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Overall Market Sentiment: Risk-on. Hopes of a US–China détente plus near-certain Fed easing are lifting cyclicals and commodities, pressuring safe havens and capping broad dollar upside. A Trump–Xi meeting in Beijing this week is in focus after reports of a draft framework.
Currency Outlooks
🔻 USD: Markets price an almost certain 25 bp Fed cut on Wednesday, with a second move by December still on the table after softer September inflation. Core PCE is expected around +0.2% m/m and 2.9% y/y later this week. The curve is modestly positive with 2-year near ~3.5% and 10-year near ~4.0%, a setup that usually caps late-cycle USD rallies. Key levels: DXY 99.20 support, 99.90 resistance. Nuance: if Wednesday’s guidance leans hawkish, a squeeze is possible.
⚖️ EUR: Focus turns to Germany’s Ifo today and euro area flash HICP on Friday. With the ECB widely expected to hold on Thursday, EURUSD trades the USD path and sentiment around the trade thaw. Levels: 1.1600 first support, then 1.1540, with 1.1730–1.1760 resistance.
🔻 GBP: UK CPI held at 3.8% y/y and services near 4.7%; markets price a meaningful chance of a BoE cut by December, which keeps GBP rallies shallow into next week’s meeting. Watch 1.3300 support and 1.3470 resistance in GBPUSD.
⚖️ CAD: The BoC is expected to cut 25 bp on Wednesday; a Reuters poll shows about 70% of economists see a move. Oil is firmer on détente hopes, adding a cyclical tailwind. USDCAD resistance 1.3780–1.3820, support 1.3650.
🔻 CHF: SNB policy rate is 0% and inflation is near 0.2% y/y. In a risk-on tape the franc usually softens, with EURCHF 0.9280–0.9400 the watch band, while USDCHF should follow USD levels; think “high-0.8s” rather than a single print.
🔻 JPY: The BoJ is widely expected to hold on Thursday, with only low odds of a hike priced. USDJPY remains underpinned by firm US yields but sits in the 151.5–153.0 resistance zone where intervention risk perception rises as 155 approaches.
🔺 AUD: Australia’s unemployment rate jumped to 4.5%, and markets price elevated odds of a November RBA cut. Risk-on and firmer metals help offset. Watch 0.6480 support and 0.6600 resistance ahead of Q3 CPI.
🔻 NZD: The RBNZ cut 50 bp to 2.50% and signalled openness to more easing; Q3 CPI printed 3.0% y/y. NZD rallies remain fragile on spreads. NZDUSD 0.5800–0.6000; EURNZD 1.93–1.96.
Conclusion
🛢 Oil: Bid on sanctions noise plus détente hopes. Brent ~66, WTI ~62; dips likely supported while trade optimism holds.
🪙 Gold: Softer as real yields stabilize and risk appetite improves after last week’s run, but buy-the-dip interest lingers if the Fed stays dovish and the dollar eases.
📈 Stocks: Tone is constructive into a packed central-bank week and a potential Trump–Xi framework. Upside leadership should skew to cyclicals and value if yields grind sideways and oil stays firm.
🧠 Trade thaw + Fed cut odds tilt dollar softer
Published: 10/27/2025