The dollar retreated on Tuesday from the previous session's 18-month highs as long end US Treasury yields extended their decline from recent peaks and market participants prepared for a highly anticipated US CPI report.

Comments from New York Fed President John Williams kept the pressure on yields and, thus, the US currency late in the Americas session by saying he still sees one more interest-rate hike as appropriate this year, but at the moment does not believe it will be necessary for the central bank to increase rates again in 2027, Bloomberg News reported. Williams told Bloomberg News in an interview there are still signs inflation will slow “quite a bit” and approach the Fed’s 2% target next year.

Economists polled by Reuters expect September core monthly CPI growth to come in at 0.2% and the annual rate of underlying consumer price inflation at 2.5% when data are released on Wednesday.

The question for markets -- and the dollar -- is how much further the market needs to go in discounting price growth above the Fed's target.

Dan Ivascyn, chief investment officer at the world's largest bond manager, PIMCO, told Reuters that US Treasury yields may have further room to rise, with the Fed likely to deliver one or two more rate increases before the current tightening cycle ends.

Chicago Fed President Austan Goolsbee said inflation is starting to feel like "aggregate overheating" fueled by spillovers from the artificial intelligence investment boom rather than largely being a byproduct of supply shocks that will pass on its own.

Federal Governor Christopher Waller said the recent rise in US bond yields has been due to stronger economic growth and large-scale investment in artificial intelligence rather than to higher inflation expectations, which remain "well anchored."

Bank of America's latest Global Fund Manager survey found that the US 10-year Treasury yield would need to climb to nearly 6% before bonds become compelling enough for investors to draw money away from stocks, highlighting the resilience of equity markets even as borrowing costs jump.

US Treasury yields were slightly higher at the front end but about 1 to 3 bps lower in five- to 30-year maturities. The 10-year yield was at 5.22% and the 2s-10s curve flatter by about 3 bps at 42 bps at the mid, according to data supplied by LSEG.

The S&P 500 was trading 0.07% lower in the New York afternoon as chip stocks came under selling pressure while investors parsed a mixed bag of quarterly results, including those from big US banks.

WTI crude oil rose 0.6% while copper slid 0.26%.

Gold fell 0.21%.

Heading toward the close: EUR/USD +0.4%, USD/JPY -0.18%, GBP/USD +0.34%, AUD/USD +0.32%, DXY -0.38%, EUR/JPY +0.21%, GBP/JPY +0.16%, AUD/JPY +0.16%.(Robert Fullem)

• NY opened near 1.1185 after 1.1154 traded overnight, pair rallied early

• USD, US yield , USD/CNH drops helped EUR/USD hit 1.1205

• Some of that rally was then erased as sellers emerged

• USD, yields and oil moved upward while equities, gold and silver traded lower

• EUR/USD neared 1.1190 late, it traded up +0.32% in NY's afternoon

• Daily RSI is rising but monthly is falling & pair ius below 10- & 21-DMAs

• EUR/USD's ongoing consolidation, widening Bolli bands are bearish signs

• US September CPI & its potential impact on Fed policy is a key risk Wednesday
eurusd

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

ANZ Research discusses Gold outlook and expecst macroeconomic headwinds to persist through the end of the year.

"Investment demand has remained resilient, with gold-backed ETF holdings rising by 7t so far in October. Economic and political uncertainty in Europe continues to support investment demand, while Asian buyers have stepped up purchases to hedge against falling equity markets. Investors are increasingly looking beyond rising rates and focusing on concerns over global debt sustainability.

Central bank buying was strong in the third quarter. China has purchased more than 100t year-to-date, including around 20t in each of the past three months. China’s official gold reserves is now around 2,410t, or 9% of total reserves. China imports have also risen by more than 70% y/y to 1140t.

Markets are currently pricing in only a 20% probability of a Fed rate hike in October, but roughly an 80% probability of a hike in December. Minutes from the latest meeting showed that policymakers supported the September hike, while most expected another increase to be appropriate by year-end. We therefore expect macroeconomic headwinds for gold to persist through the end of the year," ANZ adds.

EUR/USD bounced on Tuesday, but the pair is still trading close to the 17-month low it hit on Monday. The broader downtrend looks intact, though the market probably needs a pause before the next leg lower.

Bears have had trouble getting through 1.1150. Buyers have shown up on several dips toward that level, possibly to defend an option barrier. Still, the level stays vulnerable unless EUR/USD puts together a meaningful rally.

A strong recovery looks unlikely. Fiscal and election uncertainty in France, Spain and Germany probably won't be resolved soon. That backdrop could keep the European Central Bank on hold and keep the US dollar attractive to investors.

After falling almost 4.75% from its August monthly high, the pair needs a period of distribution before the downtrend can pick up again. The recent consolidation suggests that process is already underway. It also gives the deeply oversold daily RSI a chance to recover.

Longer-term technicals suggest any rally will be sold. The monthly RSI and widening 15-month Bollinger Bands signal ongoing downside momentum and rising volatility, both of which should help to keep bearish sentiment in place.

For traders holding long positions, the bearish view might only change if EUR/USD breaks above the 1.1350–1.1400 resistance zone and holds there over time. Until then, the path of least resistance stays lower.
eurusd

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

Goldman Sachs Research likes selling EUR/JPY on rallies.

"We continue to see increased downside asymmetry in USD/JPY that should make being short a more attractive and ultimately successful portfolio hedge than it has been in many years. More tactically, though, there are few obvious catalysts for renewed JPY strength without signs of willingness by the BoJ to deliver consecutive hikes or relief on US yields. But we still recommend having long JPY exposure in some form, and our preference has been versus EUR," GS notes.

"EUR funding reduces the carry cost and should still work amidst any potential hawkish Fed repricing, further upside in energy prices, or intensification of European fiscal fears—the key shorter-term risks around our more benign baseline view—and we recommend taking any rebound in EUR/JPY as an opportunity to add downside at slightly better levels," GS adds.

Sterling outperformed on Tuesday, climbing off overnight lows near 1.3200 as global yields and oil prices retreated, with traders squaring positions ahead of upcoming US and UK CPI releases and the UK Autumn Budget on October 28.

GBP/USD's bid was likely just position curating as traders prepared for US CPI on Wednesday, UK August GDP and output data on Thursday, UK CPI on October 21, and the most significant UK asset-related event — the Autumn Budget.

Market expectations suggest persistent inflation due to high oil prices in recent weeks. However, the drop in global yields might indicate that traders believe recent elevated yields have already addressed some inflationary pressures, potentially stifling demand and curbing price rises. UK 10-year gilt yields have retreated from their recent highs, trading around 5.35%, down from above 5.5%, which were influenced by fiscal instability in France.

Despite ongoing inflation concerns, which are expected to hinder growth and exacerbate fiscal challenges, the issue remains a global phenomenon affecting both developed and emerging markets. The UK Autumn Budget is particularly critical for gilts and sterling, as any misstep by the Burnham government could lead to an increase in UK yields, thereby placing additional downward pressure on the pound.

Currently, GBP/USD remains confined within its recent 1.3280-1.3180 range. With potential headline risks surrounding the upcoming UK and US data, traders are likely to adopt a cautious stance, awaiting fiscal insights from the budget announcement before significantly altering positioning.
GBP$ Chart:

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

Societe Generale Research likes selling EUR/JPY and GBP/AUD than selling EUR/USD and GBP/USD around current levels.

"We appear to be coming to the end of the third leg up in Fed pricing this year. Questions about how high bond yields could get have been a feature of many recent conversations. The fact that 10year notes yielded 13% and Fed Funds were above 15% on my first day at work in 1984 is a reminder not to be too surprised by higher yields (the low yields of the post-GFC period were every bit as unusual as the high ones of the early 1990s), but the spike in bond yields will do some work for the Fed and tomorrow’s core CPI data will have to come in well above the consensus 2.5% print, if we are to see any further uptick in market pricing of terminal Fed Funds," SocGen notes.

Morgan Stanley Research previews the US September CPI report due on Wednesday.

"We forecast core CPI at 0.24% m/m in September (2.5% y/y), five basis points below August's 0.29% increase. We expect core services inflation to decelerate, mainly reflecting a normalization in communication services as the one-off increase in wireless telephone fees does not repeat this month. We forecast still positive core goods inflation, driven by higher vehicle prices and ongoing, albeit modest, pressure from AI-related demand," MS notes.

"We expect headline CPI at 0.62% m/m and 3.69% y/y, reflecting another sizable increase in gasoline prices. Our forecast implies an NSA CPI index of 336.792," MS adds.

• US-listed shares of gold miners rise premarket, tracking bullion prices [GOL/]

• Spot gold up 0.3% at $4,183.84/ounce

• Prices edge higher as oil and the US dollar retreat, while expectations of a Federal Reserve rate hike this month remain subdued ahead of key US inflation data

• Top miners Newmont and Barrick Gold

each rise ~1%, respectively

• South African miners: Gold Fields , Harmony Gold and AngloGold Ashanti rise between 1.3% and 2.7%

• Canadian miners: Agnico Eagle Mines and Kinross Gold rise 1.8% and 1.1%, respectively

(Reporting by Tyakshi Singh in Bengaluru)

(Removes have from third bullet)

• Stress for French bonds lower lessening - 10yr spread with Germany 139bps vs 160 high

• US/German 10-year yield spread has tightened slightly

• Brent crude highs declining from near $110 below $107.50

• Bets on EUR dropping have increased from $4 billion to $14 billion

• The drop has become stretched close to lower band 20-day/week Bollingers

• EUR/USD: Crowded shorts and a narrower spread raise risk of a rally

•
Forces influencing EUR/USD

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

• Yen strengthens as BOJ wholesale data was enough to justify fears of higher interest rates

• USD/JPY has slipped from 158.64 to 158.00, on Tuesday, on the EBS

• However the cloud, that currently spans the 156.64-158.44 region, should prevent a collapse

• The tenken and kijun lines on the daily chart are bullishly aligned

• The overall bias remains on the upside as the pair usually climbs in October

• USD/JPY and EUR/JPY tend to move in tandem, 30 and 60-day log correlations are high above +0.5

Daily Chart


Correlation Chart

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

Oct 13 (Reuters) - EUR/USD could see a much bigger slump as the downside risk continues to grow in part due to a negative technical outlook on the medium-term chart.

The euro saw its fifth straight weekly drop on Friday, as FX traders continued to increase their speculative US dollar long positions.

EUR/USD on Friday registered a second consecutive weekly close below 1.1336, the 38.2% Fibonacci retracement of the 1.0125 to 1.2084 rise on EBS between 2025 and 2026. That has increased the likelihood of a deeper fall to test 1.1104, the 50% retracement of the same move.

The 14-week momentum reading remains negative, highlighting the overall bearish market structure. If the pair slides below the 1.1104 level, that would unmask the 1.1000 psychological level.

The downside bias remains negative while trading persists below last week's 1.1276 high. However, if trading rebounds above 1.1276, that would provide evidence that the downtrend may be nearing an end.
Weekly Chart


Weekly Momentum Chart

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

• Cable has traded a 24 pip range thus far Tuesday; 1.3205-1.3229

• Monday range was 1.3202-1.3261 (high before low)

• 1.3206-1.3250 was Friday range (last below 1.32 on Thursday)

• Britain needs to keep deficit reduction on track, IMF says

• UK PM Burnham hopes for EU deal next month, stirs Brexit debate

• Pound rose to new 16-month high vs euro on Monday; 1.1841

GBPUSD

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

• US/German 10-year bond spread has tightened from 181bps to 171bps

• EUR/USD fell further to a fresh 2026 low at 1.1152 EBS on Monday

• The tighter spread will provide EUR/USD support

• Support from bonds timed when traders short and drop stretched

• Base 20-week Bollinger bands is 1.1193

•
US/German 10-year bond spread

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

• USD/JPY off from 158.75 EBS high yesterday, Asia 158.64 to 158.19

• Into daily Ichimoku cloud between 158.44-64, below 158.56 200-DMA

• Holding for now above 157.97-158.23 ascending hourly Ichimoku cloud

• Ascending 100-HMA in cloud at 158.10

• In area of flattening 100-HMA currently at 158.26, pivot for now?

• $1.3 bln in option expiries at 158.00 also supportive

• Japanese exporter good sellers early Asia, market seen heavy pre-159

• Market could be on hold till US re-open, moves in US yields

• Geopolitical concerns, high oil prices still seen USD supportive

• Related comment , also , for more click on [FXBUZ]

USD/JPY hourly:

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

• USD/JPY down after trade up to 158.75 EBS yesterday, Asia 158.64 to 158.19

• Japanese exporter sales noted, specs too adding to JPY longs up top?

• Geopolitical concerns and high oil prices but nothing really that new

• USD/JPY back into 156.64-158.44 daily Ichimoku cloud after brief fling above

• Market also trading back from still gradually ascending 200-DMA at 158.56

• Support from 157.97-158.17 hourly Ichi cloud, 158.26 100-HMA now above

• Also 158.09 ascending 200-HMA in cloud, $1.3 bln option expiries at 158.00

• EUR/JPY heavy too, Asia 176.75-92 EBS, in recent, lower 176.25-178.33 range

• Resistance from 177.01 hourly Ichimoku tenkan, kijun 177.13, 100-HMA 177.31

• CHF/JPY in stasis, 189.76-190.16, in 189.17-190.82 range since October 8

• Resistance from 189.96 200-HMA area, hourly cloud 190.00-41, 100-HMA 190.07

• GBP/JPY 209.06-67, in recent, lower 208.13-209.98 range since October 8

• Back into 209.05-31 hourly Ichimoku cloud, 200/100-HMAs in area at 209.09/23

• AUD/JPY 110.43 to 110.01 in Asia, backing off from 110.62 high yesterday

• To base of 110.11-37 hourly Ichi cloud, holding mostly above 110.03 200-HMA

• NZD/JPY 88.36-66, in lower range, 88.61-73 hourly Ichi cloud resistance

• Related comment , also , on EUR/JPY

• On Japan CGPI , for more click on [FXBUZ]

USD/JPY hourly:


EUR/JPY hourly:


AUD/JPY hourly:

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

• Australian gold stocks drop as much as 2.8%, logging their steepest intraday pct fall since October 1

• Bullion prices ease as US dollar holds firm, markets focused on upcoming US inflation report [GOL/]

• Evolution Mining and Northern Star Resources

fall 2.1% and 1.3%, respectively

• Sub-index down 3.8% YTD

(Reporting by Keshav Singh Chundawat in Bengaluru)

• Shares of Australia's iTech Minerals rise as much as 6.5% to A$0.049, their biggest intraday pct gain since October 6

• Gold and antimony explorer reports further drilling results at its Sabre gold project in the Northern Territory

• Co says the latest results expanded a second gold shoot identified earlier this month, highlighting further growth potential

• YTD, stock down 4% including the session's moves

(Reporting by Paridhi Minda in Bengaluru)

• AUD/USD -0.1% Tue as minutes from Sep RBA meeting underscores hawkish theme

• RBA says hikes abroad could loosen domestic conditions via lower AUD

• AU Sep employment due Thur, poll consensus: +20.0k jobs, 4.6% unemployment

• Trump's diesel deal has negligible impact as oil prices remain elevated

• Ukraine says Russia hit energy facilities despite U.S. ceasefire claim

• AUD targets .6865, break would open downside potential significantly

• Range Asia 0.69496-60 support 0.6865 0.6834, resistance 0.7052 0.7282
AUD Hourly Bollinger Study & DXY Daily 55/100/200-DMA

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

• USD bid across board on geopolitical and other factors, USD/JPY no exception

• USD/JPY 158.43-64 EBS so far in Asia, in area of 158.56 200-DMA

• Also in area of 156.67-158.44 daily Ichimoku cloud, 100-DMA 159.50 above

• Spot in move lower from 158.75 high yesterday, low yesterday 158.08

• Japanese exporter offers eyed from ahead of 159.00, importers on dips

• In option expiries, massive at 158.00 today, $1.3 bln, some at 158.75

• JGB-US Treasury rate differentials at recent trough in 2s, near wides in 10s

• Eyes still on Middle East developments, oil prices, US ylds post-US re-open

• US Treasury market, govt offices closed yesterday for Columbus Day

• Related comments , , ,

• And , , also

• Other markets , , ,
USD/JPY daily:


USD/JPY hourly:

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

(Corrects rate in second bullet)

• NZD/USD -0.6% from Mon 0.5619 high as USD buyers regain the upper hand

• Pair bouncing along 0.5581 support line, break below looks inevitable

• DXY trades new 102.61 18-month high ahead critical U.S. CPI update Wed

• WTI +1.4% as fresh Saudi attacks overshadow any Trump diesel deal impacts

• Ukraine says Russia hit energy facilities despite U.S. ceasefire claim

• Futures pricing currently implies 62.8% chance of RBNZ hike on Oct 28

• Range NZ 0.5584-867, support 0.5581 0.5485, resistance 0.5995 0.6012
DXY Daily 55/100/200-DMA


NZD Daily 21/55/100-DMA

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

Danske Research previews the US September CPI report due on Wednesday.

Markets are pricing more than 80% probability of both the Fed and ECB staying on hold in the late-October meetings, so barring major surprises in data or forward guidance, the interest rate differential could remain relatively stable over the next few weeks.But while this week will be a quiet one in terms of economic data, one potential surprise factor could be Wednesday's US September CPI," Danske notes.

"Our forecast is in line with consensus (headline 3.6% y/y, core 2.5% y/y), but as the CPI will be the final major data point before the rate decision, it could carry even more weight for markets than usual," Danske adds.

• Analysts at Jefferies maintain "hold" rating for global miner BHP Group , at a price target of A$65 per share

• BHP's recent operational performance across most of its portfolio has been encouraging, though valuation and exposure to iron ore underpin its neutral stance - Jefferies

• Brokerage says higher freight rates to China, diesel inflation and weaker iron ore prices are likely to pressure margins in BHP's Western Australia iron ore operations, leaving earnings from business an overhang on the stock

• Adds visibility on timing and direction of BHP's copper growth projects remains key investor focus, with co's diversified pipeline providing multiple growth options

• Expects copper earnings to continue outpacing iron ore earnings, supported by stronger copper prices and production growth projects

• Six of 22 analysts rate the stock "buy" or higher, 15 "hold" and one "sell" or lower; their median PT is A$62.02 – LSEG-compiled data

• Stock up 37.2% YTD, as of last close

(Reporting by Rudrannsh Mehra in Bengaluru)

• GBP$ soft in NY afternoon trade, -0.2% at 1.3210; NorAm range 1.3238-1.3202

• Liquidity light given US holiday, no US cash bond trading; UST futures prices a touch lwr

• Pair dripped lower throughout the session; US-Iran situation fluid, oil +2%

• US CPI on October 14, UK GDP and output on the 15th in focus

• LSEG's IRPR indicates BoE to hike in early Nov; Fed seen hiking in early-Dec

• GBP$ supt 1.3202 Monday low, 1.3140 2026 low on June 24, 1.3099 lwr 30-d Bolli

• Res 1.3231- 10-DMA, 1.3261 Monday high, 1.3290/1.33 falling 21-DMA/psychological lvl

GBP$ Chart:

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