• AUD/USD rallied 0.6962-0.6979 overnight, neared the 10-DMA

• Sellers emerged after the 4-session high traded, NY opened near 0.6965

• The pair fell despite USD and US yields moving lower

• Drops in copper, silver also contributed to AUD/USD's move down

• Daily techs now warn that the rally off the October 1 low may be complete

• Daily RSI diverged on the high & a daily inverted hammer candle formed

• AUD/USD bulls likely need above 200-DMA, 0.7040/50 to gain some control
audusd

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

• EUR/USD regains ground above 1.1200 from 16-month lows at 1.1161 on Monday as Oat/Bund spreads narrow

• However, French budget debates are not due until next week so overall recovery could be limited until then

• Relief rally so far extending to 1.1248 where its run in to mild resistance, potential for stops above Friday's high at 1.1261

• However, traders cite 1.1310/30 - where Thursday's breakdown began, as the most likely spot for fresh sales

• FX option prices are retreating from 7-month highs as the spot slide stalls, but shows caution, whilst also warning of 1.1000 risk
EUR/USD daily chart (EBS)

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

• Dollar index struggling to overcome the 200-WMA at 102.15

• Sep's rise from 98.60 halted at 102.28 before drop to 102.05

• The euro is 58% of the dollar index

• Traders are betting euro drops and decline has become stretched

• Dollar index rise is stretched at peak 20-week Bollinger bands

• Another GBP/USD short squeeze is brewing

•
USD index

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

Recent price action in FX options shows a market short of protection against deeper EUR/USD declines. The key levels to watch are 1.1100 and 1.1000, especially the latter, as that round level holds the biggest barrier and trigger-type options, which could leave the market more exposed to further losses.

Implied volatility gauges realised volatility, and it wasn't pricing the recent sharp EUR/USD fall. It has since repriced rapidly higher, from multi-year lows to its highest since March.

That came as EUR/USD fell on the firmer USD and then on French debt worries over recent weeks. On Monday, EUR/USD hit 1.1161, its weakest level since May 2025. Since mid-September, benchmark 1-month implied volatility has risen from 4.5 to 7.3, while the 1-year measure has increased from 6.0 to 7.3. Those are significant gains.

The break below the 1.1300 — and then 1.1200 — barrier options drove demand for implied volatility, especially downside strikes. Hedge funds bought large amounts of 6-12-month expiry digital EUR puts with strikes in the 1.0700-1.0600 zone as a cheaper downside hedge. That added to the option volatility short covering.

DTCC-traded options data shows a significant drop in the number of existing strikes below 1.1100, and an even bigger drop below 1.1000 (see chart). The market is clearly underhedged for sub-1.1000 levels. With volatility much higher, anyone needing cover now has to pay a much higher premium, which should help limit implied volatility setbacks.

Risk reversals remain a favoured way to hedge EUR/USD downside, hence the big rise in the volatility premium for EUR puts over calls. When spot dips, implied volatility rises and holders benefit.

If the 1.1100 and especially 1.1000 barriers give way, the FX options market could find itself short gamma. Dealers would have to chase EUR/USD lower while buying options. That would reward those already holding EUR puts, especially lower strikes, and could speed up the decline beyond what fundamentals justify.

For now, EUR/USD is consolidating above 1.1200 as the French ​spread against Germany narrows. Implied volatility has eased, with 1-month back at 6.5 from 7.3, but the market remains nervous. If EUR/USD comes back under pressure, FX options suggest 1.1100-1.1000 is where the decline could turn significantly more volatile.EUR/USD FX option strikes expiring between Oct 6 and Dec 31



EUR/USD FXO implied volatility


EUR/USD 25 delta risk reversals-

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

• AUD/USD has traded a 14.5 pip range thus far Tuesday; 0.69625-0.6977

• 0.6977 is highest level since Sept 30 (0.69755 was Friday's high)

• It is also the peak since Thursday's 13-week low of 0.6904

• Offers likely pre-0.70 (0.6995 was Sept 30 high, before Oz CPI data)

• CFTC data showed net AUD short hit 9-month high in week to Sept 29

• Fed rate hold expected on Oct 28; RBA rate hold expected in November

AUDUSD

(Robert Howard is a Reuters market analyst. The views expressed are his own)

• German industrial orders fell 10.6% mm in August

• Orders were expected -1.05 mm

• Range of expectations from 24 polled was -5.0 to 1.5%

• EUR/USD which has been pummelled of late static near 1.12 in reaction

• Drop appears stretched with traders short looking for opportunities to buy

•
German industrial orders

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

• Cable eyes 1.3200 after extending south from 1.3232 (Asian session high)

• Bids under the figure have repeatedly propped GBP/USD since Thursday

• 1.3193 was Monday's London session low (after drop from 1.3238)

• Monday's Asian session low was 1.3191 (as EUR/USD fell to 17-month low)

• 1.3184 was Friday's low. 1.3182 was 14-week low on Thursday

• UK Sept construction PMI data due at 0830 GMT; 44.8 expected

GBPUSD

(Robert Howard is a Reuters market analyst. The views expressed are his own)

• Shares of Australia's AusQuest rise as much as 4.8% at A$0.045, hitting their highest level since September 29

• Mineral exploration co says geophysical survey at its Cangallo copper project in Peru identified several new drilling targets

• Adds, according to the survey, the copper porphyry system is much larger than previously drilled

• Co believes these targets could increase the eventual copper resource at the site if drilling is successful

• Stock down 16% YTD

(Reporting by Shravya Marakini in Bengaluru)

• EUR/USD seeing some bounce in Asia after plunge to 1.1161 EBS yesterday

• Asia so far 1.1214-31, concerns still bounce could be of 'dead-cat' variety

• France fiscal-political concerns, concerns too over upcoming Spain elections

• Risk to remain down? USD still broadly bid across the board, upside limited?

• EUR/USD low yesterday weakest since 1.1131 May 29, 2025, key support?

• Break below 1.1100 could see moves even lower, 1.1065/89 lows May 12/13 '25

• Resistance from descending hourly Ichimoku cloud currently between 1.1252-76

• Cloud to fall later to 1.1217-48, if spot holds, likely move into cloud

• Also descending 100-HMA currently in cloud at 1.1270, 200-HMA 1.1321 above

• 50% retracement of 1.0125-1.2084 move February '25-January '26 1.1045 below

• Large option expiries today mostly to upside, 1.1245-50 total E1.2 bln

• Also between 1.1300-50 strikes total E2.6 bln+

• Recent EUR weakness seen likely to keep ECB from rate hikes at this time

• Related comments , , ,

• And , , also

• Related analysis , for more click on [FXBUZ]

EUR/USD daily:


EUR/USD hourly:


EUR/USD monthly:

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

• AUD/USD -0.1% Tue, holding small wtd gains in CN holiday impacted markets

• AU Oct consumer sentiment falls sharply according to Westpac survey

• AUD 0.6928 52-WMA pivotal, clean break below will re-accelerate fall

• French debt concerns weigh on EUR; broader global bond sentiment negative

• U.S. Aug international trade due Tue, Reuters poll consensus -102.0 bln

• Range Asia 0.6963-735 support 0.6904 0.6865 0.6834, resistance 0.7282
AUD Weekly 52-WMA

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

• Higher US yields, broad USD strength buoying USD/JPY, at 157 highs

• Asia so far 157.85-158.00 EBS after 157.46-158.30 range yesterday

• Inside day likely with focus still more on EUR, EUR weaker still o/n

• JGB-US rate differentials below recent highs but still at recent wides

• Technically, USD/JPY holding in core range between daily Ichi kijun, 200-DMA

• Daily Ichimoku kijun flat still at 156.64, 200-DMA up tad at 158.51

• Support today from area of 157.88 hourly kijun, 100/200-HMAs 157.71/77 below

• Hourly Ichimoku cloud mostly flat and between 157.64-70

• Nearby option expiries today 158.00-10 total $1.5 bln, 158.25-80 $1.9 bln

• Below total $4.8 bln between 155.90-156.00 but out of market's range

• Related comments , , ,

• Also

• US markets , , ,
USD/JPY daily:


USD/JPY hourly:


USD/JPY nearby option expiries this week:

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

• Shares of Australia's Great Southern Mining rise as much as 7.5% to A$0.022, posting their biggest intraday pct gain since September 23

• Gold explorer says initial soil sampling at its Glenburgh South project in Western Australia (WA) identified two gold anomalies

• Stock has fallen 46.3% this year, including day's move

(Reporting by Roshan Thomas in Bengaluru)

• NZD/USD +0.4% from Mon 0.5581 low, significant chart level holds 1st attempt

• 0.5581 the equal low traded in 18-months, also reached Nov 21 2025

• Oil prices ease, U.S. equities rise, bonds remain under pressure globally

• EUR/USD near 17-month lows amid French debt worry, DXY up 0.2% late Mon

• NZD pushing upper hourly Bollinger band, uptick likely to run out of steam

• 0.5845 post-'tariff-day' 2025 low looks to be in play as NZ sentiment sours

• Range NZ 0.55955-0.5606, support 0.5581 0.5485, resistance 0.5995 0.6012
NZD Hourly Bollinger Study & 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.)

Morgan Stanley Research previews the September FOMC minutes due on Wednesday.

"We and markets continue to decipher the new FOMC's reaction function," MS notes.

"The upcoming minutes may help show how patient or impatient FOMC members are for the return to target inflation, how much they've taken on oil price pressures as threatening that target, and how they're viewing the recent strengthening in growth and labor market indicators," MS adds.

• AUD/USD +0.5% from Mon 0.6933 low; Nasdaq hits record high & oil prices ease

• EUR/USD at 17-month lows amid French debt concerns, DXY finishes +0.2% Mon

• Global bond sentiment remains negative, UST yield curve steepens

• AUD may extend topside short term, but unlikely to break broader downtrend

• Sellers should emerge well ahead 0.7056 100-DMA, target break below 0.6900

• Overnight range 0.69435-735 support 0.6904 0.6865 0.6834, resistance 0.7282
DXY Daily 55/100/200-DMA


AUD Daily 21/55/100-DMA

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

• Cable softer during NY trade, but another 1.32 false break offers dip-buyers hope

• The pair continues to draw support from EUR/GBP cross selling

• However, rebound attempts remain shallow, keeping spot in consolidation

• Another lift in US yields (10y nearing 5.35%) underpins USD

• On the technical front, the 200-hour MA cluster at 1.3237-60 is also a cap on cable

• Additional hurdles sit at 1.3274 and 1.3300. Support comes in at 1.3140-60
GBPUSD vs 200-hour MA

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

• NY opened near 1.1200 after EUR/USD traded 1.1261-1.1161 overnight

• EUR/USD traded a tight 1.1217-1.1187 range in NY, down -0.43% late in the day

• USD, US yield gains, wider spreads capped the topside

• Rallies in stocks, silver & USD/CNH's drop from its high limited EUR/USD downside

• Despite the lack of action in NY's trading session technicals remain bearish

• Daily, monthly RSIs & widening Bolli bands indicate downward momentum remains

• EUR/USD's hold below the 10-, 21- & 55-DMAs add to the bearish tech signals
eurusd

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

ANZ Research likes buying NZD/USD on dips below 0.56.

"We think this sell-off has been extreme and is reflecting multiple factors: weaker global risk sentiment, NZD’s lower carry relative to the AUD, the negative terms of trade shock from elevated oil prices and the USD firming. NZD/USD is fundamentally undervalued, but underperformance may persist until the next RBNZ and Fed meetings," ANZ notes.

"Although the pair may consolidate over the next few weeks, year-end seasonality should provide some upside. Any easing in Middle East tensions would support high-beta currencies such as the NZD. We therefore view dips below 0.56 as a buying opportunity," ANZ adds.

USD/JPY sellers may have to endure a bit more pain before seeing meaningful gains.

The latest leg higher was helped by a report that Japan's government pension fund skipped allocation discussions at its September meeting, undermining one of the catalysts behind the yen's early-September rally.

Although the pair continues to orbit the key 158 level, the broader backdrop still favors the dollar. Haven demand remains supportive as the Fed maintains a hawkish stance and as concerns about rising debt burdens weigh on global bond markets.

At the same time, the technology-led equity rally at the start of the fourth quarter has reduced demand for traditional safe havens, limiting yen strength even as carry-trade volatility increases.

As a result, buyers continue to emerge on dips toward 157, while risk reversals are gradually paring near-term expectations for further yen appreciation. Intervention concerns and weakness in EUR/JPY tied to European fiscal stresses are slowing the advance, but they have yet to reverse the broader uptrend.

In the near term, USD/JPY appears more likely to challenge its 200-day moving average and potentially probe the 159 area before a more durable yen recovery takes hold.

Longer term, the yen's outlook remains tied to the pace of Bank of Japan tightening, the Fed outlook, equity market stability and incoming economic data. BOJ Deputy Governor Shinichi Uchida noted that the global AI boom has supported financial conditions, while warning that markets could face setbacks if profit expectations prove overly optimistic.

As such, building long-yen positions on approaches toward USD/JPY 160 may offer a more favorable risk-reward setup, either as the policy outlook gradually turns more supportive for the yen or as a hedge against potential bouts of market turbulence.
Yen

(Robert Fullem is a Reuters market analyst. The views expressed are his own.)

Credit Agricole CIB Research revises down its USD/JPY forecasts.

"Without Japan’s Government Pension Investment Fund (GPIF) changing its asset allocations towards domestic assets, USD/JPY could struggle to head significantly lower while oil prices remain elevated and the BoJ only matches Fed rate hikes.

While we cannot know the new asset reallocations of the GPIF, which could be revealed in early November, we judge the most likely new allocations towards domestic bonds of between 31-35% combined with no increase or a modest increase in domestic equity holdings to 31%. Such reallocations would generate repatriation flows of USD115- 138.1bn, resulting in short-term fair value for USD/JPY between 148-150," CACIB notes.

"We are lowering our USD/JPY forecast profile, now expecting the exchange rate to average 156 in Q426 (down from 163) and to continue its downward path to 150 in Q427 (previously 156)," CACIB adds.

(Typo in title corrected)

• USD/CAD is hovering around levels last seen in April 2025

• Although repeated failures to break cleanly through 1.4248 suggests topside momentum is slowing

• There is no clear catalyst for a CAD rebound yet

• US yields are continuing to drift higher (10s at 5.29%), which keeps dollar dips shallow and biased to the upside

• Initial support comes in at 1.4180 (200-hour MA), with a deeper cushion at 1.4126-40. Resistance: 1.4300

• In the near-term, the bias leans towards consolidation leading into the CA labour market report (due Oct 9)
usdcad hourly chart

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

Goldman Sachs Research likes short EUR/AUD exposure in the near-term.

"Looking ahead, we see two-sided risks for the currency. Many of the macro tailwinds that have supported AUD this year remain intact, including resilient global growth, terms of trade tailwinds, a complicated but supportive China macro connection, notable fiscal resilience, and a strong carry offering. As a result, we see scope for further AUD outperformance with our preferred expression being short EUR/AUD," GS notes.

On the domestic front, however, downside risks from the housing and consumer sectors remain a concern. And while our economists have flagged the possibility of additional tightening if inflation surprises to the upside, they expect the RBA to hold policy until easing in 2H2027," GS adds.

JP Morgan sees EUR/USD a sell-on-rallies in the near-term.

"Sunday gaps are always questionable so trying to gauge the appetite to sell the rally here as all we will do this week is chase the Bund- OAT spread tick for tick given the overall lack of meaningful data on the calendar," JPM notes.

"So levels to watch are the fresh low of 1.1161 last night and 1.1109 Fibo retrace support on the downside. On the top a close above Friday’s highs of 1.1285 would represent an outside day reversal and 1.1310/30 was the breakdown level on Thursday," JPM adds.

By Justin McQueen

LONDON, Oct 5 - USD/CAD has swung from one extreme to the other since September, with RSI moving from oversold territory to firmly overbought. Spot is now trading around levels last seen in April 2025, although repeated failures to break cleanly through the year-to-date high at 1.4248 suggest that topside momentum may be starting to lose traction.

That said, the RSI being overbought is not in itself a compelling reason to fade the move. USD/CAD has shown a tendency in recent months to trend further and for longer than expected, leaving short-term counter-trend positions vulnerable. Historically, when RSI first breaks above 78 — which occurred last week — spot has generally continued to grind higher over the following 5–10 sessions.

However, in the medium term, the signal is more constructive for CAD. Over a 60-day period, USD/CAD has more consistently pulled back after entering this degree of overbought territory, with the main exceptions occurring during recessionary periods, notably in 1998 and 2008. In short, the near-term bias remains for a possible further squeeze higher, but the risk-reward for chasing topside looks increasingly less attractive, particularly if spot fails to sustain breaks above 1.4248.
CAD RSI signals

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