• NY opened near 1.1295 after 1.1337 traded overnight, pair's drop extended in NY

• US yield rallied the USD; USD/CNH climbed above 6.7200

• US-German spreads widened which added weight on EUR/USD

• Drops in gold, silver and equities helped underpin the USD buying

• EUR/USD fell sharply, hit a 16-month low of 1.1215 before bouncing a bit

• The pair sat near 1.1230 late in the session, it was down -0.86% in Ny's afternoon

• Techs are bearish; RSIs indicate downward momentum, Bolli bands are widening

• Investors will focus on the US September jobs report as a key risk for Friday
eurusd

(Christopher Romano is a Reuters market analyst. The views expressed are his own)

Danske Research previews tomorrow's US September jobs report.

"Broad USD remained on a strong footing yesterday with EUR/USD trading lower especially towards the European evening. Yesterday's move looked unusual in light of the steepening of the UST curve, modest rebound in term premia and inflation data from both Europe and the US that at face value should have had the opposite effect. This could reflect a shift in positioning towards USD longs, which remain strong portfolio diversifiers during risk-off sessions like yesterday, or fiscal concerns in EUR (not least with OAT-Bund spread still widening).

But it could also mean that the market is more prone towards a tactical correction towards weaker USD, in case oil prices suddenly tick lower, or if tomorrow's US Jobs Report surprises to the soft side," Danske notes.

"The latter is not our base case though, as we continue to forecast NFP at +100k, and remain even more confident after the stronger-than-expected ADP reading yesterday (+90k, cons. +75k). We remain structurally bullish on USD," Danske adds.

LONDON, Oct 1 - Cable is back testing the 1.32 handle as the fixed-income sell-off gathers momentum. With 30-year gilt yields probing above 6%, the rates backdrop is increasingly difficult for sterling, while the dollar remains the clear beneficiary as flight to safety takes hold.

The sharp widening in the Bund-OAT spread has added to the weakness in the euro, the result of which has also weighed on GBP/USD. This is largely a euro-centric move, given that the EUR is under performing across the board, including through EUR/GBP, which has so far helped cushion cable and kept it from the 2026 low at 1.3140.

Elsewhere, the potential for a US diesel export ban continues to hang over markets after reports that the US has told France and Germany to release diesel stocks or risk an export ban. Although, any relief for US prices would likely be short-lived and have only a limited impact on the broader inflation story, the implications for Europe and the UK are clearly negative. That in turn also presents a headwind for EUR and GBP, making it difficult to lean against the dollar's strength.

Even though from a risk-reward perspective, chasing USD higher looks increasingly unappealing. The current combination of rising gilt yields, widening European spreads and a flight to safe-havens means that the dollar can still grind higher, leaving cable under pressure in the near term. The next downside objective remains the 2026 low at 1.3140.
gbpusd hourly chart

Justin McQueen is a Reuters market analyst. (The views expressed are his own) ((Email: ))

CIBC Research discusses USD/CAD outlook and see the pair averaging 1.42 in Q4 before retracting towards 1.39 in Q1 of 2027.

'With the Federal Reserve pulling the trigger on hiking rates, the broad USD has been flying higher, leaving the CAD under pressure, along with other major currencies. And the Fed is set to follow up the September move with another hike in October, given inflation risks tied to still elevated oil prices. That will leave a wider interest rate differential with the BoC, as we don’t agree with the market pricing in a BoC hike this year. Any upside to headline inflation in Canada from elevated oil prices will be offset by the economic slack that has opened up as a result of trade tensions with the US, which is likely to push Canada’s unemployment rate up to 6.6% in the fourth quarter. That will leave CAD under pressure in the near term, with USDCAD likely averaging 1.42 in Q4 ‘26," CIBC notes.

"It’s likely that Trump will be more willing to make concessions for an Iran deal following the midterm elections, which could mean that the October hike will be the Fed's last for this cycle. We also expect trade negotiations with the US to result in the Section 338 tariffs on Canada being rolled back, and for a deal to be reached that avoids the tariffs that were threatened to come into effect in January. We are therefore more optimistic for the loonie in 2027, when prospects for an economic expansion tied to a trade deal with the US could prompt the BoC to hike rates early in the year. We see USDCAD reaching 1.37 by mid-2027," CIBC adds.

(adds link for stretched situation)

• No inflation is anticipated that may influence EUR/USD

• US and EZ 5 year-5 year inflation swaps barely changed in 2026

• No meaningful divergence in interest rates is anticipated

• One year EUR/USD forward swap was 170 pts in Dec 2025, 166 now

• Measures of both US and eurozone inflation are slightly elevated

• EUR/USD has sunk from 1.2084 to 1.1265 in 2026

• Traders have sold short and the drop is becoming stretched

• US and eurozone 5 year-5year inflation swaps, one year
forward swap and EUR/USD

(Jeremy Boulton is a Reuters market analyst. The views expressed are his own)

Morgan Stanley Research previews the US September jobs report due on Friday.

"We estimate September payrolls +65k and private payrolls +75k. The unemployment rate moves sideways at 4.1%, on the verge of a 4.2%, as LFPR inches up. Average hourly earnings remain slow, rising 0.2% m/m and 3.1% y/y," MS notes.

"Our forecast reflects continued strong labor demand, with only limited reversal of the industry payrolls that were above trend in August. Despite resilience in payrolls, the unemployment rate moves sideways (or up) as labor force participation moves sideways (or up).

The Fed's clearly not concerned about faltering labor demand. But a drop in the unemployment rate below 4.0% would further raise the chance of an October rate hike," MS adds.

Goldman Sachs Research summarizes the key findings form the COFER Q2 Data.

"The International Monetary Fund (IMF) recently released the Currency Composition of Official Foreign Exchange Reserves (COFER) for Q2 2026.

"During the past quarter, the headline share of U.S. Dollar (USD) reserves ticked down, though it remains just above the low reached in Q4 2025. Meanwhile, the valuation-adjusted share of Euro (EUR) reserves increased, while Japanese Yen (JPY) reserves declined. Elsewhere, the valuation-adjusted shares of other reserves remained roughly stable," GS notes.

• 0.6956-0.6931 traded overnight, pair fell to levels not seen since July 29

• Overnight gains in US yields, USD & USD/CNH weighed on the pair

• AUD/USD moved upward in Europe's morning however, turned positive

• NY opened near 0.6950, AUD/USD traded up +0.03% in early action

• US yields turned lower while USD & USD/CNH selling took hold

• Rallies in gold, silver and equities contributed to USD's drops, AUD/USD's lift

• Daily doji formed & daily RSI diverged on the low; could be warnings for bears

• US jobless claims, Sep. ISM manufacturing PMI are data risks in NY
audusd

(Christopher Romano is a Reuters market analyst. The views expressed are his own)

Demand for EUR/USD downside protection through options has surged. Implied volatility is at its highest since April, and the market is positioning for deeper EUR/USD declines.

Benchmark 1-month expiry implied volatility broke through the June 24 high at 6.15 early Thursday to reach 6.55, a new high since April. That's a sharp turnaround from the long-term lows at 4.5 in mid-September. The latest gains came after the removal of 1.1300 option barriers, which opens the door to further losses.

Demand has been particularly strong for downside strikes, especially December 18 expiry 1.1100 strike EUR put/USD call options, which is alleged to have traded as much as €2-billion in London early on Thursday. This contract gives the holder the right to sell EUR/USD at 1.1100 on December 18 if that is favourable to the spot price. However, EUR/USD spot doesn't need to be below 1.1100 at expiry for the option to increase in value. That would happen if spot extends losses and implied volatility extends recent gains.

Risk reversals tell the same story. They are a volatility play but a directional one. The implied volatility premium for EUR puts over calls on the benchmark 1-month 25 delta risk reversal has risen from 0.85 to 1.1 so far on Thursday. That beats the late July peak at 0.9 for a new high since April.

Overnight expiry options show the market bracing for Friday's non-farm payrolls. EUR/USD overnight implied volatility has jumped from 9.0 to 11.25 since including the data, a break-even of 53 USD pips in either direction. That's close to levels seen before the September 16 Fed announcement, which shows how seriously the market is taking the NFP as a test of the USD's direction.
EUR/USD FXO implied volatility


EUR/USD 25 delta risk reversals-

(Richard Pace is a Reuters market analyst. The views expressed are his own. Editing by Louise Heavens)

• EUR/USD sinks alongside stocks and bonds

• EUR/USD drops to 1,1288, lowest since May 26 2025

• DOW futures hit three-month low

• US-10 year yield hits 24-year high

• 78.6% of May 2025-Jan 2026 rise 1.1065 to 1.2084 is 1.1283

• Drop toward 1.1065 may follow any fall below 1.1285

•
EURUSD weekly chart

(Jeremy Boulton is a Reuters market analyst. The views expressed are his own)

• USD/JPY 55-DMA is set to fall below the 200 a death cross

• Bearish signal occurs at a point when further action to support yen likely

• Lower oil (Brent now $10 pb below Sep high) to support JPY

• Traders have slashed shorts lessening their restraint on a drop

• Main target for a drop if death cross confirmed is 147.97

• EUR/USD breaks below 100-WMA; 1.1283 Fibonacci support now key

•
USDJPY

(Jeremy Boulton is a Reuters market analyst. The views expressed are his own)

• Thursday's low at 1.1307 EBS is lowest since May 26 2025

• EUR/USD falls below 100-WMA (1.1355) for 1st time since Mar 2025

• Pair rose from 1.08 toward 1.21 on break above 100-WMA last year

• 78.6% of May 2025-Jan 2026 rise 1.1065 to 1.2084 is 1.1283

• Drop toward 1.1065 may follow any fall below 1.1285

• The stronger yuan could reshape the $13 trillion global reserve mix

•
EURUSD weekly chart

(Jeremy Boulton is a Reuters market analyst. The views expressed are his own)

• Shares of Tartana Minerals rise as much as 23.1% to A$0.016, their highest since September 22

• Stock logs its largest intraday pct gain since July 17

• Copper-gold explorer commences drilling at the Nightflower Silver Project in Far North Queensland, marking the first drilling undertaken at the project since 2008

• TAT adds drilling is targeting silver-lead mineralisation within and around the historically defined Digger Lode system

• YTD, stock down over 60%

(Reporting by Tejas Harish in Bengaluru)

• USD/CNH rallies as high as 6.7171, last 6.7153, in thin liquidity

• Briefly pops into Bollinger uptrend channel at 6.7159

• Thurs close above that will trigger momentum toward 55 DMA 6.7318

• USD/CNH inspired by USD/JPY gains; most USD/AXJ pairs rising

• Chinese refiners halt fuel exports beyond HK, Macau

• China, HK financial markets closed Thursday
CNH

(Ewen Chew is a Reuters market analyst. The views expressed are his own.)

• GBP/USD -0.1% in Asia as elevated U.S. yields keep dollar broadly supported

• US 10-year, 30-year yields hit multi-year highs on Thu before paring gains

• Softer-than-expected US PCE, waning Oct Fed rate bets largely shrugged off

• GBP weighed by risk aversion, firm energy prices as US-Iran talks stall

• But fares better than peers on robust Q2 UK GDP; GBP at 6-week high vs euro

• UK tops G7 growth rankings in H1 2026 as economic momentum builds

• Support 1.3230, strong base at 1.3200-05, then 1.3140-1.3160 Mar, June lows

• Resistance 1.3275-80, 1.3300-10; Thu range 1.3223-1.3311,Asia 1.3251-1.3272
UK GDP:

(Krishna Kumar is a Reuters market analyst. The views expressed are his own.)

• AUD/USD flat Thur in quiet trading; trade surplus lower than expected

• AU Aug balance on goods +0.5 bln (poll +2 bln), imports +5.8%, exports +3.7%

• RBA optimistic households/banks well placed to weather an economic downturn

• Futures currently imply both Fed & RBA to hold rates steady at next meetings

• Waning confidence in Fed hike bets may temper pace of AUD downswing

• AUD 0.6920 support will be tough to break, but rout would accelerate below

• Iran fails to restore interim ceasefire, WTI $90.05 a barrel, DXY flat

• Range Asia 0.6940-485 support 0.6920 0.6865 0.6834, resistance 0.7282 0.7660
AUD Hourly Bollinger Study & DXY Daily 55/100/200-DMA

(James Connell is a Reuters market analyst. The views expressed are his own.)

• Australian gold stocks fall as much as 2%, their biggest intraday pct drop since Sept 24

• Gold stocks slip on the back of falling bullion prices [GOL/]

• Gold miners Northern Star Resources and Evolution Mining fall more than 1.5% each

• YTD, AXGD flat

(Reporting by Aamir Sheik Khalid in Bengaluru)

• As if the slump in Asia yesterday to 156.38 didn't occur, USD/JPY back up

• USD/JPY 157.35-76 EBS and again in holding pattern on 157 handle into US NFP

• Market nervous, not ruling out stronger US jobs report surprise

• Even higher US yields likely if data strong, despite contained US PCE o/n

• Doubt too whether dovish Fed Williams-speak Wednesday will cancel Oct hike

• USD broadly bid with crude oil prices still relatively high

• JGB-US Treasury rate differentials remain at or near recent wides too

• Tech-wise, USD/JPY ranging between 156.64 daily Ichi kijun, 158.49 200-DMA

• Hourly shows spot back above 157.57 flattening 200-HMA, pivot today?

• Descending 100-HMA below now at 157.45, hourly Ichimoku cloud 157.18-39

• In options-land, massive $6.2 bln in expiries below between 156.00-75 today

• At 157.00 $1.5 bln, $1.2 bln between 157.19-80, 157.95-158.03 $1.7 bln

• Related comments , , ,

• And , , , also

• US markets , , ,

• On BOJ , Fed-speak , ,

• And , on US PCE , for more click on [FXBUZ]

USD/JPY daily:


USD/JPY hourly:


USD/JPY nearby option expiries into next week:

(Haruya Ida is a Reuters market analyst. The views expressed are his own)

• NZD/USD -0.5% wtd as pair gets scant relief from faltering FFR hike bets

• Futures imply 37.1% chance of Fed hike versus 65.9% for RBNZ hike on Oct 28

• NZD near major support at 0.56265 ytd low, break below would accelerate fall

• U.S. Aug PCE +3.4% y/y (poll +3.7%), following a downward revision for Jul

• Iran says proposal rejected by Trump was to restore interim ceasefire

• WTI $90.06 a barrel, DXY flat, world awaits next Middle East development

• Range NZ 0.56305-355, support 0.5627 0.5581, resistance 0.5995 0.6012
DXY Daily 55/100/200-DMA


NZD Daily 21/55/100-DMA

(James Connell is a Reuters market analyst. The views expressed are his own.)

• AUD/USD -0.7% from Wed 0.6995 high, looks set to challenge 0.6920 support

• U.S. Aug PCE +3.4% y/y (poll +3.7%), including a downward revision for Jul

• Futures pricing now implies chance of Oct 28 Fed rate hike slips to 37.1%

• AU trimmed mean CPI stuck at 3.6% 3-months on end will stoke RBA hawkishness

• AU Aug balance on goods due Thur, Reuters poll consensus 2 bln surplus

• AUD break below 0.6920 would open door on series of technical support levels

• Overnight range 0.69425-88 support 0.6920 0.6865 0.6834, resistance 0.7282
AUD Daily 21/55/100-DMA


DXY Daily 55/100/200-DMA

(James Connell is a Reuters market analyst. The views expressed are his own.)

Morgan Stanley Research previews the US Manufacturing ISM report for the month of September, due on Thursday.

"September manufacturing surveys so far suggest resilient manufacturing activity. Demand remains strong, and labor demand continues to expand. Supplier delivery times have lengthened at a faster pace, while input prices have accelerated sharply," MS notes.

"We expect similar patterns in the ISM. We are tracking the September ISM Manufacturing PMI at 54.5, little changed from 54.6 in August," MS adds.

• NY opened near 1.1355 after 1.1329 traded overnight, pair rallied early

• Below estimate US Aug. PCE drove the US dollar, yields

lower

• 1.1380 traded after the report but the rally was then reversed

• USD, yields turned up and USD/CNH turned positive

• Gold, silver erased the post-PCE gains & stocks eroded some gains

• EUR/USD turned lower, hit 1.1333 in NY's afternoon, traded down -0.03%

• Daily inverted hammer candle and daily, monthly RSIs are bearish influences

• Pair's hold below the 10-DMA, widening & falling Bolli bands add to bear signs
eurusd

(Christopher Romano is a Reuters market analyst. The views expressed are his own)

• NY opened near 0.6975 after 0.6995 traded overnight, pair rallied early

• USD, US yields fell after the below estimate August PCE data

• Gold, silver, stocks rallied on the report, AUD/USD spiked up to 0.6988

• Bulls ran out of gas though and the pair began falling again

• USD buying emerged & yields turned higher while gold, silver stocks moved down

• AUD/USD turned lower, fell below the 76.4% Fibo of the 0.6867-0.7238 rally

• AUD/USD hit a 2-monthlow of 0.6947, it traded down -0.54% in NY's afternoon

• Techs are bearish; RSIs indicate downward momentum, pair below 10- & 200-DMAs
audusd

(Christopher Romano is a Reuters market analyst. The views expressed are his own)

ANZ Research discusses BoE rate outlook and GBP/USD direction.

"We expect the BoE to deliver a shallow tightening cycle, with 25bp hikes in November and February taking the Bank Rate to 4.25%, a profile that is broadly consistent with current market pricing. As a result, additional inflation concerns are unlikely to provide sustained support for GBP. Instead, markets are likely to remain focused on the UK's fiscal outlook ahead of next month's Budget and the relative policy outlook versus the US," ANZ notes.

"With much of the BoE tightening story already priced in and growth momentum appearing soft, risks skew towards GBP/USD weakness," ANZ adds.