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The Euro-dollar pair continued to decline to the 1.0850 level in the early Asian session on Thursday. Further growth of the US dollar puts selling pressure on the main pair. Investors will keep a close eye on the European Central Bank (ECB) monetary policy meeting, which is expected to cut interest rates again on Thursday.

The Federal Open Market Committee (FOMC) took the unusual step of lowering the benchmark interest rate by half a percent to a target range of 4.75-5.00% at its September meeting.

Fed Chairman Christopher Waller said Monday that future interest rate cuts will be less aggressive than the big move in September because he is concerned that the economy could still be operating at a faster pace than expected. Later on Thursday, investors will focus on U.S. retail sales data, which is expected to rise to 0.3% in September from 0.1% in August.

Across the ocean, the ECB is likely to make its third interest rate cut in a year at its October meeting, and money markets are all but pricing in three more rate cuts through March 2025.

Trading recommendation: Trade mainly with sell orders at the price level of 1.0890.

Small bets on a Fed rate cut support the dollar and provide some support for USD/JPY.

The Japanese Yen (JPY) strengthened against its US counterpart on Tuesday and rolled back most of the previous day's losses to its lowest level since early August. Overnight declines in US equity markets, as well as lingering geopolitical risks, proved to be key factors that sent flows rushing towards the safe-haven yen. Nevertheless, uncertainty over the Bank of Japan's (BoJ) rate hike plans held back significant appreciation.

Adding to this, disappointing Japanese August Core Machinery Orders data is contributing to the JPY's decline in Wednesday's Asian session. Meanwhile, the US Dollar (USD) is holding near its highest level in over two months amid expectations that the Federal Reserve (Fed) will continue to moderate interest rate cuts over the next year. This is helping the USD/JPY pair to hold near the 149.00 level and making the JPY bulls cautious.

From a technical perspective, any further decline is likely to find decent support around 148.60-148.55. However, some follow-through selling could leave the USD/JPY pair vulnerable to further weakening below the 148.00 round figure and testing last week's low around 147.35. The latter is followed by 147.00, the break of which would mean that the recent gains seen over the past month have exhausted themselves and would open the way for deeper losses.

Trade recommendation: Following the level of 149.00, at fixation below consider Sell position, at rebound consider Buy position

On Monday, GBP/USD encountered resistance at the 1.3000 level, with markets maintaining a calm tone ahead of key UK data releases in the first half of the trading week. The UK's payroll and jobs data are scheduled for release on Tuesday, while the Consumer Price Index (CPI) and Producer Price Index (PPI) inflation figures are scheduled for release on Wednesday. The midweek will conclude with the release of US retail sales data on Thursday, while UK retail sales data will be released in the London session on Friday.

It is anticipated that UK employment data for the quarter ended August will show further signs of softening. The average market forecast is for the annualised measure of average earnings excluding bonuses for the quarter ended August to fall from the previous reading of 5.1% to 4.9%. The change in UK jobless claims is forecast to decline to 20.2k in September from 23.7k in August. Meanwhile, the ILO unemployment rate in the UK is anticipated to remain at 4.1% for the three-month period ended August.

The first half of the trading week will be focused on data related to the British pound, with the release of UK CPI inflation data scheduled for Wednesday. The core CPI is forecast to decline to 1.9% from the previous reading of 2.2%. However, UK core CPI is anticipated to continue its upward trajectory, reaching 3.4% from 3.6%.

The next significant data release from the US is scheduled for Thursday, when US retail sales are expected to accelerate to 0.3% m/m in September, following a relatively subdued 0.1% m/m in August. However, the primary focus of traders will be on the Bank of England's (BoE) monetary policy report, scheduled for release on Thursday. The trading week will conclude on Friday with the release of UK retail sales data, which is expected to show a decline of -0.3% m/m in September, down from the previous reading of 1.0%.

Trading recommendation: Trading predominantly Sell y orders from the current price level.

The Euro-Dollar pair extended declines to the 1.0920 level in the early Asian session on Monday. Risk aversion amid rising geopolitical tensions in the Middle East and conflicts between China and Taiwan is putting selling pressure on risky currencies such as the Euro (EUR).

On Monday, a US State Department spokesperson said that they have “serious concerns about People's Liberation Army (PLA) military exercises in the Taiwan Strait and around Taiwan”. They also said they would monitor the PRC's actions and coordinate with allies and partners on our shared concerns. Any signs of escalating tensions could increase safe-haven flows, which would favor the U.S. dollar and weigh on the major pair.

Traders expect a 25 basis points (bps) Federal Reserve (Fed) rate cut in November following the release of the U.S. Producer Price Index (PPI) on Friday. The CME FedWatch tool showed that the probability of a 25 bps Fed rate cut is almost 86.8%, up from 83.3% before the PPI data was released.

Overseas, the euro is under some pressure as the European Central Bank (ECB) is expected to cut interest rates further at both of its remaining monetary policy meetings this year. The ECB's softer stance has been reinforced by a faster-than-expected decline in Eurozone inflationary pressures and a “fragile” economic recovery.

Trading Recommendation: Trade mainly with Sell orders from the current price level.

The Pound-Dollar pair is unable to capitalize on a modest rebound from the 1.3020 area or the one-month low and has been fluctuating in a narrow range during the Asian session on Friday. Spot prices are currently hanging around the mid-1.3000 area, unchanged for the day, and seem vulnerable to a continuation of the recent corrective decline from the highest level since March 2022 reached last month.

US initial jobless claims data released on Thursday pointed to signs of weakness in the US labor market and suggested that the Federal Reserve (Fed) will continue to cut interest rates. This kept the US Dollar (USD) on the defensive below its highest level since mid-August and provided some support for the GBP/USD pair. Nevertheless, investors seem to have already fully appreciated the possibility of more aggressive Fed policy easing. These expectations were confirmed by the minutes of the September FOMC meeting and stronger than expected US consumer inflation data.

In addition, persistent geopolitical risks associated with ongoing conflicts in the Middle East serve as a tailwind for the safe-haven US Dollar and limit GBP/USD growth. From the latest developments: the Israeli army claimed to have killed the top commander of the Palestinian militant group Islamic Jihad in the Nur Shams refugee camp in the occupied West Bank. This, as well as market confidence that the Bank of England (BoE) may be about to accelerate its rate cut cycle, could continue to undermine the British Pound and keep the currency pair under control.

Market participants are now awaiting the release of UK macroeconomic data, including monthly GDP, to provide some momentum. However, the focus will remain on the US Producer Price Index (PPI), which will be released later in the North American session. In addition, on the economic front, the US will release preliminary data on the Michigan Consumer Sentiment Index and inflation expectations. This data, along with the speeches of influential FOMC members, will stimulate demand for the US dollar and allow traders to take advantage of short-term opportunities in the GBP/USD pair on the last day of the week.

Trading recommendation: Trade predominantly with Sell orders from the current price level

EUR/USD fluctuated in a narrow range below 1.0950 during the Asian session on Thursday and consolidated recent strong losses to a near two-month low reached the previous day.

The US dollar (USD) is near its highest level since 16 August as traders assessed the possibility of another 50 basis points (bps) interest rate cut by the Federal Reserve (Fed) in November. Moreover, current market pricing indicates a more than 20 per cent probability that the US central bank will keep rates unchanged next month, and these expectations were confirmed by the hawkish FOMC meeting minutes released on Wednesday. As a result, US 10-year government bond yields will exceed the 4% threshold, which will support the quid and serve as a headwind for EUR/USD.

On the other hand, the euro currency continues to be pressured by growing confidence that the European Central Bank (ECB) will cut borrowing costs by 25bps at each of its two policy meetings before the end of the year. Moreover, the risk of further escalation of geopolitical tensions in the Middle East should favour the safe-haven US Dollar and indicate that the path of least resistance for EUR/USD lies to the downside. Traders, however, may refrain from new bearish bets and prefer to wait for the latest US inflation data before positioning themselves for further rate cuts.

The all-important US Consumer Price Index (CPI) will be released later in the North American session this Thursday, followed by the US Producer Price Index (PPI) on Friday. This data will play a key role in shaping expectations about the path of the Fed rate cut, which in turn will stimulate demand for the dollar in the near term and give new directional momentum to EUR/USD.

Trading recommendation: Trade mainly with sell orders at the price level of 1.0890.

The Chinese stock market is experiencing a sharp decline following a strong rally in recent weeks. On October 8, the Hang Seng Index (#HSI on FreshForex) plummeted by 9.56%, reaching 20,893 points.

The Hang Seng China Enterprises Index, which tracks Chinese stocks traded in Hong Kong, dropped even further — by 10.9%. The CSI 300 Index of mainland China, which started the day with an 11% gain, ended with a nearly 8% loss.

The main reason for the drop is growing investor dissatisfaction with the lack of new economic stimulus measures from the Chinese government. Expectations were high, especially after the National Development and Reform Commission's press conference, where economic support was promised but no concrete actions were provided. This has heightened uncertainty in the market.

What has been done previously:

• In late September, the Chinese government announced plans to strengthen economic stimulus, promising fiscal injections and support for the real estate sector.
• The People's Bank of China lowered reserve requirements for banks, freeing up 1 trillion yuan ($142 billion) for the market.
• There are plans to lower mortgage rates and the down payment for second-home purchases to a record low of 15%.

Bottom line: The market is waiting for action. Given the history of sharp declines in the Chinese market, such as in 2015 when the CSI 300 Index lost 40% in two months, the Chinese government cannot afford a similar outcome and may direct efforts to strengthen investor confidence. Since mid-September, #HSI has experienced a steady bullish trend, and our analysts believe these trends could repeat.

The Japanese yen (JPY) saw some intraday selling on Tuesday, which helped the USD/JPY pair pause its modest pullback from its highest level since August the previous day. The latest data released on Tuesday showed a decline in real wages in Japan in August, following two months of growth. Additionally, there was a reduction in household spending, which has led to concerns about the resilience of private consumption and the potential for a sustained economic recovery. This development coincides with critical remarks from Japan's new Prime Minister regarding monetary policy, contributing to uncertainty surrounding the Bank of Japan's (BoJ) plans to raise rates further. In addition, the prospect of a ceasefire between Lebanon's Hezbollah and Israel has contributed to the decline in the perceived safety of the Japanese Yen in the lead-up to Japan's snap election on 27 October.

However, speculation that Japanese authorities will intervene in the currency market to support the national currency has prevented a more aggressive stance on the part of those betting on a decline in the yen. Furthermore, the weak demand for the US dollar (USD) prevented the USD/JPY pair from capitalising on the overnight rebound from the 147.35-147.30 area, resulting in a limited price range during Wednesday's Asian session. Furthermore, investors are adopting a wait-and-see approach ahead of the release of the minutes of the September FOMC meeting, scheduled for today. This data, along with the US Consumer Price Index (CPI) and Producer Price Index (PPI), will play a pivotal role in influencing the US dollar price dynamics in the near term and will help determine the next stage of directional movement of the currency pair.

Trade recommendation: Trading mainly by Sell orders from the current price level.

The Pound-Dollar pair attracted some buying during the Asian session on Tuesday and so far seems to have broken a five-day losing streak, hitting a near four-week low near 1.3160 reached the previous day. However, spot prices are unable to consolidate above the 1.3100 mark, causing bullish traders to be somewhat cautious.

Investors remain concerned that tensions in the Middle East could escalate into a larger conflict. In addition, not-so-optimistic comments from the National Development and Reform Commission (NDRC) overshadowed the recent optimism from China's stimulus measures and curbed investors' appetite for risky assets. This is evidenced by the overall weak tone in equity markets, which in turn could help drive inflows into the US Dollar and constrain the GBP/USD pairing.

Meanwhile, Bank of England (BoE) Governor Andrew Bailey said last week that there is a possibility that the central bank could become more aggressive in cutting rates if there is further good news on inflation. This could help limit British Pound (GBP) gains and suggests that the path of least resistance for the GBP/USD pair lies to the downside. As such, any further upward movement could be seen as a selling opportunity and risks quickly coming to naught.

On Tuesday, no market-important economic data will be released from either the UK or the US, so the dollar and the GBP/USD pair will depend on the Fed's words. Meanwhile, attention will be focused on the release of the FOMC meeting minutes on Wednesday. It will be followed by data on the Consumer Price Index (CPI) and Producer Price Index (PPI) in the US, which will play a key role in stimulating demand for the dollar and will give a new impetus to the currency pair.

Trading recommendation: Watch the level of 1.3100, when fixing above it consider Buy positions, when rebounding we consider Sell positions.

The EUR/USD pair starts the new week on a subdued note and consolidates last week's significant losses to its lowest level since mid-August, achieved on the back of favourable US jobs data on Friday. The pair is currently trading around 1.0970.

The US Dollar (USD) is near a seven-week high as traders further reduced their bets on another significant interest rate cut by the Federal Reserve (Fed) in November on the back of unexpectedly strong US jobs data. The key NFP figure showed that the economy added 254k jobs in September, well above consensus estimates, while the unemployment rate unexpectedly fell to 4.1%. This was an indication that the US labour market remains robust, while higher than expected growth in average hourly earnings has revived inflationary concerns, dashing hopes for more aggressive easing policies from the Fed.

In fact, current market pricing points to a nearly 95 per cent probability that the Fed will cut borrowing costs by 25 basis points at the end of its two-day meeting on 7 November. In addition, persistent geopolitical risks stemming from ongoing conflicts in the Middle East have helped the US Dollar Index (DXY), which tracks the US Dollar against a basket of currencies, register its lowest week since September 2022. On the other hand, the euro continues to be undermined by bets that the European Central Bank (ECB) will cut rates again in October amid weakening inflationary pressures and slowing economic growth.

Expectations were confirmed by comments from ECB Governing Council member Francois Villeroy de Gallo, who said the central bank will cut rates in October as weak economic growth raises the risk of inflation falling short of its 2% target. This, in turn, is seen as another factor acting as a headwind for EUR/USD and supporting the prospects for further rate cuts in the near term. Thus, any recovery attempt can be seen as a selling opportunity and risks to quickly derail.

Trading Recommendation: We follow the level of 1.0940, in case of consolidation below we consider Sell positions.

The USD/JPY pair is fluctuating in a narrow range in the Asian session on Friday, consolidating its weekly rise to its highest level since 19 August, reached the previous day. Spot prices are currently trading below 147.00, unchanged for the day, as traders prefer to stay on the sidelines ahead of the release of important monthly US employment data.

The US Non-Farm Payrolls (NFP) report is expected to show that the country added 140,000 jobs in September, down slightly from 142,000 in the previous month, while the unemployment rate remained unchanged at 4.2%. In addition, average hourly earnings will be looked at to determine the size of the rate cut by the Federal Reserve (Fed) at its next meeting in November. This, in turn, will play a key role in fuelling demand for the US Dollar (USD) and provide a meaningful boost to the USD/JPY pair.

Ahead of the key data release, investors lowered bets on more aggressive Fed policy easing amid signs of a still resilient US labour market. This sent the US Dollar Index (DXY), which tracks the dollar against a basket of currencies, to a one-month high on Thursday. In addition, lower bets for a Bank of Japan rate hike in 2024 as well as political uncertainty ahead of Japan's snap election on 27 October could undermine the Japanese Yen (JPY) and serve as a tailwind for the USD/JPY pair.

Nevertheless, spot prices continue to rise for the second week in the last three, and if the US employment data does not offer any negative surprises, the fundamental backdrop supports the prospects for further gains. At the same time, persistent geopolitical risks associated with ongoing conflicts in the Middle East and the risk of a full-scale war in the region may favour the yen. This may prove to be the only factor restraining bullish traders from aggressive bets on USD/JPY.

Trading recommendation: Trade predominantly with Buy orders from the current price level

The GBP/USD pair saw a further decline during the early Asian session on Thursday, reaching the 1.3265 level. The renewed demand for the US dollar (USD) amid rising geopolitical tensions in the Middle East provides some support for the major pair. On Thursday, market participants will be monitoring the September ISM Services Purchasing Managers' Index (PMI), weekly initial jobless claims and the final PMI from S&P Global Services.

On Tuesday, Iran launched over 180 rockets at Israel, marking the largest direct strike on the country to date. Israel and the United States have vowed to take action in response to the attack. The conflict in the region is intensifying, with fears of a wider war boosting safe-haven flows and favouring the US dollar against the pound sterling (GBP).

The ADP US employment change data for September exceeded expectations, with 143,000 new jobs created. The figure exceeded the median forecast of 120,000 and the revised August figure of 103,000. On Friday, attention will shift to US employment data in search of new market-moving information.

Trading recommendation: Trading predominantly Sell y orders from the current price level.

The EUR/USD pair is trading slightly higher around 1.1070 during Asian trading hours on Wednesday. Meanwhile, any signs of rising geopolitical tensions in the Middle East could weigh on risky assets such as the euro (EUR).

Traders are still assessing the likelihood of a sharp rate cut by the US Federal Reserve (Fed) in November after Fed Chairman Jerome Powell said that the US central bank is in no hurry and will lower the benchmark rate “over time”. Financial markets now estimate the probability of a 50 basis point (bps) rate cut in November at nearly 37.4%, while the probability of a 25 bps rate cut is 62.6%, according to CME FedWatch Tool data.

Unfavorable economic data from the U.S. on Tuesday undermined the dollar. The US manufacturing PMI from ISM was unchanged at 47.2 in September, weaker than expectations of 47.5. The report pointed to a continued contraction in the US manufacturing sector.

Eurozone inflation declined in September, falling below the European Central Bank's (ECB) target level. The harmonized consumer price index (HICP) rose 1.8% in September, down from 2.2% in August, Eurostat said on Tuesday. The figure was the lowest since April 2021. The eurozone economy may not be out of the woods yet, even despite encouraging inflation data for September. The ECB cut interest rates to 3.50% in September and has also hinted that another cut may be in the near future.

Fears of an expanding war in the Middle East could put pressure on the common currency and boost safe-haven assets such as the U.S. dollar. Iran launched more than 200 ballistic missiles at Israel on Tuesday, and Prime Minister Benjamin Netanyahu vowed to retaliate against Iran for the missile attack.

Trading recommendation: Watch the level of 1.1070, if the level is fixed above consider Buy positions, if the level rebounds consider Sell positions.

The USD/JPY pair is building on an overnight good bounce from the 141.60 area, or near two-week lows, and gaining momentum for the second day in a row on Tuesday. The upward movement takes spot prices above 144.00 during the Asian session and is supported by a combination of factors.

The US Dollar (USD) is receiving support from Federal Reserve (Fed) Chairman Jerome Powell's relatively hawkish tone on Monday, which prompted investors to cut bets on another excessive rate cut in November. The Japanese Yen (JPY), on the other hand, remains on the defensive amid comments from Japan's new Prime Minister Shigeru Ishiba, who said that the Bank of Japan's (BoJ) monetary policy must remain accommodative to support the fragile economic recovery.

In addition, Ishiba said on Monday that he intends to call a general election for 27 October. Furthermore, bullish sentiment in global financial markets is undermining demand for the safe-haven Yen and serving as a tailwind for the USD/JPY pair. Bulls on the Japanese Yen remained on the sidelines after the Bank of Japan's September meeting released a summary of views that the central bank will adjust its accommodative stance if economic conditions improve.

In terms of economic data, Japan's unemployment rate fell more than expected to 2.5 per cent in August from 2.7 per cent in the previous month. In addition, the Bank of Japan's closely watched Tankan survey showed that sentiment among large Japanese manufacturers was stable in the three months to September, while sentiment among large non-manufacturers improved slightly. Nevertheless, this did not provide a boost to the Japanese Yen or the USD/JPY pair, supporting the outlook for further intraday gains.

Market participants now turn their attention to the economic agenda in the US, where ISM manufacturing PMI data and JOLTS job openings data will be released. These data, along with speeches of influential FOMC members, will stimulate demand for the dollar and create opportunities for short-term trading on the USD/JPY pair. In addition, important US macroeconomic releases scheduled for the beginning of the new month, including the Nonfarm Payrolls (NFP) report, should determine the next stage of directional movement.

Trading recommendation: Trade predominantly with Buy orders from the current price level

The GBP/USD currency pair is trading at around 1.3385 in the early Asian session on Monday. The prospect of further interest rate cuts by the Federal Reserve (Fed) and a less dovish stance from the Bank of England (BoE) is providing some support to the major pair. The Federal Reserve's Chair, Michelle Bowman, is scheduled to deliver a speech later today.

US inflation has reached a rate close to the Fed's 2% target. The US Bureau of Economic Analysis (BEA) reported on Friday that the headline personal consumption expenditure (PCE) price index rose 2.2% year-on-year in August, up from 2.5% in July. The figure was below the estimated 2.3% level. The core PCE index increased by 2.7% in August, in line with expectations.

On a monthly basis, the PCE price index showed a 0.1% increase over the same period. The CME FedWatch Tool data indicates that the probability of a half-point rate cut in November is nearly 54%, while the probability of a quarter-point cut is 46%.

The appreciation of the pound sterling (GBP) is supported by the expectation that the Bank of England's rate cut cycle will be slower than in the US. This, in turn, serves as a positive factor for GBP/USD. In the absence of significant economic data releases in the UK this week, market expectations regarding the Bank of England's monetary policy actions for the remainder of the year will influence the GBP.

Trading recommendation: Trading predominantly Buy orders from the current price level.

On Thursday, the EUR/USD returned to its highest point since the market sell-off in the dollar gained momentum. The release of better-than-expected data from the US has helped to allay concerns about a possible slowdown in the US economy.

Despite a slight easing of recession fears, the US economy is still facing challenges, with key activity indicators showing a decline. Friday will present one final challenge for those monitoring economic data. The release of Personal Consumption Expenditure (PCE) inflation data in the final trading session of the week could have a significant impact on the market if it fails to meet expectations.

In Europe, the EU confidence figures are also scheduled for release on Friday. However, most of these indexed surveys are anticipated to remain consistent with previous readings. Euro traders are particularly focused on the release of European inflation data for September, scheduled for next Tuesday.

The recent decision by the US Federal Reserve to cut interest rates by 50 basis points prompted concerns in global markets, with some investors questioning whether such a drastic move was a reaction to the looming economic slowdown in the US. However, Fed Chairman Jerome Powell clarified that the rate cut was a preemptive measure designed to bolster the US labour market, rather than a reaction to indications of recession.

The positive data on US durable goods orders and weekly initial jobless claims further reinforced the Fed's position, with both figures exceeding expectations. The narrative of a 'soft landing' for the economy remained intact. The upcoming release of Personal Consumption Expenditure (PCE) inflation data on Friday will be a crucial indicator of the impact of the Fed's recent rate cut.

US Durable Goods Orders in August remained unchanged from the previous month, falling short of the previous month's strong increase but still outperforming the projected 2.6% contraction. Additionally, initial jobless claims for the week ending 20 September decreased to 218,000, exceeding the projected 225,000 and indicating a reduction from the previous week's revised 222,000.

Trade recommendation: Trading predominantly Buy orders from the current price level.

The Japanese Yen (JPY) remains depreciated against the US Dollar (USD) following the release of the minutes from the Bank of Japan's (BoJ) July policy meeting on Thursday. The yen faces challenges as traders expect the BoJ to ponder before further rate hikes.

The minutes of the BoJ's monetary policy meeting expressed a general view among members on the importance of remaining vigilant on the risks of inflation exceeding targets. Several members indicated that raising rates to 0.25 percent would be an appropriate way to adjust the level of monetary support. Some others suggested that a moderate adjustment in monetary support would also be appropriate.

Pressure on the U.S. dollar is being exerted by the increased likelihood of further interest rate cuts by the U.S. Federal Reserve (Fed) at upcoming meetings. According to CME FedWatch Tool, markets estimate the probability that the Fed will cut rates by 75 basis points to a range of 4.0-4.25% by the end of this year at around 50%.

Traders' attention is now focused on the release of final annualized U.S. gross domestic product (GDP) data for the second quarter (Q2), due later in the day. On Friday, inflation data will be released in Tokyo, which could provide further insight into the economic outlook and possible monetary policy moves by the Bank of Japan.

Trading recommendation: Trading predominantly Sell orders from the current price level.

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GBP/USD continued to rally the Pound for the second day in a row, breaking above 1.3400 and hitting new 30-month highs after the US Dollar weakened significantly on Tuesday.

Wednesday will be quiet for the Pound in terms of data, although traders will be keeping an eye on statements from Bank of England Monetary Policy Committee (MPC) member Megan Green. MPC member Green will be speaking at the North East England Chamber of Commerce.

The U.S. portion of Wednesday's economic data list is also underweight for the midweek market session. August's monthly new home sales figure is unlikely to have much momentum one way or the other, followed by a speech from Federal Reserve Board of Governors (Fed) member Adrian Kugler, who will speak at Harvard's Kennedy School in Cambridge.

Consumer confidence deteriorated across the board on Tuesday, with consumer expectations for 12-month inflation accelerating to 5.2 per cent. Consumers also reported a general weakening in their six-month outlook for household financial conditions, and consumer assessments of overall business conditions turned negative.

The pullback in consumer confidence results triggered renewed trading in the rates markets in favour of a subsequent sharp rate cut in November. According to the CME's FedWatch tool, rates markets are pricing in nearly 60% probability of a second 50 bps rate cut. 7 November and only a 40% probability of a more reasonable subsequent 25bp rate cut. Earlier in the week, traders were estimating roughly equal odds of a 50bp or 25bp rate cut.

Trading recommendation: Trade predominantly with Buy orders from the current price level

The EUR/USD exchange rate saw a modest decline of 0.5% on Monday, indicating a loss of recent bullish momentum. The Fib declined on one of the most challenging trading days of the second half of the year, following the release of EU Purchasing Managers' Index (PMI) data that fell short of expectations and US PMI data that showed only slight improvement.

Tuesday will be a relatively quiet day for EUR/USD, with minimal data releases anticipated on either side of the Atlantic. However, there is expected to be a speech from Federal Reserve (Fed) Governor Michelle Bowman.

Despite the dollar's general weakening following the Fed's surprise double rate cut last week, negative market sentiment towards the euro is preventing gains in the EUR/USD.

The September S&P US Manufacturing PMI declined to 47.0 m/m, reaching its lowest level since July 2023. This is indicative of the persisting gloomy outlook for business activity in the US manufacturing sector. In contrast, the S&P US Services PMI Purchasing Managers' Index declined to 55.4 in September, down from 55.7 in August. However, this figure exceeded the projected 55.2.

Austan Goolsbee, a policymaker at the Federal Reserve Bank of Chicago and President of the Chicago Fed, made comments on Monday that had a chilling effect on the markets. He noted that the Fed may have to make further rate moves to keep business credit conditions liquid enough to keep the keel on U.S. business as record tightness in the U.S. labour market winds down.

Trade recommendation: Trading predominantly Buy orders from the current price level.