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US dollar

The US dollar has recovered thanks to the Fed chair’s reluctance to signal a rate cut in October, a correction in stock indices, and rising geopolitical risks. Each of the USD’s main competitors has its own Achilles heel. The euro is disappointed by Friedrich Merz’s fiscal stimulus measures. The leadership battle in the Liberal Democratic Party weighs down the yen. The pound is concerned about the Treasury’s ability to plug a £35 billion hole in the budget.

Scott Bessent expressed surprise that Jerome Powell did not signal further rate cuts in October. According to the Treasury Secretary, the federal funds rate should fall by 100-150 basis points before the end of 2025. However, many FOMC members are concerned about the possibility of accelerating inflation. The split within the Fed is playing into the hands of the US currency.

The greenback continues to act as a safe-haven asset, and the United States is a net exporter of energy commodities. Therefore, rising oil prices amid increasing geopolitical risks have provided support for the USD index.

Stock indices

The fall in US stock indices resembles a sell-the-fact after a large-scale buy rumour after the Fed has lowered its rate. After the S&P 500 rose on news of Oracle and NVIDIA’s deals with OpenAI, asset managers bought $58 billion worth of US stocks. This is the largest inflow since the beginning of the year. This seems logical against the backdrop of numerous record highs for the broad stock index.

As soon as the S&P 500 took a step back, the bulls became nervous. Jerome Powell contributed to the pullback. The Fed chairman said that US stocks are overvalued. Until then, the markets had not attached any significance to the Price-to-Earnings Ratio rising to 22.9. The broad stock index has only traded above this level twice this century — during the dot-com crisis and the pandemic.

Bank of America notes that 19 out of 20 fundamental valuation metrics for the S&P 500 indicate that the market is overheated. However, corporations’ current positions look much better than in the past, so the current valuations may be justified. This gives investors the opportunity to use the good old strategy of buying on dips.

Daily Pivots: (S1) 199.51; (P) 199.97; (R1) 200.34; More...

Intraday bias in GBP/JPY remains neutral as sideway trading continues. Further rise is expected as long as 197.93 support holds. Firm break of 201.24 will target 100% projection of 180.00 to 199.79 from 184.35 at 204.14. However, considering bearish divergence condition in both D and 4H MACD, firm break of 197.93 will indicate bearish reversal and bring deeper fall back to 195.01 support first.

In the bigger picture, price actions from 208.09 (2024 high) are seen as a correction to rally from 123.94 (2020 low). The pattern might still extend with another falling leg. But in that case, strong support should be seen from 38.2% retracement of 123.94 to 208.09 at 175.94 to contain downside. Meanwhile, decisive break of 208.09 will confirm long term up trend resumption.

Daily Pivots: (S1) 174.51; (P) 174.73; (R1) 174.96; More...

Intraday bias in EUR/JPY remains on the upside for retesting 175.41 high. Decisive break there will resume larger up trend. On the downside, however, firm break of 173.88 resistance turned support will turn bias back to the downside for deeper pullback to 172.11 support instead.

In the bigger picture, current rally from 154.77 is still tentatively seen as resuming the larger up trend. Firm break of 175.41 (2024 high) will confirm and target 61.8% projection of 124.37 (2022 low) to 175.41 from 154.77 (2025 low) at 186.31. However, sustained break of 169.69 support will delay this bullish case, and probably extend the correction from 175.41 with another fall.

Daily Pivots: (S1) 0.8727; (P) 0.8739; (R1) 0.8755; More...

Intraday bias in EUR/GBP is back on the upside as rise resume after brief consolidations. Decisive break of 0.8752 resistance will resume larger rally to 61.8% projection of 0.8354 to 0.8752 from 0.8631 at 0.8877, which is close to 0.8867 fibonacci level. However, break of 0.8694 will turn bias back to the downside for 0.8631 support, to extend near term sideway trading.

In the bigger picture, the structure from 0.8221 medium term bottom are not impulsive enough to suggest that it's reversing the down trend from 0.9267 (2022 high). But even if it's a correction, further rise could still be seen to 61.8% retracement of 0.9267 to 0.8221 at 0.8867. Nevertheless, sustained trading below 55 W EMA (now at 0.8518) will argue that the pattern has completed and bring retest of 0.8221 low.

Daily Pivots: (S1) 1.7794; (P) 1.7826; (R1) 1.7870; More...

Intraday bias in EUR/AUD remains neutral at this point and some more consolidations could be seen. On the upside, break of 1.7929 temporary top will resume the rebound from 1.7588 to retest 1.8155 high. Firm break there will resume the whole rise from 1.7245. However, break of 1.7588 will resume the fall from 1.8155 instead.

In the bigger picture, price actions from 1.8554 medium term top are seen as a corrective pattern. Deeper fall could be seen as the pattern extends, but downside should be contained by 38.2% retracement of 1.4281 (2022 low) to 1.8554 at 1.6922 to bring rebound. Uptrend from 1.4281 is expected to resume at a later stage.

Daily Pivots: (S1) 0.9315; (P) 0.9334; (R1) 0.9345; More...

Intraday bias in EUR/CHF stays neutral as range trading continues. On the upside, firm break of 0.9354 resistance will confirm short term bottoming, and bring stronger rebound to 0.9394 resistance. On the downside, break of 0.9311 will resume the fall from 0.9452 to 0.9265 support.

In the bigger picture, the down trend from 0.9204 (2018 high) might still be in progress considering that EUR/CHF is staying well inside the long term falling channel. However, with bullish convergence condition in W MACD, downside potential should be limited in case of another fall. Instead, firm break of 0.9660 resistance will be an important sign of medium term bullish trend reversal.

Daily Pivots: (S1) 1.1622; (P) 1.1688; (R1) 1.1732; More...

Intraday bias in EUR/USD remains on the downside as fall from 1.1724 is in progress. Considering bearish divergence condition in D MACD, sustained break of 55 D EMA (1.1667) will argue that 1.1917 is already a medium term top. Deeper fall should then be seen to 1.1390 support next. For now, risk will stay on the downside as long as 1.1819 resistance holds, in case of recovery.

In the bigger picture, rise from 1.0176 (2025 low) is seen as the third leg of the pattern from 0.9534 (2022 low). 100% projection of 0.9534 to 1.1274 from 1.0176 at 1.1916 was already met. For now, further rally will remain in favor as long as 1.1390 support holds, and firm break of 1.2000 psychological level will carry larger bullish implications. However, firm break of 1.1390 will suggest that rise from 1.0176 has already completed and bring deeper fall to 55 W EMA (now at 1.1214).

Daily Pivots: (S1) 148.93; (P) 149.43; (R1) 150.30; More...

Intraday bias in USD/JPY remains on the upside as rise from 145.47 is in progress for retesting 150.90. Break there will resume whole rise from 139.87 to 151.22 fibonacci level. On the downside, below 148.55 minor support will turn intraday bias neutral first, before staging another rise.

In the bigger picture, price actions from 161.94 (2024 high) are seen as a corrective pattern to rise from 102.58 (2021 low). Decisive break of 61.8% retracement of 158.86 to 139.87 at 151.22 will argue that it has already completed with three waves at 139.87. Larger up trend might then be ready to resume through 161.94 high. In case the corrective pattern extends with another fall, strong support is expected from 38.2% retracement of 102.58 to 161.94 at 139.26 to bring rebound.

Daily Pivots: (S1) 1.3290; (P) 1.3378; (R1) 1.3433; More...

Intraday bias in GBP/USD remains on the downside for the moment. Fall from 1.3725, as the third leg of the corrective pattern from 1.3787, is in progress. Break of 1.3332 support will target 1.3140. For now, risk will remain on the downside as long as 1.3535 resistance holds, in case of recovery.

In the bigger picture, rise from 1.3051 (2022 low) is in progress, and would target 61.8% projection of 1.0351 to 1.3433 (2024 high) from 1.2099 (2025 low) at 1.4004. However, with 1.4248 resistance (2021 high) intact, this rally is more likely a corrective move. Sustained break of 55 W EMA (now at 1.3157) will argue that a medium term top has already formed and bring deeper fall back to 1.2099.

Daily Pivots: (S1) 0.7953; (P) 0.7984; (R1) 0.8026; More…

Intraday bias in USD/CHF remains on the upside for the moment. Firm break of 0.8006 resistance argue that fall from 0.8170 has completed as a five-waver at 0.7828. USDCHF should then be in larger scale corrective bounce and should target 0.8170 resistance next. For now, risk will stay on the upside as long as 0.7908 support holds, in case of retreat.

In the bigger picture, long term down trend from 1.0342 (2017 high) is still in progress. Next target is 100% projection of 1.0146 (2022 high) to 0.8332 from 0.9200 at 0.7382. In any case, outlook will stay bearish as long as 0.8332 support turned resistance holds (2023 low).