Daily Forex Pulse — October 28, 2026

FX OVERVIEW

The dollar is broadly supported by hawkish Fed expectations and safe-haven demand amid escalating Middle East tensions, while policy and growth concerns weigh on the euro, sterling and kiwi. Australian inflation is an important counterforce, lifting RBA hike expectations, but the AUD’s advance is capped by the stronger USD.

MAJOR PAIRS

EURUSD — The pair remains under pressure from the Fed–ECB policy divergence and rising concern over French fiscal risk, with France’s 10-year yield above 5% and eurozone lending conditions tightening. A break below 1.1113 leaves 1.1000 in focus; the ECB’s upcoming communication is the main near-term risk to the bearish bias.

GBPUSD — Sterling has broken below 1.3307, with 1.3245 the next downside level, as fiscal uncertainty, £3 trillion-plus public debt and doubts about the extent of BoE tightening undermine confidence. A firm BoE signal could challenge the downside, but the current bias is lower.

AUDUSD — Australian CPI at 4.3% y/y revived expectations of an RBA hike and lifted the pair to a one-month intraday high. The advance remains capped below the 100-day EMA at 0.7030; a sustained break would open 0.7066, while 0.7025 is near-term support.

NZDUSD — The RBNZ’s hold at 2.75%, after markets anticipated a hike, triggered a sharp kiwi sell-off; Governor Breman’s hint of a possible December increase did little to steady sentiment. The pair is near 0.5584, with 0.5564 the key support and 0.5700 resistance.

USDCAD — The Canadian dollar failed to gain ground after the BoC’s widely priced 25 bp hike to 2.5%, while a cautious policy tone and firm US yields supported the pair toward 1.4060. The lack of CAD follow-through leaves the near-term bias higher, with BoC guidance the next key catalyst.

USDJPY — US rate expectations and the carry advantage continue to support the pair, which is holding above the 20-day EMA at 157.75. A move above 159.00 would extend the upside, but warnings of possible Japanese intervention raise the risk of a sharp reversal.

USDCNY — The PBOC set the fixing at 6.7165, marginally stronger than the prior day but weaker than market consensus implied. The managed fixing points to limited near-term volatility, though global dollar strength and the PBOC’s tolerance for yuan weakness remain relevant risks.

EURJPY — The cross is under pressure from yen strength and rising intervention warnings from Japanese officials, with EUR/JPY approaching the 175.00 area. The broader bias remains lower, although oversold conditions leave scope for a short-term bounce.

CENTRAL BANK WATCH

  • Fed: Markets expect a near-term hold but continue to price future tightening; hawkish signals are sustaining dollar support.
  • ECB: The upcoming press conference is in focus. A dovish tone could deepen euro weakness; a firm stance could prompt a short-term rebound.
  • BoE: The November decision is complicated by elevated inflation and a divided MPC, while fiscal uncertainty weighs on sterling.
  • RBA: Australian inflation has strengthened market expectations of a November rate hike.
  • RBNZ: The unexpected hold at 2.75% disappointed hike expectations; a tentative December signal failed to halt the NZD sell-off.
  • BoC: The 25 bp hike to 2.5% was widely anticipated. Cautious guidance left markets unconvinced that further tightening is assured.
  • BoJ/Japanese authorities: The BoJ is expected to hold, but official warnings of “decisive action” have increased intervention risk for the yen.
  • PBOC: The slightly stronger fixing versus the prior day suggests continued management of yuan moves, though it was weaker than consensus expected.

MACRO DRIVERS

  • Policy divergence remains the central FX driver: Fed tightening expectations contrast with a cautious ECB, BoE and BoC outlook, while the RBNZ’s hold has sharply weakened the kiwi.
  • Energy and geopolitical risk support the dollar: Attacks on Saudi energy infrastructure have intensified supply concerns, lifting safe-haven demand and adding to inflation risks.
  • European fiscal and credit concerns are weighing on the euro: French bond yields above 5% and tighter lending conditions have sharpened concerns about sovereign and growth risks.
  • Australia’s inflation surprise has shifted regional rate expectations: The 4.3% CPI reading supports the AUD and has widened its policy contrast with the NZD.

POSITIONING IDEAS

  • Bullish

    • AUDNZD — RBA hike expectations have strengthened after the inflation surprise, while the RBNZ’s hold and weak guidance have undermined the kiwi.
    • USDJPY — Fed rate expectations and the carry advantage support upside, with 159.00 the near-term technical trigger. Intervention risk is the key reversal hazard.
    • USDCAD — The CAD’s muted reaction to the BoC hike and cautious guidance leave the pair supported near 1.4060.

  • Bearish

    • EURUSD — Fed–ECB divergence, French fiscal stress and weak lending conditions keep the balance of risks to the downside.
    • GBPUSD — The break below 1.3307, fiscal uncertainty and doubts about BoE tightening support a move toward 1.3245.
    • NZDUSD — The RBNZ’s unexpected hold has weakened the policy outlook; 0.5564 is the next key support.

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.