreads or a USD squeeze if U.S. data firm.

⚖️ GBP: Markets price a high probability the BoE holds on Thu Nov 6. The nearer swing factor is UK CPI on Wed Oct 22; a downside miss would lean GBP softer via earlier cut pricing. GBPUSD buyers are defending 1.3335, with 1.3470–1.3500 near resistance.

⚖️ CAD: Oil softness and a large API crude build (~+7.36 mb) keep CAD rallies shallow unless risk extends. EIA confirmation is due today after the holiday delay. USDCAD holds heavy above 1.40; levels 1.3970 support, 1.4100 resistance.

🔺 CHF: SNB policy rate is 0.00% and Swiss CPI is running near 0.3% y/y, keeping CHF firm on safe-haven demand. EURCHF initial resistance 0.9300–0.9350; support 0.9220. Frame CHF primarily via EURCHF unless U.S. yields lurch.

⚖️ JPY: USDJPY ~151 remains a tug-of-war between wide U.S.–Japan spreads and rising intervention sensitivity. Tokyo reiterated vigilance against “excessive” FX moves; breaks toward 152–155 face headline risk without a fresh U.S. yield spike. Trader bias: fade strength toward ~152.5 with tight risk; buy dips near 150.0 only if U.S. yields stabilize.

🔻 AUD: Australia’s labor market weakened, with unemployment up to 4.5% in September, pushing markets toward a November RBA cut. Keep the levels truthful to spot: AUDUSD 0.6500 support, 0.6670 resistance. Rallies remain vulnerable unless China sentiment improves or the USD fades broadly.

⚖️ NZD: The RBNZ cut 50 bp to 2.50% and kept the door open to more easing, leaving NZD mainly a risk and rates-spread trade. NZDUSD is capped unless U.S. yields fall further; watch 0.57–0.58 as a near-term zone.

Conclusion

🪙 Gold: Momentum stays powerful. Spot printed fresh records around $4,241–4,250, with dips likely shallow while real yields drift lower and policy risk persists.

🛢 Oil: API’s large build and oversupply narratives keep rallies fragile; WTI in the high-50s leaves energy-beta FX on the back foot pending EIA confirmation.

📈 Stocks: Lower long yields and high cut odds still favor quality growth. A CPI upside surprise on Oct 24 would challenge that tilt and hand the baton back to USD.

Week Ahead Heat Map

• Oct 22: UK CPI. A soft print strengthens BoE-hold expectations and caps GBP.
• Oct 24: U.S. CPI. Single most important data point before the Fed.
• Oct 24: Euro-area flash PMIs. A steady read supports EUR on dips.
• Oct 29: Fed and BoC. Markets lean strongly toward a Fed cut; BoC closer to a coin-flip.