Danske Research previews the October FOMC decision on Wednesday.

"We expect the Federal Reserve to keep policy rates unchanged at the October meeting, in line with consensus. Markets price in a 15-25% probability of a hike.  Most central FOMC members have signalled they can wait until December before hiking again, though a few see more urgency. We expect 2-3 votes for a hike," Danske notes.

"We expect the FOMC to hike rates gradually, with 25bp in December 2026 and March 2027, and risks skewed towards more hikes.

EUR/USD could tick modestly higher, and UST curve could steepen on Wednesday evening, but in 6-12M horizon, we forecast EUR/USD declining to 1.10," Danske adds.

• AUD/USD -0.3% from Mon 0.70395 high despite marginal lift in risk sentiment

• WTI -1.8% to $101.47 a barrel as Saudi defence pact seeks peace in Tehran

• AU Q3 CPI release due Wed, Reuters poll consensus 1.2% q/q, +3.9% y/y

• FOMC outcome and accompanying dialogue Wed will be closely watched

• AUD continues to encounter sellers between 0.7033 100-DMA & 0.7053 200-DMA

• Overnight range 0.7013-39 support 0.6865 0.6834, resistance 0.7053 0.7282
AUD Daily 21/100/200-DMA

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

The dollar rose on Monday, supported by higher US two-year Treasury yields ahead of Wednesday's FOMC decision, gains in US technology shares following Anthropic's IPO filing, and weakness in the Brazilian real after President Luiz Inacio Lula da Silva's election victory.

Improving OAT-Bund yield spreads after Moody's left France's credit rating unchanged last week also helped support risk sentiment.

The US central bank is widely expected to leave policy rate unchanged at 3.75% to 4%.

Russian President Vladimir Putin will meet with Iran's Massoud Pezeshkian and Qatar's Sheikh Tamim bin Hamad Al Thani in Moscow. Meanwhile concerns over a potential Hezbollah escalation added to geopolitical risk.

Saudi, Turkish and Pakistani officials met Iranian counterparts in Tehran to ease regional tensions as Yemen's Houthis launched fresh attacks on Saudi Arabia.

British finance minister John Healey will announce plans to increase the minimum wage by nearly 4%, The Times newspaper reported on Monday.

Turnover was uneven ahead of this week's central bank meetings and month-end flows, with the dollar index briefly pushing above its 21-DMA at 101.94 shortly after the US equity open.

EUR/USD retained a softer tone below 1.1200 as higher EU gas prices and limited demand for euros weighed on sentiment, with support at 1.1173 and resistance at 1.1235 ahead of the Fed and ECB decisions.

GBP/USD held above 1.3326 support, underpinned by risk appetite and easing fiscal concerns, but remains capped near 1.3360 as markets await Wednesday's Fed decision.

USD/JPY remained constructive above the lower Bollinger at 156.90 as the dollar and shares advanced though its 55-DMA at 157.71 and 21-DMA at 157.88 may limit gains, keeping the pair centered within its 156.06-158.44 daily cloud.

AUD/USD consolidated below its 100-DMA at 0.7033, with support at 0.7000 as traders await Australia's Q3 CPI, where a strong print could lift the pair toward 0.7100 while a miss risks a return to 0.6900.

Treasury yields were mixed as the curve flattened, with a soft auction pressuring two-year notes. The 2s-10s curve fell about 4 basis points to +27.3bp.

The S&P 500 rose 0.75%.

WTI oil slipped 1.4% though held above $100/bbl

Gold rose 0.47% while copper gained 0.62%

Heading toward the close: EUR/USD -0.17%, USD/JPY +0.36%, GBP/USD -0.14%, AUD/USD -0.13%, DXY +0.13%, EUR/JPY +0.17%, GBP/JPY +0.18%, AUD/JPY +0.17%.(Editing by Burton Frierson Robert Fullem is a Reuters market analyst. The views expressed are his own)

• GBP$ down a touch in NY afternoon trade, -0.1% at 1.3355; NorAm range 1.3357-1.3326

• Pair supported in early NorAm by the rising 10-DMA currently at 1.3326 as risk rallies

• Long-end gilt yields a lower relieves some fiscal concerns ahead of key UK Autumn Budget Oct 28

• Oil off session lows, Nasdaq much higher hints at better outlook for risk broadly, for now

• GBP net spec IMM short remains 3rd largest USD long behind EUR & AUD; Fed Wednesday in focus

• GBP$ res 1.3389 the 100-DMA, 1.3406 50% Fib of 1.3675-1.3137, 1.3470 area daily cloud twist area

• Supt 1.3326 Mon low/10-DMA, 1.3300 psychological lvl, 1.3268 daily low Oct 16

GBP Chart:

(Paul.Spirgel is a Reuters market analyst. The views expressed are his own)

Credit Agricole CIB Research discusses USD/CAD outlook into the October BoC decision on Wednesday.

"Overall, USD-CAD rate differentials have only come off modestly from their recent highs, and therefore the USD/CAD retracement may at this stage struggle to have much longer legs beyond 1.40.

It would especially require obvious hawkish tilts from the BoC when it meets on Wednesday, whereas we rather see the bank refraining from clearly telegraphing extra rate hikes, to instead stick to an open and flexible stance. Aside from that, today’s Canadian retail sales should not give the CAD much of a fillip, even though reassurance that Canadian consumers have not curtailed spending could be welcomed," CACIB notes.

"All in all, after rejecting the attempt to reestablish itself around the 1.44 pivot that prevailed in Q125, USD/CAD could then focus in the near term on holding up near the 1.40 handle," CACIB adds.

(Updates)

• Shares of gold miners gain, tracking rise in prices of the precious metal [GOL/]

• Spot gold up 0.6% at $4,016.37/ounce after hitting $3,975/ounce on Friday, its lowest level since July 20

• Gold prices rise, rebounding from the previous session's over-three-month low, as retreating oil prices tempered inflation concerns ahead of this week's Fed meeting

• Top miners Newmont gains ~1%, Barrick Gold

rises 1.1%

• US-listed shares of South African miners Gold Fields , Harmony Gold , AngloGold Ashanti and Sibanye-Stillwater gain ~1%-2.1%

• Canadian miners Agnico Eagle Mines adds 1.5% and Kinross Gold gains ~1%

(Reporting by Pooja Menon in Bengaluru)

JP Morgan on the USD outlook into this week's October FOMC meeting on Wednesday.

"We see USD-bullish risks around next week’s FOMC decision as the statement/presser could both lean hawkish in response to recent US data that has generally been stronger than expected, against rates pricing that has depriced significantly," JPM notes.

"Many FOMC members see above-target inflation as a temporary energy and tech shock, though some, like non-voter Goolsbee, worry the AI buildout could cause broader overheating, and there is a risk of dissents," JPM adds.

Sterling may struggle to extend its recent advance above 1.34 as a trio of risk events — the October 28 Fed decision, the UK Autumn Budget, and the November 5 BoE meeting — test a rally built on widening UK-US rate divergence and sticky UK inflation.

Cable's climb from the October 14 low of 1.3137 to last trading at 1.3374 has come amid data pointing to elevated UK prices and wages and a higher-for-longer BoE path. It has also been helped recently by an unwinding of GBP shorts put on amid recent French fiscal angst.

LSEG's IRPR implies the BoE may hike twice in 2026 against one Fed move, and further out the BoE strip futures currently indicate the BoE hiking by 116bp by the 2027 MPC meeting, versus a scant rise of 68bp for the Fed.

However, the upcoming UK Autumn Budget and central bank decisions introduce an element of uncertainty. While Prime Minister Andy Burnham has committed to current fiscal rules, market skepticism persists given the ongoing impact of inflation on UK households and the government's mandate to address affordability. Fiscal options are limited, and any perceived deviation from fiscal prudence could undermine sterling's strength.

Technically, GBP/USD meets resistance at 1.3406, the bruised 50% Fib of the 1.3675-1.3137 range, and 1.3470, the daily cloud twist. On the downside, bullish momentum wanes on a close below 1.3325, the rising 10-DMA, with bears then eyeing the October 14 French fiscal-related low at 1.3137.
GBP Chart:

(Paul Spirgel is a Reuters market analyst. The views expressed are his own)

Morgan Stanley Research previews the October FOMC meeting on Wednesday.

"We expect the Fed to hold rates at 3.75-4.0% in October, with two dissents. Chairman Warsh is likely to signal further tightening while emphasizing a gradual, trend-dependent approach. We expect 25bp hikes in December and March, with risks skewed toward more tightening.   No dissents, financial stability concerns, or a benign inflation assessment would be dovish signals. Three or more hawkish dissents, explicit tightening guidance, or heightened concerns about inflation and energy spillovers would be hawkish," MS notes.

"Our FX strategists expect the USD to remain supported despite an October Fed hold, with persistent US inflation, upside risks to global yields and US rate differentials, and European political uncertainty all favoring further USD strength," MS adds.

Bank of America Global Research previews the October BoC meeting on Wednesday.

"We expect BoC to hold at 2.25% on Oct 28, but it is a close call. Markets price in 85% chance of a hike, up from 35% a week prior, following hawkish communication and rising inflation expectations. Weak labor data and core inflation below target favor a hold; headline inflation above 3%, hawkish BoC communication, and rising inflation expectations leave meaningful hike risk," BofA notes

"Either outcome likely comes with hawkish communication and a move higher in Dec hike pricing. A surprise hold could trigger a sharp but short-lived rates rally, with the press conference likely to be hawkish. A hike likely delivers modest bear flattening. We would see a hike as the start of a small adjustment-2 total hikes-not a full hiking cycle," BofA adds.

• Broader G10 FX option implied volatility gains are capped by a lack of FX realised volatility

• EUR/USD 1-12-month curve retreats from last weeks highs - 1-month 6.5 vs 6.8, 1-year 7.0 vs 7.25

• A huge €10-billion+ of 1.1200 strike expiries and related hedging flow will help to shackle the pair this week

• However, risk reversal contacts show the options market remains wary of deeper EUR/USD declines

• Benchmark 1-month 25 delta risk reversals keeps last weeks new recovery high above 0.5 EUR puts over calls

• Risk reversals on other dates maintain a downside over upside strike premium, too

• Related comment - Break-even check: how far central banks could push FX this week
EUR/USD 25 delta risk reversals


Benchmark 1-month expiry FXO implied volatility

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

• USD/JPY has risen from 156.66 to 157.36, so far on Monday, EBS data shows

• The daily cloud currently spans the 156.06-158.44 region, the base limited USD/JPY last week

• There seems to be solid support ahead of the 155.96 level, 50% of the 152.89-159.03 EBS rise

• Note euro firms against dollar and yen ahead of central bank meetings

• The Fed, ECB and BOJ are all expected to hold rates steady despite inflation pressures

Daily Chart


Daily Chart

(Martin Miller is a Reuters market analyst. The views expressed are his own)

• US-listed shares of gold miners gain premarket, tracking rise in prices of the precious metal [GOL/]

• Spot gold up nearly 0.7% at $4,020.05/ounce after hitting its lowest level since mid-July in the previous session

• Gold edges higher as softer oil prices tempered inflation concerns, while investors awaited the US Federal Reserve's policy decision later this week

• Top miners Newmont , Barrick Gold up 1.4% each

• South African miners Gold Fields , Harmony Gold , AngloGold Ashanti and Sibanye-Stillwater

gain between 2.8% and 3.2%

• Canadian miner Agnico Eagle Mines rises 3.3%

(Reporting by Pooja Menon in Bengaluru)

• EURUSD is trading close to 1.1200, where a heavy run of option expiries falls this week

• Expiries and related hedging flows can help contain spot, so this level is worth watching

• Today's 10am NY cut (14.00 GMT) includes €1.7 billion of 1.1200-05 strikes

• Tuesday has €1 billion at 1.1200-10 and Wednesday has €4bn expiring between 1.1200-15

• If Wednesday's Fed fails to excite FX - Thursday brings another €2.5bn at 1.1200, and Friday €3.5bn at 1.1200
EUR/USD FX option strikes expiring Oct 26-Oct 30

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

• Cable has traded a 28 pip range thus far Monday; 1.3360-1.3388

• 1.3388 was also the London and New York session high on Friday

• Support levels include 1.3355 (Thursday low), 1.3335 and 1.3300

• Mindful of the markets, UK's Healey is set to deliver a careful budget Wednesday

• CFTC data: net GBP short fell 20% from 9-year high to 80,420 in week to Oct 20

• Short-covering helped inflate GBP/USD from 1.3137 to 1.3418 (Oct 14-22)

GBPUSD

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

• EUR/USD 1.1235-1.1199 EBS range on Monday

• Upside capped by 21-DMA in past week which is 1.1234 and falling

• German Oct IFO due 9GMT seen 90.0 from 89.9, expectations 90.0 from 90.4

• Oil remains elevated at $115 pb weighing EUR/USD

• Traders large $19 billion bet on euro dropping continues to underpin

• Break beyond 2026 low at 1.1113 or Oct 16 peak at 1.1270 to excite

•
EURUSD

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

• GBP/USD up 0.1% as dollar eases slightly & US crude futures fall 2% in Asia

• Supported by US-coordinated Qatari efforts to de-escalate regional tensions

• Upside limited; Houthi attacks in Saudi Arabia stoke energy supply concerns

• Wed UK budget eyed; two state-backed lenders to get £20 bln capital boost

• UK fin minister expected to announce 3.9% state pension increase-The Times

• Fed rate decision Wed, quarterly results from major US AI players also key

• Resistance at 55-day MA at 1.3411, 200-day MA at 1.3433, 61.8% Fibo @ 1.3469

• Support 1.3350-60, 1.3300-10; Fri range 1.3361-1.3407, Asia 1.33655-1.3388
UK tax:

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

• AUD/USD flat Mon, but +1.9% from 0.68945 mtd low on firming RBA hike bets

• WTI -1.9% Mon but still elevated on supply concerns, gold near 3-month lows

• AU Q3 CPI release due Wed, Reuters poll consensus 1.3% q/q, +3.9% y/y

• FOMC outcome and accompanying dialogue Wed will be heavily scrutinised

• AUD likely to encounter sellers between 0.7033 100-DMA & 0.7053 200-DMA

• Range Asia 0.7027-395 support 0.6865 0.6834, resistance 0.7053 0.7282
Gold Daily 21-DMA


AUD Daily 21/100/200-DMA

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

• AUD/USD -0.1% Mon, activity subdued as markets steady ahead of Fed meeting

• FOMC outcome and dialogue Wed the likely watershed events this week

• Gold consolidates below $4,000 per ounce, trades near 3-month lows

• WTI -1.4% in Asia, but remains elevated as Middle East turmoil continues

• AU Q3 CPI release due Wed, Reuters poll consensus 1.3% q/q, +3.9% y/y

• AUD likely to encounter sellers as it approaches 0.7053 200-DMA

• Range Asia 0.7027-395 support 0.6865 0.6834, resistance 0.7053 0.7282
AUD Daily 21/100/200-DMA


Gold Daily 21-DMA

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

• Haven demand sent JPY higher late last week, USD/JPY now around 157.00

• 157.00 likely the "new" 158.00, the new pivot of sorts

• USD/JPY 156.79-157.14 EBS so far today, off full yen from previous range

• With global equities likely heavy now on AI concerns, JPY haven still?

• Japanese exporter, other offers now seen lower by a full yen

• Japanese importer demand still but on dips only, at Tokyo fixes

• Spot ensconced in 156.07-158.44 daily Ichimoku cloud, tenkan/kijun 157.51/55

• Hourly Ichimoku 156.86-157.07, lower, descending 100-200-HMAs 157.56/86

• Option expiries today include $1.3 bln between 156.75-157.00, supportive?

• Also between 157.75-85 $517 mln, whopping $3.1 bln at 158.00 strike above

• JGB-US Treasury rate differentials narrower, in 2s @280, 10s @218 bps

• IMM CTA yen longs up as of last Tuesday to 69,878 contracts from 50,207

• USD bid elsewhere and working to limit yen gains

• Related comments , , , also

• US markets , , ,

• On IMM CTAs , also , for more click on [FXBUZ]

USD/JPY:


S&P Index:


Nikkei 225:

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

• NZD/USD flat Mon, activity subdued with NZ markets closed for holiday

• RBNZ monetary policy meeting outcome due Wed, 25 bps hike widely anticipated

• FOMC outcome (also due Wed) and associated dialogue could be pivotal for NZD

• Brent crude $116.72 a barrel as Middle East supply concerns re-escalate

• NZD remains clear of 0.5636 21-DMA, move towards 0.5770 zone seems likely

• Range NZ 0.5690-0.5700, support 0.5566 0.5485, resistance 0.5995 0.6012
NZD Daily 21/55/100-DMA

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

• AUD/USD +0.05% early Mon, markets cautious as AI trade concerns linger

• RBA's Hunter acknowledges government spending contributing to inflation

• AU Q3 CPI release due Wed, Reuters poll consensus 1.3% q/q, +3.9% y/y

• Futures pricing currently implies 62.3% chance of 25 bps RBA hike Nov 3

• AUD likely to encounter sellers between 0.7033 100-DMA & 0.7053 200-DMA

• Brent crude $116.72 a barrel amid ongoing Middle East turmoil, gold -0.7%

• Range early Asia 0.7027-385 support 0.6865 0.6834, resistance 0.7053 0.7282
AUD Daily 21/100/200-DMA


Brent Crude Daily & Gold Daily

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

• USD net G10 spec long fell $4.58bn in the Oct 14-20 IMM period; $IDX -0.42%

• Specs unwound USD purchases from previous week's French fiscal tumult

• Concurrently, Fed hike expectations reducing considerably aided USD weakness

• EUR$ +0.34% in period; specs +3k contracts now -134.5k; French fiscal concerns ebb

• $JPY -0.11%; specs +19.7k contracts now +69.9k; BoJ hike path seen outpacing Fed

• GBP$ +0.92%; specs +26.5k contracts now -80.4k; Fed-BoE policy divergence lifts GBP

• $CAD -1.12%; specs +20.1k contracts now -74.7k; oil rise, hawkish BoC boosts CAD

• Next weeks Fed decision, after current period close, in focus for Fed policy clues

Majors w/IMM Perf Chart:


IMM Position Table:

(Paul.Spirgel is a Reuters market analyst. The views expressed are his own)

The dollar found haven support on Friday as oil prices rose and equities slipped ahead of the weekend, with escalating US-Iran tensions and deteriorating consumer sentiment weighing on risk appetite.

President Donald Trump said the US could quickly end Iran war, but questioned whether to pursue a rapid resolution or let the conflict ease gradually.

Iran has prepared plans to target Gulf undersea communications cables if the US and Israel launch new attacks, Reuters reported.

In data, S&P Global's flash PMI showed US business activity cooled in October and the University of Michigan consumer sentiment index edged down to near a record low.

The WSJ reported that the US expected to lift 50% tariffs on some Canadian agriculture and forestry products to aid northern-state Republicans ahead of the midterms.

The dollar index rose above its 5-DMA in moderate FX turnover, but remained capped below the 101.89 21-DMA that has limited gains throughout the week.

EUR/USD gave up an early rally and slipped below 1.12 as higher Treasury yields and oil prices reinforced bearish momentum, with the pair remaining bearish while below the 10- and 21-DMAs.

GBP/USD slipped ahead of the UK budget and FOMC next week, but stays constructive above 1.3355 support, with resistance near its 1.3413 55-DMA and 1.3433.

USD/JPY steadied below its 156.90 lower Bollinger after rebounding from 156.08, retaining a mildly bearish bias in the middle of a 156.06-158.44 daily cloud ahead of next week's central bank meetings.

AUD/USD rose above its 100-DMA at 0.7032, supported by CNH strength despite firmer US yields and the dollar, keeping the near-term bias bullish while above 0.7005.

Treasury yields rose 3 to 4 basis points, leaving the 2s-10s curve steady at 30.9bp.

The S&P 500 slipped 0.43% amid weakness in consumer shares.

WTI oil rose about 4%, filling an outstanding price gap near $101/bbl.

Gold fell 0.75% while copper gained 1.6%.

Heading toward the close: EUR/USD -0.19%, USD/JPY +0.05%, GBP/USD -0.22%, AUD/USD +0.24%, DXY +0.19%, EUR/JPY -0.11%, GBP/JPY -0.15%, AUD/JPY +0.31%.(Editing by Burton Frierson Robert Fullem is a Reuters market analyst. The views expressed are his own)