UOB Group analysts suggest the euro may rise, needing to surpass 1.1720 for momentum
The Euro’s Resistance Level
The Euro (EUR) might keep rising, but it must break the 1.1720 resistance level to move toward 1.1760. Analysts from UOB Group say that even though the momentum is positive, a strong close above 1.1720 is crucial for ongoing progress.
Recently, the EUR hit a high of 1.1694 and closed at 1.1687, showing more strength than expected. This upward trend hints at possible gains, but we need to confirm that it can break through 1.1720. Staying above 1.1650, with minor support at 1.1675, is key for maintaining momentum.
In the upcoming weeks, the EUR’s weakness has stabilized. It is expected to trade between 1.1575 and 1.1720. The quick move toward 1.1720 was noted when the EUR reached 1.1694, closing higher for three days in a row. The chance of going beyond 1.1720 remains as long as the EUR stays above strong support at 1.1625.
With positive momentum building, traders might consider strategies that benefit from a rise in the EUR/USD. Buying call options with a strike price at or slightly above the current level could be effective for capitalizing on a potential breakout. This strategy limits risk to the premium paid for the option.
ECB’s Influence and Inflation
This optimistic view aligns with recent comments from European Central Bank officials, who suggest that interest rates will stay high for a while to bring inflation back on track. This stance has created a solid foundation for the Euro, despite a recent dip in headline inflation to 2.9% in September. The market sees the bank’s determination as a source of strength for the currency.
For a more organized strategy, we recommend a bull call spread. This involves buying a call option with a 1.1700 strike and selling a call option with a 1.1760 strike at the same time. This method reduces initial costs while targeting the specific range we expect in the coming weeks. It works well if prices rise gradually but remain capped.
On the other hand, we are closely monitoring US Treasury yields, which have recently risen to near 4.8%, similar to a spike seen in late 2023. If these yields start to peak, it could weaken the US dollar’s support. A dip in yields might help the EUR/USD break through the 1.1720 resistance.
The 1.1625 level is crucial for managing risk in this bullish outlook. If it drops below this strong support, it would indicate that the upward momentum is fading, contradicting the current view. In that case, traders should think about closing bullish positions or taking protective put options to shield against further declines.
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Japanese yen unexpectedly rebounds to around 150 against the US dollar
The Japanese Yen has recently improved, trading around 150 against the US dollar. This change isn’t linked to Abenomics returning, even with Takaichi as the new LDP leader, since the LDP and Komeito coalition has broken down. Uncertainty surrounding the upcoming election for Japan’s next prime minister and coalition formation adds to this situation.
Political Dynamics In Japan
While Takaichi may not become prime minister, talks between the LDP and smaller parties are ongoing. Three opposition parties considering a coalition could mark a first in Japanese politics. However, these parties have had no experience governing over the past 13 years, which raises concerns about the stability of any new government. Bold reforms seem unlikely, and policy changes might only aim at relieving households and controlling inflation. We may see minor actions, such as suspending gasoline taxes. Further devaluation of the yen could worsen the situation, making a steadier exchange rate probable amid Japan’s political uncertainty. The current political challenges in Japan suggest that the yen may stabilize in the near term. The breakdown of the LDP coalition indicates that whoever becomes prime minister after the October 21st parliamentary session will lead a weak government, limiting drastic economic reforms. This implies that the yen’s recent recovery to around the 150 level against the dollar may signal a more controlled trading range. For derivatives traders, this situation points to strategies that benefit from falling volatility. We’ve already noticed that implied volatility on one-month yen options dropped from over 12% in early October 2025, when a Takaichi-led government seemed likely, to about 8.5% now. This trend indicates that selling option premiums, such as through short straddles or strangles, could be a good strategy in the upcoming weeks.Trading Strategies In A Stabilizing Market
We expect the USD/JPY pair to remain within a tight range, likely between 148 as support and 152 as resistance, based on our observations in September 2025. An options structure like an iron condor, which profits when the currency pair stays within a set range, may work well in this context. This strategy enables traders to earn premiums while the political landscape stifles any major moves. This scenario brings to mind the “revolving door” era of Japanese prime ministers before 2012, when political indecision hindered significant shifts in currency policy. Moreover, with September 2025’s inflation report showing a stubborn 2.8%, any new government will face immense pressure to avoid a weaker yen that raises import costs. This reinforces our belief that authorities will prioritize stability over stimulus. Create your live VT Markets account and start trading now.OCBC analysts noted that USD/JPY dropped to 149.71 due to falling UST yields.
The USD/JPY has been steadily falling, mainly due to decreasing US Treasury yields, and is currently around 149.71. The outlook appears bearish.
In Japan, the focus is on the potential alliance between the LDP and JIP, which could secure 231 seats—just shy of the 233 needed for a majority. This coalition might help LDP’s Takaichi move closer to becoming Prime Minister, while opposition parties consider forming their own alliance to compete.
Political Moves In Japan
Political activity is expected to ramp up as parliament gets ready to meet on October 21 to vote for a new Prime Minister. Meanwhile, Bank of Japan (BOJ) Governor Ueda has stated that the BOJ’s policy will remain the same, with possible changes depending on improvements in the economic outlook. Several factors are influencing the USD/JPY rate, including Japan’s policy decisions, ongoing US-China tensions, and overall risk sentiment. Technical analysis shows a decrease in bullish momentum and a drop in the Relative Strength Index (RSI). Important support levels are at 149.67 and 148.50, while resistance is found around 150.35, 151, and 151.90. The FXStreet Insights Team is composed of journalists who gather market observations and expert insights. The USD/JPY has continued its downward trend, following lower US yields and hovering around 149.71. The risks in the near term seem tilted downward. All eyes are on the parliamentary vote for Prime Minister on October 21. Political maneuvering before this vote is creating significant uncertainty, especially concerning the LDP and JIP coalition talks, which could bring Takaichi closer to the Prime Minister position. Such event-driven risks are classic triggers for rising implied volatility. Traders might consider purchasing options, like put options or straddles, to prepare for a potential sharp move following the decision on October 21.Market Responses And Strategies
Recent data support this cautious stance, showing September’s national CPI at 2.9%, slightly above expectations, which places pressure on the BOJ. We have also observed the Cboe FX Yen Volatility Index (JYVIX) rise to its highest point in three months, indicating market anxiety. This situation resembles the heightened intervention alerts we saw in 2022 and 2023 when the USD/JPY traded in a similar range. Governor Ueda’s comments indicate that the BOJ is likely in a wait-and-see mode for now, looking for more confidence in the economic outlook. However, a new government could change the trajectory of policy normalization, especially regarding Japan’s debt and deficit. This policy uncertainty supports strategies that would benefit from a stronger yen, such as buying USD/JPY put options with expirations in late November to capture any shifts in policy after the vote. The technical analysis reinforces a bearish outlook as daily momentum weakens. With the next support level at 149.67 and then 148.50, traders could consider purchasing put options with strike prices near these levels. Additionally, resistance at 150.35 presents an opportunity to sell call options or set up bear call spreads, betting that the pair won’t rally past this level in the coming weeks. Create your live VT Markets account and start trading now.ING analyst notes the Swedish krona’s surprising strength against the euro despite falling equities
The Swedish krona has risen sharply this week, doing better than the euro while equity markets have declined. This is unusual because the SEK usually tracks riskier assets closely. Hopes for a resolution in Ukraine and falling crude oil prices have helped support the krona. Additionally, when events in the US market happen, significant SEK repatriation flows occur due to Swedish investments in US equities.
The strength of the krona against equity market shocks suggests a favorable medium-term outlook. However, one should be cautious; declining sentiment in European equities could influence the krona’s performance today. The FXStreet Insights Team shares expert market observations for further insights.
Gold And Cryptocurrency Trends
Gold prices have dropped below $4,300 after reaching a peak of $4,380. This decline is due to a rebound in US Treasury bond yields and a strong US Dollar. Meanwhile, Bitcoin is experiencing its second bearish Friday, trading under $105,000. Other cryptocurrencies like Ethereum and Ripple have also fallen, with Ethereum at $3,700 and Ripple below $2.22, as negative sentiment affects the crypto market. Upcoming economic data includes US CPI and PMI figures that might impact Federal Reserve policies. UK inflation data could affect Bank of England rate cut expectations for 2025, while CPI numbers from Canada and Japan are also being watched. Eurozone flash PMIs may influence European Central Bank rate forecasts. The unexpected strength of the Swedish krona offers an opportunity. Its ability to perform well despite equity sell-offs marks a break from past trends. We have seen significant capital repatriation by Swedish investors from US markets this quarter, supporting this bullish trend as they purchase SEK. With Brent crude futures falling 8% this month to under $75 a barrel, the krona benefits from lower import costs. Derivative traders may want to consider long SEK positions, potentially against the euro, as upcoming Eurozone PMI data is likely to show economic weakness. This trade is backed by the krona’s resilience, suggesting it can better handle broader market shocks than before.Market Implications And Strategies
Gold’s dip below $4,300 seems like a healthy correction after reaching a record high last week. This pullback results from a modest rise in US 10-year Treasury yields, which have climbed back to 4.10% from their lows in October. This price movement is like the consolidation phase we observed in early 2025 before the next upward trend, prompting traders to sell put options at lower strike prices during this dip. In the cryptocurrency market, sentiment has turned sharply negative as Bitcoin has dropped below the important $105,000 support level. Data from derivatives exchanges reveals that open interest in Bitcoin futures has decreased by 15% over the past week, indicating traders are closing their positions. This heavy sell-off makes it wise to buy protective put options for major assets like Bitcoin and Ethereum to guard against further declines. Next week is crucial, as US inflation data could challenge the market’s expectation for a Federal Reserve rate cut in the first quarter of 2026. The outlook is for the core Consumer Price Index (CPI) to remain at 3.6% year-over-year, a figure that could trigger volatility across asset categories. Traders should be prepared for sharp movements in equity index futures and the US dollar following this data release. Create your live VT Markets account and start trading now.The US dollar weakened due to dovish Fed comments, a disappointing business outlook, and concerns about regional banks.
The US Dollar continued to fall due to several factors: soft comments from Federal Reserve officials, a decline in the Philadelphia business outlook, the ongoing US government shutdown, decreasing US Treasury yields, and worries about US regional banks’ exposure to auto bankruptcies. The Dollar Index (DXY) was last seen at 98.25. Fed comments hinted at potential interest rate cuts, with Waller suggesting a 25 basis point cut in October, depending on the job market.
The Euro bounced back, supported by the French Prime Minister’s survival of no confidence votes and a weakening Japanese Yen, which put more pressure on the US Dollar. On the technical front, bullish momentum on the daily chart weakened, and the Relative Strength Index (RSI) decreased. Short-term risks are expected, with support levels at 98 and 97.50. Resistance levels are at 98.40, 99.10, and 99.80.
Fxstreet Insights
The FXStreet Insights Team shares key market observations from top experts, offering commercial notes and extra insights from both internal and external analysts. We are seeing ongoing weakness in the US Dollar, driven by soft comments from the Fed and the ongoing government shutdown, which has now lasted three weeks. The September 2025 inflation report showed core CPI falling to 2.8%, well below the yearly peak, giving the Fed room to ease its policies. This environment suggests caution for long dollar positions. The unexpected drop in the Philadelphia business outlook is not an isolated incident, as the September jobs report added only 95,000 jobs, missing expectations by a wide margin. With Fed officials linking future decisions to the job market, this weak data bolsters the case for a rate cut in October, which further pressures the dollar against other major currencies. For those trading derivatives, this situation favors bearish strategies on the dollar. Buying put options on the DXY index or USD-related pairs like USD/JPY could be a direct strategy for this anticipated decline. With economic uncertainty, we might also see a rise in implied volatility, making options pricing an important factor to monitor.Economic Uncertainty
The decline in US Treasury yields reflects fears of an economic slowdown, similar to patterns we observed during previous easing cycles, like in 2019 when the Fed began cutting rates. Lower yields make the dollar less appealing to foreign investors looking for better returns. Traders should expect this trend to continue as long as the Fed stays dovish. We are also watching risks in the financial sector. Reports indicate that subprime auto loan delinquencies have reached a fifteen-year high, putting pressure on regional bank stocks. This particular weakness adds more negativity toward the US economy and its currency. The key technical level to watch on the DXY is the 98.00 support area, which lines up with the 50-day moving average. Create your live VT Markets account and start trading now.Dollar under pressure as concerns about US regional banks affect equities negatively
The recent focus on US regional banks is affecting the dollar. The S&P 500’s regional banks index has dropped 5% due to loan fraud problems at two lenders. This situation is similar to past banking worries and could impact credit markets, which have recently experienced tight spreads.
While current risks seem limited, there are worries that the US business environment and credit quality might be worse than indicated by the data. Investors will pay close attention to regional bank earnings, and any further issues could lead to a decline in the dollar, especially as futures for the S&P 500 and Euro Stoxx suggest negative openings.
Safe Haven Currencies Gain Favor
Safe-haven currencies like the Japanese Yen (JPY), Swiss Franc (CHF), and Euro (EUR) are becoming more popular due to the sell-off affecting US markets. Additionally, upcoming talks between Trump and Putin, falling oil prices, and shifting interest rates are putting pressure on the dollar. The DXY index may drop to 97.50 unless there is positive news from the US. Concerns about US regional banks are creating a negative outlook for the dollar, reminiscent of the SVB collapse in 2023. Reports show that delinquency rates on commercial real estate loans from these banks hit 5.2% in the third quarter of 2025, the highest level in years, which is alarming investors. US equities are suffering, with the KRE regional banking ETF down over 7% this week. As a result, the dollar is becoming a less attractive safe haven. The Dollar Index (DXY) has dropped below the critical level of 100.00 for the first time since early 2024, opening the door for further declines toward 97.50. Derivative traders might consider strategies that profit from ongoing dollar weakness, like buying puts on dollar-tracking ETFs or shorting DXY futures.Impact of Falling Oil Prices
Falling oil prices, with WTI crude now under $75 a barrel, are increasing pressure on the dollar. Market attention is also shifting towards a more aggressive easing cycle from the Federal Reserve. The CME FedWatch tool now indicates a 65% chance of a rate cut by the December 2025 meeting. These decreasing rate differentials make long dollar positions less appealing. Geopolitical events, including a potential Trump-Putin meeting to discuss the war in Ukraine, are eroding the dollar’s risk premium. This situation is prompting capital to flow into traditional safe havens like the Japanese Yen and Swiss Franc. Traders may find opportunities to take advantage of the relative strength of these currencies against the dollar using options that benefit from a declining USD/JPY or USD/CHF exchange rate. Create your live VT Markets account and start trading now.The USD/CNY fix drops to 7.0949 for the third consecutive session, while USD/CNH remains at 7.1280.
The USD/CNY fix was set at 7.0949, staying below 7.10 for the third day in a row. Nevertheless, the USD/CNH last traded at 7.1280, showing stability compared to previous levels, according to FX analysts at OCBC.
Policymakers seem to be slowly guiding the renminbi towards a stronger position. Market talks suggest a possible intentional strengthening of the renminbi ahead of the Chinese Communist Party’s 4th plenum in Beijing from October 20th to 23rd. During this meeting, the Central Committee will present the next 5-year plan for 2026-2030, focusing on economic growth, security, innovation, and improving living standards.
Communique And Market Reactions
A communiqué from the meeting is expected on October 23rd, followed by the proposal for the 5-year plan a week later. The Central Economic Work Conference will finalize key policies in December ahead of the National People’s Congress meeting in March 2026. Ongoing US-China tensions over rare earth export controls and tariffs are limiting the renminbi’s potential decline. The market needs positive sentiment to bring spot rates in line with the fixings. Bullish momentum is fading, and the RSI is decreasing, indicating downside risks. Support levels are at 7.1150 and 7.08, while resistance is found at 7.1330, 7.1420, and 7.1460. The People’s Bank of China is signaling its preference for a stronger Yuan by keeping the daily fix below 7.10 for three consecutive days. This approach likely aims to project stability ahead of the 4th Plenum meeting next week. However, the spot market is hesitant, with USD/CNH trading higher than the fix, suggesting market caution. Recent economic data supports this push for a stronger Yuan. Last week, China’s Q3 GDP growth came in at 4.9%, just above expectations. This strengthens the idea that authorities have a stable economic foundation to manage the currency. In contrast, September CPI data in the United States showed persistent inflation at 3.5%, keeping the Federal Reserve on a cautious path.Trading Strategies And Considerations
For traders, this highlights the tension between Chinese policy and US economic situations, with short-term risks for USD/CNH leaning downwards. It’s worth considering positions for potential Yuan strength, especially around the Plenum dates. Buying USD/CNH puts with strike prices targeting the 7.1150 or 7.08 support levels could be a good strategy to benefit from a drop. Uncertainty surrounding the Plenum’s communiqué, due on October 23rd, has increased short-term implied volatility in the options market. This raises the cost of buying options but also highlights the chance of a significant market move. For those with long USD/CNH positions, it’s a good time to consider hedging against risk. It’s important to remember that geopolitical issues can quickly change this policy direction, as seen during the trade disputes in 2018 and 2019 that caused the Yuan to lose value. Ongoing tensions over rare earth exports and tariffs mean that while the trend may lean towards a stronger Yuan for now, things could shift unexpectedly. Therefore, structuring trades with clear risk limits, such as put spreads, may be wiser than holding outright short positions. Create your live VT Markets account and start trading now.Natural gas prices fall to a three-week low as Henry Hub futures drop to $2.9/MMBtu
US Natural Gas prices dropped to a three-week low, with NYMEX Henry Hub futures falling to $2.90/MMBtu. This marks four straight days of price declines. The drop is mainly due to increased weekly storage injections, which are outweighing expectations for colder weather in late October in the eastern US.
Last week, US gas inventory rose by 80 Bcf, which matches market expectations of about 80.8 Bcf. This increase is close to the five-year average of 83 Bcf for this time of year. As of October 10, the total gas stockpiles reached 3.721 Tcf, which is 4.3% above the five-year average, indicating a surplus as winter nears.
Fxstreet Insights Team
The FXStreet Insights Team, made up of journalists, gathers market observations from experts. Their information includes notes and insights from both internal and external analysts. With natural gas prices falling below $2.90/MMBtu, the market shows signs of weakness. Weekly storage injections are currently maintaining a good supply, overshadowing initial forecasts of colder weather. On October 10, our inventories were 3.721 trillion cubic feet, a healthy 4.3% above the five-year average. This oversupply suggests traders should think about bearish strategies in the near future. We see potential in buying put options on the November and December futures contracts to benefit from further price drops. Creating bear put spreads can also help reduce initial costs while managing risk. This downward trend is further supported by consistently high production levels. Output from major areas like the Permian and Appalachia is near a record 106 Bcf per day. This strong supply surpasses the solid demand from LNG export facilities, which are currently pulling about 14.5 Bcf per day. For now, the market is focused on the oversupply.Cautionary Note
Still, we need to be cautious about being too bearish as winter approaches. The latest forecasts from the Climate Prediction Center hint at a higher chance of a colder-than-usual start to November in the Midwest and Northeast. Any sign of lasting cold could quickly raise prices from these low levels, surprising short-sellers. We recall the price drop that occurred after the mild winter of 2023-2024, demonstrating the risks associated with a warmer winter. On the other hand, we’ve seen prices spike during sudden cold snaps in past years when inventories were depleted more quickly than expected. This scenario makes selling out-of-the-money puts a worthwhile strategy to collect premiums while betting that extreme cold will support prices. Create your live VT Markets account and start trading now.EUR/USD rises as a weaker US dollar supports markets anticipating French PM Lecornu’s stability.
EUR/USD rose primarily due to weakness in the US Dollar. This came after market expectations that French Prime Minister Lecornu would survive no-confidence votes. While political stability in France helped, it also brought budget challenges that affected pension reform. As a result, the 10-year OAT-Bund spread stayed above 75 basis points, putting pressure on the Euro. However, the Euro became less affected by the French risk premium.
Market Drivers And Speculations
With no government collapse expected before the end of the year, EUR/USD may begin to focus on traditional market factors like interest rates and stock prices. The US Dollar is still at risk, and it could rise above 1.750, with 1.180 likely within reach. The upcoming meeting between Trump and Putin might stir speculation about a ceasefire in Ukraine, which could influence the Euro. In the Netherlands, the upcoming elections are not considered a major threat to the Euro. A divided parliament is likely, with most parties hesitating to work with Geert Wilders’ PVV party, despite it leading in polls. This situation suggests stability in politics without severe effects on the Euro. The recent rise in EUR/USD seems driven more by a weak dollar than by strength in the Euro itself. The US CPI data for September 2025 showed a mild increase of 2.5%, reinforcing predictions of another Federal Reserve interest rate cut before year-end. This has added downward pressure on the US dollar overall. The 10-year OAT-Bund spread remains around 80 basis points, highlighting worries about France’s financial direction after freezing pension reforms. This ongoing risk premium indicates that long positions in the Euro could face political instability. Options traders might think about buying low-cost, out-of-the-money EUR puts as a hedge against a sudden market change.Policy Divergence
With much of the political risk in France already reflected in prices, the main focus is now on the clear policy differences between the ECB and the Fed. Eurozone inflation has remained persistent, sitting just above 3% in the latest report, leading the ECB to indicate that rates will stay higher for a while. This is in stark contrast to the more dovish approach from the Federal Reserve. Given the fragile state of the dollar, a breakout above the 1.1750 resistance level seems increasingly likely, putting the 1.1800 psychological mark in play. In the options market, one-month implied volatility has dropped to 5.5%, making bull call spreads an effective strategy for this potential move. This approach lets traders take advantage of upward movements while capping their maximum risk. The upcoming Trump-Putin meeting adds a significant variable that could boost the Euro. Any credible hints of a ceasefire in Ukraine would likely lead to a sharp decline in European natural gas futures, which have experienced volatility since the conflict began in 2022. This would be very positive for the Euro, possibly driving it past the 1.1800 target quickly. Meanwhile, the earlier preview of the Dutch elections appears insignificant for the currency as we near voting day. Polls continue to indicate a fragmented outcome, preventing the Eurosceptic PVV party from forming a government. This lack of a clear catalyst keeps the attention on the broader macroeconomic situation. Create your live VT Markets account and start trading now.US Dollar Index rebounds from 98.00 but still faces risks
The US Dollar Index is finding support around 98.00 but is having trouble moving higher. Trade tensions between the US and China are affecting markets and putting pressure on the US Dollar. The Federal Reserve (Fed) has hinted at the possibility of two more rate cuts by year-end, which is shaping market expectations.
During the European trading session, the Index managed to reduce some of its losses after a four-day drop of 1.30%. Ongoing concerns over US-China trade issues and anticipation of Fed rate cuts are making it hard for the Index to fully recover.
