Bank of America Global Research previews the October BoJ meeting on Friday.

"We expect the BoJ Policy Board to keep the policy rate unchanged at 1.25% at the 29-30 October Monetary Policy Meeting (MPM). The most likely vote is 8-1, with board member Takata casting the lone dissent in favor of a hike. In the Outlook Report, we expect the board to judge, for the first time, that "underlying inflation" has reached the 2% target," BofA notes.

"But the BoJ has already shifted to a policy stance that assumes underlying inflation is near 2% and places greater weight on preventing an overshoot. Rather than signaling a further acceleration in hikes, the Outlook Report and Governor Ueda's press conference should reinforce expectations for continued quarterly hikes, with the next move likely in December," BofA adds.

• EUR/GBP eyes 0.8361 (this week's 17-month low) as Lagarde exit news digested

• European Central Bank chief Lagarde will step down from her role on Feb 7

• ECB rate hold expected at 1315 GMT; Lagarde briefing starts at 1345 GMT

• Euro could weaken if Lagarde is relatively dovish; 0.8333 is EUR/GBP bear target

• 0.8333 = GBP/EUR 1.20. UK will reduce "unsustainable" welfare costs, Healey says

• UK lenders approve fewest mortgages since 2023 as borrowing costs rise

EURGBP

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

Oct 29 (Reuters) - EUR/USD could be on the verge of a much bigger slump in coming sessions to new 2026 lows.

The euro was steady on Thursday ahead of a policy decision from the European Central Bank, where the focus will be on the bond market selloff in France. The ECB is set to keep interest rates on hold in a well-telegraphed decision that is likely to be overshadowed by questions about France and ECB President Christine Lagarde's own future.

There is scope for eventual EUR/USD losses, sending the pair below the 2026 low at 1.1113 posted on October 14, especially as the negative 14-day momentum reading is reinforcing the overall bearish structure. A break below the 1.1113 low would weaken the market further and unlock the 1.1000 psychological level for a retest.

Note that EUR/USD's multiple recent failures above the 1.1254 level, which aligns with the 23.6% Fibonacci retracement of the 1.1711 to 1.1113 (August to October) fall, seem to have trapped bulls. A "bull trap" is set when a market breaks above a technical level but subsequently reverses, and is usually a bearish sign.
Daily Chart

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

• AUD/USD tests 0.7036 (ex-resistance level) after extending south from 0.7068

• 0.7036 was last week's high. 0.7068 was five-week high in Asia

• Fed awaits 'accumulation of more information'

• US Sept PCE and advance Q3 GDP data is due at 1230 GMT

• Core PCE forecast up 0.3% MM, 3.1% YY. GDP forecast up 3.2%

• RBA rate decision next week: markets see 83% chance of hike

AUDUSD

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

(Repeats without changes)

EUR/USD heads into the October 29 ECB decision with bearish positioning stretched and downside momentum showing signs of fatigue near key chart support.

The ECB is widely expected to leave its key rate at 2.5% at 1315 GMT, leaving the market reaction largely dependent on President Christine Lagarde's guidance, particularly whether she keeps a December rate rise firmly in play amid renewed concern over French bond-market turmoil.

Speculators are reportedly short euros equivalent to $19 billion, the largest bearish bet since 2015. That leaves the single currency vulnerable to a sharp short-covering rebound if Lagarde sounds sufficiently hawkish, especially with markets assigning a 65% probability to a December ECB hike. Low one-month EUR/USD implied volatility of about 5.8 also suggests traders may be underestimating event risk.

EUR/USD has repeatedly found support around 1.1100, near the 200-week moving average at 1.1108 and the 50% retracement of the 1.0125–1.2084 advance at 1.1105. Holding above that area could pave the way for a rebound towards 1.1200 and 1.1254 despite the broader corrective trend.

Conversely, a cautious tone from Lagarde or escalating concerns over France's fiscal position could put 1.1105 under pressure and trigger deeper losses. However, narrowing US–German 10-year yield spreads (20 bps tighter in October) may help limit downside and support a corrective euro recovery.

The target for a corrective bounce is 1.1341, while a sustained break below 1.1100 would bring 1.0873 into focus.
EURUSD drop stretched, targets should pair bounce


EURUSD

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

• Cable holds above 1.3300 after dollar's dip on relatively dovish Warsh

• Two-year UST yields down to 4.68% in Asia vs 4.78% high Wednesday, pre-Fed

• GBP/USD was sub-1.33 before Wednesday's low-key UK budget

• US Sept core PCE data due at 1230 GMT; 0.3% MM, 3.1% YY forecast

• Biggest market impact of US midterms may be 2028 countdown

• Seven Fed policy meetings scheduled for 2027; six in 2028 (vs eight this year)

GBPUSD

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

• GBP/USD unchanged in Asia after trading in a 1.3274-1.33385 range on Wed

• Dropped to 1.3306 from 1.3329 New York close before rallying to 1.3335

• Supported by decline in US yields; 10 and 30-yr yields drop 5 bps in Asia

• Buoyed by Fed's patient stance on rates as it awaits further inflation data

• UK budget seen as fiscally credible but largely taken in stride

• US GDP, PCE data Thu in focus; US midterms, BoE rate decision next week key

• Consolidation in 1.3275-1.3400 range likely as risk events loom

• Support 1.3305, stronger at 1.3275-85, resistance 1.3350, 1.3390-1.3400
GBP:

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

• AUD/USD flat in Asia but holding higher platform, upside potential growing

• AUD targets 0.7072 55-DMA, break would open topside toward 0.7140 resistance

• U.S. core PCE index due Thur, Reuters poll consensus +0.3% m/m, +3.1% y/y

• RBA Governor Bullock comments that inflation far too high stoking AUD buyers

• Futures pricing currently implies 79.7% probability of 25 bps RBA hike Tue

• Range Asia 0.70475-68 support 0.6865 0.6834, resistance 0.7140 0.7282
AUD Daily 21/55/100-DMA

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

• Shares of Australia's Tesoro Gold decline as much as 9.2% to A$0.735, hitting their lowest level since mid-September 2025

• Shares mark their biggest intraday pct drop since June 11

• The gold explorer discloses A$40 million ($28.24 million) placement at A$0.73 per share, a 9.9% discount to company's last close on October 27

• Says proceeds will be used to advance resource growth and development activities at its El Zorro gold project in Chile

• Adds unit to acquire Inversiones Marlin Limitada's 5% stake in Tesoro Mining Chile SpA, via which company holds interest in El Zorro, thus increasing ownership of the project to 95.4%

• More than 255,000 shares change hands, about 1.5x the 30-day average

• YTD, stock down 39.3%, including session's moves

($1 = 1.4162 Australian dollars)

(Reporting by Subhalakshmi Dey in Bengaluru)

• AUD/USD -0.1% Thur, activity subdued as tide of central bank influence ebbs

• AUD targets 0.7072 55-DMA, break would open topside to 0.7140 resistance

• AU Q3 export prices +1.4% (prior +1.1%), import prices -1.1% (prior +5.7%)

• U.S. core PCE index due Thur, Reuters poll consensus +0.3% m/m, +3.1% y/y

• RBA Governor Bullock says inflation far too high, flags higher OCR

• Futures pricing currently implies 81.6% probability of 25 bps RBA hike Tue

• Range Asia 0.70475-575 support 0.6865 0.6834, resistance 0.7140 0.7282
AUD Daily 21/55/100-DMA

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

• USD/JPY traded a 157.65-158.35 EBS range yesterday into/post-FOMC

• Fed held rates as is as generally expected, says awaiting more data

• Economic assessment raised however, suggests hike in December likely

• USD/JPY inside day so far ahead of BOJ tomorrow, 157.70-85 so far

• BOJ hawkish hold eyed, bar high for even more hawkish take

• Japanese exporter offers eyed above 158.00, importer demand into Tokyo fix

• Technically, USD/JPY ensconced in 156.42-158.44 daily Ichimoku cloud

• At top of ascending hourly Ichimoku cloud between 157.32-77

• Support from flattening 200-HMA near top of cloud at 157.70, 100-HMA 157.45

• Large option expiries mostly to downside today, more supportive than not

• 158.85-95 $1.3 bln, 157.00-05 $1.7 bln, 157.15-31 $310 mln

• Also 157.50-75 $764 mln, above 157.90 $940 mln, 158.50 $661 mln

• JGB-US Treasury rate differentials tad wider, in 2s @285, 10s @220 bps

• Related comments , , ,

• Also ,

• US markets , , ,

• On Fed , , , ,

• And , , for more click on [FXBUZ]

USD/JPY:

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

• AUD/NZD finished +1.4% Wed after simultaneous divergence between RBA & RBNZ

• Pair is +17.7% from its 1.0652 Apr 2025 low, with the rally re-accelerating

• RBNZ's shock hold undermines NZD just as the RBA is upping hawkish rhetoric

• While both central banks are in a hiking cycle, RBNZ has ceded credibility

• AUD/NZD remains a 'buy the dip' scenario, 1.2270 zone a significant support

• Range Asia 1.2524-44, support 1.2269 1.2141 1.1912, resistance 1.2678
AUDNZD Daily Fibonacci Study


AUDNZD Monthly

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

• NZD/USD +0.8% from Wed 0.55831 low, but remains well off pre-RBNZ levels

• Wed's remarkably hawkish OCR hold has investors contemplating future hikes

• RBNZ Governor Anna Breman says OCR to rise higher than previous path

• Futures pricing now implies 74.4% probability of Dec 9 RBNZ hike

• NZD sellers likely ahead of 0.5637 21-DMA, break above may flip narrative

• FOMC holds FFR steady while acknowledging that inflation remains elevated

• U.S. core PCE index due Thur, Reuters poll consensus +0.3% m/m, +3.1% y/y

• Range NZ 0.5611-385, 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.)

Danske Research reviews today's October FOMC decision and press conference.

"The Fed left policy rates unchanged at 3.75-4.00% at its October meeting, in line with consensus and our expectations. Two members dissented, voting in favour of a rate hike. Even though the market reaction was to the dovish side, we read Warsh's comments on the economic outlook as hawkish," Danske notes.

"Therefore, we think the case for further hikes remains strong, and we maintain our call for two 25bp hikes at the December and March meetings. We see risks tilted towards more than two hikes," Danske adds.

• AUD/USD +0.4% late Wed, breaks above 0.7056 200-DMA & touches 5-week high

• Pair approaching 0.7072 55-DMA, breach would reset topside target to 0.7140

• FOMC stands pat on FFR while acknowledging that inflation remains elevated

• RBA Governor Bullock says inflation too high, indicates incoming rate hike

• Futures pricing implies 84.8% chance of Nov RBA hike, Fed Dec hike at 85.3%

• U.S. core PCE index due Thur, Reuters poll consensus +0.3% m/m, +3.1% y/y

• Overnight range 0.70239-645 support 0.6865 0.6834, resistance 0.7140 0.7282
AUD 21/55/100/200-DMA

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

The dollar held firm after the Fed's expected hawkish hold, but later turned lower as Chair Kevin Warsh unveiled a new meeting schedule and said inflation expectations were moving in the right direction.

The FOMC held rates at 3.75%-4.00% in a 10-2 vote and kept the door open to further tightening amid strong growth and elevated inflation.

DXY was eyeing its 21-DMA at 102.02 after being up marginally prior to the Fed announcement, supported by month-end flows, rising Treasury yields and firmer oil prices.

Elsewhere, the Bank of Canada increased its target rate to 2.5%, as expected and raised growth and inflation forecasts, with Governor Tiff Macklem seeing less room for monetary accommodation.

UK finance minister John Healey's budget offered household and business support while seeking to limit bond market strain.

Iran's foreign minister said Tehran remains in contact with mediators on a proposal to end the Middle East war.

EUR/USD held firm above 1.11 on month-end demand, EUR/JPY strength and USD/CNH weakness, with a daily doji and RSI divergence pointing to scope for a short-covering bounce.

GBP/USD held a modest bid above 1.33 and its nearby 21-DMA after a largely market-friendly UK Budget, with focus turning to US data and the Nov. 5 BoE meeting.

USD/JPY edged up after the Fed's expected hold, with a break above 158.44 cloud resistance and the 200-DMA at 158.55 opening scope for further gains, while a drop below the 21-DMA at 157.95 shifts focus to 157.03 lower Bollinger.

AUD/USD remained constructive above its 21-DMA and 100-DMA, with bullish momentum indicators supporting gains as it nears an upper Bollinger and 200-DMA around 0.7055.

Treasury yields turned mixed after Warsh as the curve steepened. The 2s-10s curve jumped 7 basis points to 33.8bp.

The S&P 500 was nearly flat.

WTI oil rose nearly 3% on supply and geopolitical concerns.

Gold slid 0.37% while copper was down marginally.

Heading toward the close: EUR/USD +0.36%, USD/JPY -0.08%, GBP/USD +0.11%, AUD/USD +0.47%, DXY -0.20%, EUR/JPY +0.29%, GBP/JPY +0.12%, AUD/JPY +0.40%.(Editing by Burton Frierson Robert Fullem is a Reuters market analyst. The views expressed are his own)

• NY opened near 0.7025 after AUD/USD traded downward overnight

• The overnight drop reversed in early NY despite firm US yields

• Drops in gold, silver did not deter bulls, 0.7045 traded after Europe's close

• USD/CNH drop to 6.6621 & AUD/JPY rally above 111.40 helped lift AUD/USD

• Muted reaction for AUD/USD after the Fed left rates unchanged as expected

• The pair sat near 0.7040 after the statement and traded up +0.20%

• Techs lean bullish; RSIs indicate bull momentum, pair above 10- & 21-DMAs
audusd

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

EUR/USD has turned positive after falling to the October 14 daily low. Traders holding long positions may still be disappointed, though. Until broader market perceptions of the Fed and ECB move toward a more favorable setting, the pair's upside looks limited.

The rally off the October 14 low stalled near the downward-sloping 21-day moving average and resistance in the 1.1265/85 zone. It had been helped by a narrowing of the US-German 2-year yield spread , which the pair is correlated with. From October 2 to October 19, that spread tightened from roughly -181 bps to -164 bps. It then stalled at a key resistance zone. Since late last week, the spread has been widening again, which is weighing on EUR/USD.

Fed and ECB policy expectations help drive those spread moves. Investors currently expect the Fed to stay hawkish. They think the ECB may lean dovish, partly because of sell-offs in French, Italian and Spanish government bonds. The Fed is focused on fighting inflation, and the ECB faces downside economic risks amid uncertainty. Those perceptions are therefore unlikely to change soon, which should cap any significant EUR/USD rally and keep risks tilted to the downside.

The main threat to this bearish view would be a change in sentiment. If markets begin to price in a less hawkish Fed and a potentially hawkish ECB, EUR/USD could rally sharply and put the current downtrend in jeopardy.
DEUS


eurusd

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

The following are brief expectations for today's October FOMC decision as compiled from the related notes of 10 banks and eFX Sentiment Indicators.

Out of the 10 banks below, 8 banks expect a hold, 1 bank (BofA) expects a hike, and 1 bank (ANZ) sees a 50-50 outcome for a hawkish hold or a 25bp hike. On the Press Conference, the expectations are leaning for Fed Warsh to sound hawkish.

On the USD front, both of eFX's LSI and ISI Indicators point to USD tactical and strategic built into the meeting, suggesting that investors may look to buy USD dips if emerging post the meeting especially vs GBP and CHF.

MUFG: The FOMC is very likely to remain on hold but the OIS indicates close to 10% probability of a hike. A hold would likely be accompanied by a statement similar to the statement in September when the FOMC hiked underlining the fact that the economy remains resilient. There is a risk that there could be some dissents and that would certainly be one signal of the leaning and would strengthen the market’s conviction of a hike in December. A December hike is close to fully priced. If the press conference is similar in tone to previous public engagements by Chair Warsh he is likely to come across as hawkish.

Bank of America: BofA economists are the market outlier in their call for an Oct hike.. We agree the Fed should hike, but markets price a Fed willing to wait until after the election, especially given rising credit risks. Ultimately, persistent inflation could drive further Fed tightening...USD risks skew to the downside on a hold. A convincing, hawkish hold could leave the USD and rates broadly near current levels, while a dovish or poorly explained hold risks renewed Fed credibility concerns, bear steepening in 2s30s and potentially significant USD weakness.

Goldman Sachs: Comments from FOMC participants since their last meeting point to a compromise to raise the funds rate every other meeting. This means that the FOMC is set to skip raising rates at its October meeting but is likely to deliver a second hike in December...We do not expect significant new information from the press conference.

Danske: 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.

Morgan Stanley: 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.

Credit Agricole: e expect the Fed to keep rates on hold. The tightening cycle should resume in December, however, and result in two additional hikes by March 2027, according to our US economist. That being said, ours is a less hawkish Fed outlook compared to the US rates markets, at the time of writing. We continue to think many Fed related positives are already in the price of the USD and expect the October FOMC meeting to confirm that view especially if the Fed Chair Kevin Warsh fails to signal that another rate hike is imminent.

SEB: Unchanged. Key Fed policy makers have signalled a pause to await more data. Warsh abstained from his usual hawkish comments in his appearance at the IMF. Some members have indicated concerns about rising yields, while jittery equity markets may weigh on financial conditions in a situation where the stock market has been highlighted as supportive for the economy. However, high energy prices and more worrisome inflation pipeline in the PPI mean Fed.

Westpac: Given the concerns shown by Committee members over price risks and their collective resolve to return annual inflation to target, the above data could easily justify a follow-up hike at the October meeting. That said, Committee members who have spoken recently have shown patience with respect to assessing the economy and positioing policy. The market has responded, effectively pricing out the chance of an October hike in favour of a December move, which is also our expectation.

ANZ: We see two broad scenarios: Hawkish hold: Rates are left unchanged, but Chair Warsh emphasises that inflation remains too high and a rate hike in December is live. OIS is largely reflecting this outcome (20bp priced) so it would be unlikely to shift the DXY meaningfully. Any dissents will indicate how hawkish the FOMC is tilting. 25bp hike: The Fed responds to recent firm inflation data with a rate rise. Because markets are pricing this as only a modest probability (6%), the USD would likely rally sharply as investors adjust expectations for the timing of further hikes. However, we do not expect such a rally would last. With OIS reflecting a total of two or three hikes to September 2027, it is difficult to see much room for additional hikes to be priced in.

ING: Despite hot inflation prints in September and the Fed having signalled that further action to tame inflation will likely be needed, markets and economists are united in expecting the central bank to leave interest rates on hold at the 28 October FOMC meeting. Ongoing concerns about elevated price pressures mean we do expect a December interest rate rise.

• Cable nudges up to 1.3300 as pound benefits from low-key UK budget

• 1.3300 is Ldn/NY session high. 1.3274-1.3295 was pre-budget range

• UK doubles tax surcharge on banks to 6%. Fiscal headroom £15 billion

• OBR says UK's economic and fiscal position remains very challenging

• Fed rate hold expected at 1800 GMT; Warsh briefing starts 1830 GMT

• Dollar might strengthen on a more hawkish-than-expected Fed hold

GBPUSD

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

CIBC Research reviews today's BoC October policy decision.

"The Bank of Canada raised its overnight rate by 25bp to 2.50% as widely expected today, as it looks to guard against the threat of elevated energy prices becoming a widespread inflationary problem. While the statement admitted that core measures of inflation remained close to 2% currently, it noted rising inflation expectations and producer prices as likely to drive an acceleration ahead, with the Bank's surveys suggesting greater passthrough of higher transportation costs is likely.  The Monetary Policy Report (MPR), utlilising the Bank's new economic model, showed a forecast for headline inflation to still be elevated at 2.6% at the end of 2027, even with the energy component being slightly negative by that time. However, the forecast for the output gap of between -1.25% and -0.25% shows that the Bank still believes that the economy is in excess supply, and the bank expects that new US tariffs will, at least temporarily, slow growth to 0.8% annualized in Q4," CIBC notes.

"As to what's ahead, the statement noted that there "could" be a need for further rate increases but that given continued economic uncertainty that they would "proceed carefully". We currently forecast that the Bank will hold in December before hiking once more in January," CIBC adds.

• AUD/USD rallied to a 1-month high in Asia, hit the 200-DMA, traded 0.7055

• Rally aided by Australia CPI, which upped chance RBA hikes, rallied yields

• Sellers emerged, 0.7024 hit in Europe, NY opened near 0.7030, pair up only +0.04%

• Fall from the high driven by USD buying, US yield

& USD/CNH gains

• Drops in gold, silver and copper also contributed to AUD/USD's slide from the high

• Daily techs warn bulls, RSI didn't confirm the high, gravestone doji candle formed

• Hold above 10- & 21-DMAs, rising monthly RSI gives bulls some comfort though

• Fed decision in focus, investors are leaning towards a hawkish hold
audusd

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

• EUR/USD is hugging the YTD lows after a brief probe of 1.1113 during London session

• The bounce has been shallow, so risks remain firmly skewed to the downside

• Spot is in a narrow range ahead of the Fed decision

• No hike is expected, but rhetoric is likely to stay hawkish, which should keep the USD supported

• Corporate month-end today, which often coincides with dollar strength

• Should we see a clean break below 1.1113, this will open up 1.1000

• Initial resistance comes in at 1.1190-1.1205 (200-hour MA cluster)
EURUSD hourly chart

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

• Overnight expiry GBP/USD FX option implied vols are higher since including the UK budget and US Fed

• The gains show that the market is not ruling out increased volatility from these impending events

• Risk reversals have increased their vol premium and demand for GBP puts over calls this week

• Moves not excessive, but do suggest traders are more concerned about GBP/USD losses than gains

• Benchmark 1-month 25 delta risk reversals from 0.55 to 0.7 - recent highs since May were 1.0 on Oct. 1
GBP/USD 25 delta FX option risk reversals

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