Daily Forex Pulse — September 29, 2026

FX OVERVIEW

The U.S. dollar remains the dominant trade, supported by elevated Treasury yields, hawkish Federal Reserve expectations, and safe-haven demand amid rising U.S.-Iran tensions and oil prices near $107. Currency-specific policy signals are reinforcing the move: dovish guidance is weighing on the AUD, EUR, GBP and CAD, while credible Japanese intervention threats are limiting USD gains against the yen.

MAJOR PAIRS

EURUSD — EUR/USD is in a structural downtrend as the 10-year U.S. yield reaches its highest level since 2007 and markets assign roughly a 70% probability to another Fed hike. Dovish ECB guidance and weak euro-area activity are removing support for the euro; a break below 1.1325 would expose 1.1270 and 1.1210.

GBPUSD — Sterling remains pressured by weak UK labor demand, sluggish private-sector growth and limited room for further BoE tightening, despite an 85% probability of a November hike. The pair remains below the 1.3373 20-period EMA, with resistance at 1.3250–1.3300 and a break below 1.3200 targeting 1.3140.

AUDUSD — AUD/USD fell below 0.7000 despite the RBA’s 25 bp hike to 4.60%, as Governor Bullock’s uncertainty over further tightening and concern about housing and global growth undermined the policy signal. Weak household spending and softer inflation expectations reinforce the bearish bias; support is at 0.6947, then 0.6867, while 0.7010 and the 0.7030 200-day moving average now cap rebounds.

AUDNZD — The cross has a bearish AUD bias as the RBA shifts toward stability amid weakening consumption, housing and labor-market conditions, while New Zealand momentum appears more resilient. TD Securities favors NZD outperformance, making short AUDNZD the clearest expression of Australia–New Zealand policy divergence.

USDCAD — USD/CAD remains in a broad uptrend near 1.4190, supported by widening U.S.–Canadian yield differentials and stronger Fed expectations. The pair holds above support near 1.4020, although an RSI of 75.45 signals overbought conditions and leaves the market vulnerable to a pullback around Canadian GDP and U.S. JOLTS.

USDJPY — USD/JPY is caught between a structural yen selloff and increasingly credible Japanese intervention threats. Speculative yen positioning has weakened sharply, but coordinated official warnings and a roughly 36% probability of a December BoJ hike have pulled the pair back toward 156.50; upside resistance is at 184.50, with intervention risk the dominant near-term constraint.

GBPJPY — GBP/JPY faces downside pressure from yen intervention risk and deteriorating UK fundamentals. The pair is moving toward 207, and rallies remain vulnerable while Japanese officials maintain an explicit willingness to act against excessive yen weakness.

USDCNY — The PBOC set the fixing at 6.7411, slightly weaker than the prior day and above consensus, signaling tolerance for gradual yuan depreciation. The policy bias favors export competitiveness and domestic support, leaving upside pressure on USDCNY unless authorities reassert tighter exchange-rate control.

USDSGD — USD/SGD is stabilizing near 1.2780, but the medium-term bias favors SGD strength as August manufacturing surged 15.4% year on year and persistent inflation raises the prospect of a modestly steeper MAS S$NEER slope. Momentum is softening technically, with 1.2750 a key downside threshold for USD/SGD.

USDINR — The rupee has stabilized temporarily after RBI intervention, but oil near $107 and higher U.S. yields keep the medium-term bias tilted higher for USD/INR. The pair holds above 95.67, with 97.00 the next significant upside objective if dollar demand and energy costs intensify.

USDMXN — USD/MXN has broken above 18.00, marking a major deterioration in peso support as shrinking rate differentials and capital outflows favor the dollar. The break signals a structural shift toward peso weakness, particularly while U.S. yields remain above 5.6% and Banxico cannot match the Fed’s tightening impulse.

CENTRAL BANK WATCH

  • Federal Reserve: Markets assign roughly a 70% probability to another hike, keeping U.S. front-end yields and the dollar supported. Strong U.S. PCE or payrolls data would reinforce the current hawkish pricing.
  • RBA: The 25 bp hike to 4.60% was overshadowed by Governor Bullock’s cautious guidance and discussion of housing and global risks. Markets interpreted the decision as a possible peak rather than the start of a renewed tightening cycle.
  • ECB: President Lagarde’s emphasis on a “measured response” and reduced concern over inflation have weakened expectations for an October hike, widening the policy gap with the Fed.
  • Bank of England: Markets still price an 85% chance of a November hike, but weak domestic activity and fiscal pressure limit the pound’s benefit from that expectation.
  • Bank of Canada: Markets see potential tightening, including approximately 14 bp priced for October and 37 bp by December, but the signal lacks the credibility and momentum of Fed tightening.
  • Bank of Japan: Officials have escalated intervention warnings, while markets see a roughly 36% chance of a December hike. Both developments are strengthening the yen and capping USD/JPY upside.
  • PBOC: The weaker fixing indicates a controlled tolerance for yuan depreciation to support exports and growth.
  • MAS: A modest steepening of the S$NEER slope is expected at the October meeting, consistent with resilient growth and persistent inflation.

MACRO DRIVERS

  • U.S. rate dominance: Treasury yields near multi-year highs are driving capital toward the dollar, overwhelming the carry appeal of higher-yielding currencies such as the AUD and MXN.
  • Policy divergence: The Fed remains hawkish while the ECB and RBA signal caution; this is widening short-rate spreads and reinforcing dollar strength against EUR and AUD.
  • Geopolitical risk and oil: U.S.-Iran tensions and Brent crude near $107 are supporting safe-haven dollar demand while worsening the external balance for oil-importing economies.
  • Asian policy differentiation: The yen is benefiting from intervention risk and possible BoJ tightening, while the PBOC is tolerating yuan depreciation and MAS is positioned to support SGD.

POSITIONING IDEAS

Bullish

  • USDCAD: Long bias on widening U.S.–Canadian yield differentials and stronger Fed expectations; Canadian GDP weakness would reinforce the move.
  • USDMXN: Long above 18.00 as shrinking Mexico–U.S. rate differentials and capital outflows mark a structural break in peso support.
  • USDINR: Long bias toward 97.00 on oil-driven pressure, RBI intervention fatigue and higher U.S. yields.
  • AUDNZD: Favor short AUDNZD as the RBA’s dovish pivot contrasts with more resilient New Zealand momentum.

Bearish

  • EURUSD: Short bias below 1.1325, with widening U.S.–euro-area yield spreads targeting 1.1270 and 1.1210.
  • GBPUSD: Short rallies into 1.3250–1.3300 while weak UK activity limits the benefit of expected BoE tightening.
  • AUDUSD: Bearish below 0.7010–0.7030, targeting 0.6947 and 0.6867 as RBA guidance loses credibility.
  • USDJPY: Tactical short bias near elevated levels because intervention threats and a potential BoJ hike can trigger abrupt yen appreciation.
  • USDSGD: Favor downside risk toward 1.2750 as strong Singapore manufacturing and prospective MAS tightening support the SGD.

This content is for informational purposes only and does not constitute financial, investment, or trading advice. Always consult a qualified financial professional before making any investment decisions.