Dollar Steadies After Split Fed Hold; Budget Calms Gilts
The dollar steadied on Thursday after a divided Federal Reserve held rates but left the path ahead unclear. Attention now turns to US inflation data and an ECB meeting likely to be dominated by France.
Dollar: Data Over Guidance
The Fed held rates at 3.75% to 4% in a 10-2 vote, with two officials voting for a hike. It upgraded its view of the economy to growing at a “strong pace” and signaled that upcoming inflation data would steer its next move, Reuters reported. Chair Kevin Warsh gave no clear steer on December, and his silence on further hikes was read as slightly dovish: traders pared bets on 2027 hikes, and two-year Treasury yields slipped to as low as 4.678% after his press conference. Even so, CME’s FedWatch tool, which turns futures prices into rate odds, still shows about a 78% chance of at least one hike by December. The dollar index held near 102.26 because that December bet survived the meeting intact. September PCE inflation and third-quarter GDP land Thursday.
Euro: France and Lagarde in Focus
The ECB is expected to hold its deposit rate at 2.5% on Thursday, but questions about French bond turmoil and whether Christine Lagarde leaves early are likely to overshadow the decision, Reuters reported. Berenberg’s Holger Schmieding said the latest oil spike has tilted inflation risks further to the upside. Algebris economists said the ECB might deploy its Transmission Protection Instrument, its emergency bond-buying tool, for other euro members while holding the line on France. Eurozone third-quarter GDP follows on Friday, with October inflation due on November 4.
Pound: Healey Delivers a “Boring” Budget
Chancellor John Healey’s first Budget left £15bn of fiscal headroom, the spare room against his own borrowing rules, for 2029-30, down from £23.6bn in March, as the Iran war pushed up borrowing costs. The OBR, the government’s independent forecaster, raised 2026 growth to 1.2% but cut its 2027 forecast to 1% from 1.6%, citing high energy prices.
Gilts, Britain’s government bonds, outperformed Treasuries after the statement. Schroders called the Budget uneventful and said that was exactly what the bond market wanted. The thin buffer still leaves sterling and gilts exposed if growth comes in weaker. A Bank of England hike on November 5 remains fully priced.
EUR/USD Price Forecast
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See all EUR/USD forecastsUS Dollar Index Technical Analysis: DXY Holds 102.03 as 102.59 Comes Into Focus
The US Dollar Index is trading near 102.23 on the 4-hour chart. After climbing to about 102.50, DXY pulled back to retest the 102.03 zone, an old ceiling that now acts as a floor, and is bouncing. A rising trendline, a line connecting higher lows, still supports the uptrend.
Resistance, where sellers tend to step in, is 102.59, then 102.92. Support, where buyers tend to step in, is 102.03, then 101.54.
RSI, which measures the strength of recent buying and selling, has cooled from overbought, meaning prices had risen too fast, to about 57. I keep a slight bullish lean while DXY holds 102.03. A close above 102.59 would open 102.92, while a drop below 102.03 would point to 101.54.
EUR/USD Technical Analysis: Euro Holds 1.1113 as Trendline Caps the Bounce
EUR/USD is trading near 1.1139 on the 4-hour chart. Buyers defended the 1.1113 zone again, the same floor that held on October 14. The rebound stalled near 1.1158, where a falling trendline has capped prices since last week.
The first resistance is 1.1158, then 1.1191. On the downside, 1.1113 is the first support, followed by 1.1081.
RSI has recovered to about 41 from near oversold, so selling is easing. My bias stays a slight bearish lean while EUR/USD trades below the trendline. A close above 1.1191 would favor buyers, while a drop below 1.1113 would open 1.1081.
GBP/USD Technical Analysis: Pound Bounces From 1.3281 but Stays Below 1.3356
GBP/USD is trading near 1.3315 on the 4-hour chart. The pound bounced from the 1.3281 zone, a level that capped prices through early October and now acts as a floor. It remains below both moving averages, lines showing the average price over time, and below a falling trendline from August.
The first resistance is 1.3356, then 1.3419. Support sits at 1.3281, then 1.3230.
RSI has climbed to about 46 from near oversold, which is close to neutral. In my view, the pound keeps a slight bearish lean below 1.3356. A close above it would open 1.3419, while a drop below 1.3281 would point to 1.3230.