US Dollar Index (DXY)

The US Dollar Index traded mostly above 102 last week. A well-received 30-year US Treasury auction drove yields lower, showing that investors remained willing to buy longer-dated government bonds despite the recent sell-off. Markets also assessed lower oil prices after President Trump described US–Iran discussions as productive and said Washington would avoid strikes before the midterm elections. At the same time, markets priced roughly an 82% probability of the Fed leaving rates unchanged this month and an 81% probability of a December hike. On Thursday, Fed Governor Christopher Waller said further tightening might be needed to return inflation to the 2% target, while emphasising that policymakers retain flexibility over the pace and leaving open the possibility of a pause in October.

Last week, DXY consolidated near its highs as bullish momentum faded. After its earlier rally, price stopped setting new daily highs and entered a period of consolidation and positioning. It briefly tested overhead resistance before retreating, then fluctuated within a range. The weekly candle had a small real body, reflecting a slower rate of ascent. Daily RSI retreated from elevated readings, MACD histogram bars contracted and the MACD lines began converging. The risk of bearish divergence is growing, although no definitive trend reversal has been confirmed. The market continues to price a “higher for longer” Fed stance, but softer payrolls and core PCE readings have limited expectations for additional tightening. Intermittent safe-haven demand linked to the Middle East has provided support and contributed to sharp, temporary moves.

DXY repeatedly failed to clear the recent high near 102.50 on Monday, Wednesday and Thursday. Even Waller’s call for further tightening on Thursday was insufficient to sustain a breakout. The index remained around 102.00, within the range in place since 1 October. The ten-year US Treasury yield near 5.30%, along with another sell-off in European sovereign debt, helped keep the dollar supported. Futures markets implied around a one-in-five chance of a hike at the 27–28 October meeting and nearly 80% at the 8–9 December meeting. DXY briefly approached 102.50, failed to surpass Monday’s high, slipped to just above 102.00 and then rebounded. Traders appear already to have priced in the possibility of “another hike at any meeting”, rather than a hike at one particular meeting.

Technical outlook for next week: Broad consolidation at elevated levels is the central scenario. Strong overhead resistance may not yield immediately, while 101 is an important downside threshold. The daily structure remains broadly constructive as the index is above 101.60 (14-day moving average), an earlier breakout level that could now serve as support. RSI around 71 indicates overbought conditions, reflecting strong prior momentum but also the risk of profit-taking. Overbought readings do not, by themselves, confirm a reversal. Holding 101.60 would preserve the bullish structure; a decisive break below it would increase the risk of a deeper retracement. With price capped around 102.50, a short bias targets 101.61 (14-day average) and 101.50 (repeated lows since 1 October), followed by 101.00 on a break. A daily close above 102.53 (5 October high) would invalidate the short view and bring 103.00 into focus, followed by 103.53 (7 April 2025 high).

AUD/USD

The Australian dollar edged toward just below US$0.70, trading above its multi-month low as a sharp fall in Treasury yields weighed on the US dollar. A rally in US government bonds pulled yields back from 24-year highs, easing pressure on global markets after weeks of heavy selling. Lower yields helped AUD maintain a modest weekly gain, potentially its first positive week in five. Focus now shifts to Australia’s September employment report on Thursday, after the unemployment rate unexpectedly rose to 4.6% in August. Further labour-market deterioration would strengthen the case against another RBA rate hike. Following last month’s hike, the cash rate stands at 4.60%. Markets assign around a 30% chance of a hike in November and 46% in December. Traders will also watch the RBA’s 13 October minutes and the third-quarter CPI release later in the month, with underlying inflation expected to remain elevated.

Australian households appear more resilient to RBA rate increases than expected. The household debt-to-assets ratio has fallen to its lowest level since 1997, and monetary-policy transmission through household cash flow may be weaker than in the past decade. This contrasts with warnings in internal RBA documents. If borrowers have become less sensitive to rate rises, the central bank may need to tighten further to restrain demand, providing a theoretical argument for a fifth hike in November. The major banks disagree on the November decision, and September-quarter inflation data are due on 28 October. Oil above US$100 a barrel keeps inflation pressure elevated and leaves the RBA limited room to relax its tightening stance. Further rate rises could lend some support to AUD, particularly against currencies whose central banks are closer to the end of their tightening cycles.

AUD/USD staged a modest rebound from low levels last week. The pair touched around 0.6932 early on and subsequently tested 0.6990 (14-day moving average) to 0.7000 (psychological level) several times, without a sustained breakout. The weekly candle finished slightly higher, but the medium-term structure remains weak. This is a corrective bounce rather than a confirmed reversal. Price remains constrained by the five- and ten-day moving averages. RSI fluctuated around 36–40; bearish momentum weakened, but buying conviction remained limited. A relatively firm US dollar pressured AUD, while commodity prices offered some support. Softer Australian inflation readings and reduced expectations of further RBA tightening constrained the rebound, leaving the pair in a 0.6930–0.7000 range.

Technical outlook for next week: The medium-term bias for AUD/USD remains bearish, with the current bounce best seen as corrective. A sustained move above 0.7037 (200-day simple moving average) would be needed to improve the short-term structure. At around 0.6975, the pair remains below the 200-day SMA at 0.7037 and other trend filters: the 100-day SMA at 0.7049 and 65-day SMA at 0.7064. Price is only marginally above the 78.6% Fibonacci retracement at 0.6945, suggesting tentative stabilisation. The 14-day RSI of 38.62 is approaching oversold territory, consistent with persistent downside pressure. Supports are 0.6900, 0.6887 (lower Bollinger Band) and 0.6865 (30 June low). Resistance begins at 0.7008 (61.8% Fibonacci retracement), followed by the 200-day SMA at 0.7037, the 50% retracement at 0.7052 and the 65-day SMA at 0.7064.

GBP/USD

GBP/USD traded in a tight 1.3185–1.3285 range last week, forming a small weekly doji without a decisive breakout. The broader weekly structure remains bearish, with a succession of lower highs; the rebound has not reversed that trend. Easing oil prices and more stable global bond markets improved risk appetite, while relatively hawkish comments from Bank of England officials also supported sterling. President Trump ruled out striking Iran before the November midterms and described peace discussions as productive, prompting Brent crude to retreat. BoE Chief Economist Huw Pill emphasised the need to control inflation. MPC member Megan Greene warned that UK wage growth could be around 3.5% in 2027, potentially sustaining inflation and warranting further tightening. Governor Andrew Bailey also reaffirmed the importance of bringing inflation down. Markets expect a BoE hike in November. The report describes the BoE as the only major central bank yet to begin tightening in response to inflation pressure from the US–Iran conflict.

Sterling has recently benefited from improved risk appetite and a pullback in US Treasury yields. The ten-year yield eased to 5.22%, while DXY briefly fell below 102, providing support for GBP/USD. Whether that support persists may depend on next Wednesday’s US CPI report. Strong inflation could reignite a bond sell-off, push yields and the dollar higher, and erase sterling’s gains. A softer print could allow yields to fall further and GBP/USD to extend its recovery. Ahead of CPI, the pair may remain near 1.3240 while traders await a catalyst.

Short-term profit-taking in the US dollar has allowed sterling to recover modestly, but UK fiscal concerns and high gilt yields still constrain its upside. GBP/USD remains range-bound with no clear trend. A sustained break higher would likely require a weaker dollar and encouraging UK data rather than technical factors alone. Resistance around 1.3285 is key to assessing the rebound; support sits around 1.3140. Without a fresh fundamental catalyst, sideways trading remains more likely. Watch US consumer sentiment and inflation expectations, as well as developments in UK fiscal policy.

Technical outlook for next week: The daily trend remains mildly bearish. GBP/USD is below its 20-day SMA at 1.3293 and below last week’s high of 1.3285, indicating that the near- and medium-term downtrend remains intact. The 14-day RSI at about 37.80 is below the neutral 50 line, suggesting that sellers retain an advantage, although conditions are not yet deeply oversold. The first major resistance zone is 1.3285–1.3293. A sustained break higher could extend the rebound toward the 30-day SMA around 1.3370 and then 1.3400. On the downside, the previous week’s low near 1.3185 provides initial support. A break would expose the lower end of the range near 1.3140, while a breach of the lower Bollinger Band at 1.3114 could trigger a deeper correction.

USD/JPY

USD/JPY is trading near 158.00 and the lower end of its weekly range as the dollar weakens more broadly. Mixed fundamental signals have nevertheless kept the pair within its established range over the past week. Traders remain alert to the possibility of official intervention to support the yen, which, together with modest US-dollar weakness, is weighing on the pair. Although the Bank of Japan raised rates as expected in September, its forward guidance was less hawkish than markets had hoped. Even so, the BoJ’s gradual tightening is making the yen less attractive as a funding currency, eroding its traditional role in low-cost carry trades.

USD/JPY has drawn support from US economic resilience and the wide US–Japan yield differential. Meanwhile, the yen has strengthened against the euro amid France’s fiscal difficulties. This divergence among major currencies means cross rates are increasingly following their own drivers rather than simply tracking the dollar, creating both opportunities and risks. Strong US fundamentals, the appeal of US assets and expectations that the Fed will maintain its tightening cycle have supported demand for dollars. Markets are closely monitoring US inflation and employment releases: upside surprises tend to reinforce expectations of further tightening.

USD/JPY traded sideways last week, with repeated failures at higher levels. The pair fluctuated broadly between 157.00 and 158.50 without establishing a directional trend. It tested resistance near 158.50 early in the week, where the 200-day moving average and 50% Fibonacci retracement converge, but failed to hold above it and fell back toward support around 157.70 (50-day moving average). This remains a high-level consolidation after the rebound. Daily RSI held around 52–56, neutral to slightly bullish. Changes in Treasury yields repeatedly shifted expectations for the US–Japan rate differential. With the psychologically important 160 area nearby, speculation about Japanese intervention discouraged aggressive buying, while existing carry-trade positions provided support below.

The short-term USD/JPY bias remains positive while the pair stays above the 100-period SMA at 157.59 on the four-hour chart. The recent consolidation can still be viewed as a bullish pause within the broader uptrend, despite limited buying enthusiasm. Initial support is at 157.59, followed by 157.00. A break could expose the 25-day SMA around 156.63. Immediate resistance sits around 158.50 at the top of the range, followed by the upper Bollinger Band at 159.46 and the psychological 160.00 level.

EUR/USD

The euro rebounded above US$1.12 after reaching a 17-month low of 1.1161 earlier in the week. More stable French bond markets, lower energy prices and declining US Treasury yields tempered the dollar’s advance. However, France’s record debt burden and political challenges to spending cuts, together with resilient US growth and a stronger dollar, left EUR/USD on course for a fifth consecutive weekly loss, with a cumulative decline of about 3%. President Trump said Washington would not attack Iran before the November congressional midterms and described negotiations to end the conflict as productive, prompting Brent crude to retreat. Lower oil prices led traders to trim expectations for central-bank tightening. Markets currently anticipate the ECB deposit rate rising from 2.50% to 2.72% by December and to 3.20% by the end of 2027.

EUR/USD surrendered some of its earlier gains last week and remained on track for a fifth successive weekly decline as the dollar recovered from the previous session’s pullback. Concerns over France’s fiscal outlook continued to undermine euro sentiment. At the time of writing, EUR/USD was near 1.1200, levels last seen around May 2025. The dollar regained ground as US Treasury yields rose after Thursday’s sharp fall. Strong demand at the 30-year Treasury auction and a modest easing in oil prices had initially helped relieve pressure on bond markets after Trump ruled out another strike on Iran before the midterms. The report argues that France’s commitments to substantial fiscal tightening may be insufficient to restore confidence in its bonds, potentially leaving the euro under pressure for longer.

EUR/USD extended its decline last week, making a fresh 17-month low early on. Intraday trading was volatile, with repeated dips followed by long-lower-wick rebounds characteristic of oversold corrections within a downtrend, not a confirmed reversal. The weekly range ran from around 1.1161 to 1.1277; Friday’s close was near 1.12040. The fifth consecutive down week left sellers in control. Price remains below its medium- and long-term moving averages, which are bearishly aligned, while MACD is below zero. RSI near 28 signals deeply oversold conditions and scope for a technical bounce, but this does not imply a trend reversal. French fiscal and political risks and wider European sovereign spreads continued to weigh on the euro. Hawkish Fed minutes, renewed expectations of prolonged high US rates and a rebound in Treasury yields also favoured the dollar.

Technical outlook for next week: The medium-term trend remains bearish, with near-term trading likely to revolve around low-level consolidation and a potential oversold bounce. At 1.1200, EUR/USD is facing a fifth consecutive weekly decline and a cumulative sell-off of around 3.5%. On the four-hour chart, the 14-period RSI remains below 50, while MACD is marginally positive. Together, these indicators point to stabilisation but insufficient buying pressure to support a bullish reversal. Price sits near the middle of this week’s horizontal channel. Initial resistance is at 1.1277 (highs of 2 and 8 October), followed by the area between the late-June low at 1.1337 and the 38.2% Fibonacci retracement of the September–October decline, around 1.1350. Initial support is near 1.1160 (2 October low). Below that, the May 2025 low area around 1.1050 and the psychological 1.1000 level become potential targets.

COMMODITIES ANALYSIS

WTI Spot Crude Oil

WTI crude oil traded in a narrow range just above US$90 a barrel last week after President Trump said Russian President Putin had agreed to make diesel available to global markets. The US Treasury said the Office of Foreign Assets Control was “immediately issuing a temporary general licence” to allow Russian diesel into the global market, with proposed supply of approximately 22.5 million barrels. Meanwhile, the US–Iran conflict disrupted shipping. Tankers were held outside the Strait of Hormuz for ship-to-ship transfers, sending global freight rates to record highs and reducing vessel availability on other routes. Eleven tankers were reportedly attacked while transiting Hormuz in the week ended 4 October. Trump said earlier in the week that he would not strike Iran again before the November midterms and that discussions with Tehran had been productive. Oil rose about 0.70% over the week.

Overall, the global economy’s current ability to withstand the war with Iran appears to reflect a temporary balance among geopolitical missteps, market resilience, depleted inventories and AI-driven economic benefits. Beneath apparently stable markets lie diminished buffers, stretched energy infrastructure and fragile macroeconomic fundamentals. Such short-term stability may prove difficult to sustain. As stabilising mechanisms weaken, the capacity to absorb another geopolitical shock is limited and the risk of renewed disruption is rising. The US midterm elections may become an important turning point in international relations once electoral pressures recede.

WTI spot crude closed near US$91.00 a barrel on Friday. Last week was marked by wide, headline-driven swings and intense two-way trading, with no sustained daily trend. WTI traded approximately between US$86.35 and US$92.50, initially testing lower support before recovering toward the top of its range by Friday. The weekly candle finished modestly higher with a lower shadow.

Intraday volatility was substantial as shifting Middle East headlines triggered sharp drops followed by V-shaped recoveries. This reflects repeated repricing of the geopolitical risk premium. Buyers defended the US$89.40 area on several occasions, making it a key support for this week, while offers near US$92 repeatedly capped advances. The main conclusion is that oil is consolidating and rebuilding a base with a neutral-to-positive bias, but without enough momentum for a sustained breakout. Next week’s fundamentals and geopolitical developments are likely to determine direction: de-escalation would weigh on oil, while renewed conflict could rapidly increase the risk premium.

Technical outlook for next week: US$90 is a key psychological reference on the daily chart. If WTI holds above this level and buying strengthens, price could retest the previous session’s high and higher resistance. Watch US$92.40 (last week’s high), then US$95.00 and US$95.02 (28 September high). These are monitoring levels rather than confirmed turning points. A decisive move below US$90 may expose support near US$87.79 (50-day moving average). Momentum has eased after the previous sharp rally, increasing the risk of chasing short-term gains. However, the indicators alone are insufficient to confirm a reversal; geopolitical headlines remain an important driver.

Spot Gold (XAU/USD)

Gold gained more than 1.0% last week to around US$4,194 an ounce, a one-week high, as investors weighed a softer dollar and lower oil prices against the possibility of further Fed tightening. Oil eased after President Trump said Washington would not attack Iran ahead of next month’s US midterm elections, while diplomatic efforts to end the war continued. The conflict has disrupted global energy markets and heightened inflation concerns. St Louis Fed President Alberto Musalem said Thursday that further monetary tightening might be needed to bring inflation back to the 2% target, but declined to say how he would vote at the upcoming policy meeting.

Gold rose more than 1.20% on Friday as US Treasury yields and the dollar declined. Recent US data pointed to growing household pessimism about the economy, while investors appeared to expect the Fed to hold rates steady. Tensions in the Middle East remained elevated. Although Trump said he would not attack Iran before the US midterms, the US–Iran conflict still appeared far from resolution. Hostilities continued around the Strait of Hormuz, and Houthi forces reportedly laid mines in the Bab el-Mandeb Strait to disrupt shipping in the Red Sea. Investors should monitor geopolitical developments, oil, Treasury yields and the dollar, as well as next week’s CPI and PPI reports, retail sales, Fed speakers and employment releases.

Gold initially fell and then recovered last week in a classic rebound from lower support. Hawkish interpretations of the Fed’s September meeting minutes weighed on prices early on, sending gold into the US$4,080–4,100 support area and briefly as low as US$4,066. Buying emerged midweek, helped by softer payroll data that reduced expectations of further tightening. Gold then recovered through the latter part of the week, including a daily gain exceeding US$60, and finished near US$4,194. The weekly candle had a small bullish body and a long lower wick, validating underlying demand. Nevertheless, price remains in a medium-term correction from its August high, and the weekly moving averages are still bearishly aligned. RSI has recovered from oversold toward neutral. On the four-hour chart, a tentative double bottom has emerged and a rising channel has formed from roughly US$4,080, with short-term moving averages turning bullish. However, supply above US$4,200 is evident, and trading activity has not expanded enough to confirm a durable advance. The recovery remains tentative rather than a strong new uptrend.

Toward the end of last week, buyers appeared near the intraday low of US$4,130 and drove spot gold to US$4,207.50 before it closed below US$4,200. This recovery reduces immediate downside pressure. Momentum has turned modestly positive, although RSI at 46.13 remains below the neutral 50 level. If gold can establish itself above US$4,200 early in the week, a stronger rebound could follow. Resistance lies at the 100-day SMA around US$4,260, followed by US$4,300 and the 50-day SMA at US$4,335. Above those levels, the upper Bollinger Band at US$4,405 becomes the next reference. On the downside, a break below US$4,155.80 (nine-day SMA) could lead to a test of US$4,100. Further reference levels include last week’s low at US$4,066, the 29 July swing low at US$3,996 and the area below US$4,000.