The euro weakened as soft German data renewed fears of stagnation in Europe, while political stability in France offered brief support. The pound held steady despite weak UK employment figures and growing expectations of rate cuts, as traders awaited clearer guidance from the Bank of England. The yen declined amid political shifts in Japan and speculation of continued ultra-loose policy, keeping it under pressure against the dollar. The Canadian dollar softened on slowing inflation and dovish signals from the central bank, weighed further by weaker oil prices. Gold remained resilient despite profit-taking, supported by safe-haven demand amid global fiscal uncertainty, geopolitical tensions, and the ongoing US government shutdown that continued to limit dollar strength and sustain risk aversion in precious metals.
🇪🇺/🇺🇸 EUR/USD Outlook – Euro vs U.S. Dollar
Macroeconomic Overview:
- The euro weakened following Germany’s Producer Price Index (PPI) decline of 0.1%, highlighting underlying fragility in Europe’s largest economy.
- Weak producer prices reflect falling industrial demand and potential stagnation in German manufacturing, amplifying fears of a broader eurozone slowdown.
- Political stability in France temporarily supported the euro, as Prime Minister Sébastien Lecornu survived two no-confidence votes, easing fiscal tensions.
- The U.S. dollar, however, remains supported by easing trade tensions with China and expectations of further rate cuts from the Federal Reserve.
- A strong U.S. Leading Economic Index (LEI) could reinforce dollar demand, while a weak print may give temporary relief to the euro.
Market Sentiment:
- Traders remain cautious amid mixed signals—economic softness in Europe vs. dovish tones from the Fed.
- The euro’s recent correction is viewed as part of a larger counter-wave within a broader bullish framework, but near-term risks favor the dollar.
Forecast:
- Short-term rebound possible toward upper resistance zones before a likely reversal lower.
- Medium-term bias leans bearish unless U.S. data significantly disappoints.
Support Levels: 1.1642, 1.1618, 1.1600, 1.1543
Resistance Levels: 1.1681, 1.1728, 1.1754, 1.1786, 1.1819
Outlook: Mildly bearish; euro may test 1.1640–1.1600 before stabilizing.
🇬🇧/🇺🇸 GBP/USD Outlook – British Pound vs U.S. Dollar
Macroeconomic Overview:
- UK bond yields dropped sharply following soft labor data—unemployment rose to 4.8%, the highest in nearly four years.
- Bank of England Governor Andrew Bailey acknowledged economic underperformance and hinted at possible rate cuts as early as December.
- Market expectations now price in full easing by February, weighing on the pound’s short-term outlook.
- The pair remains sensitive to U.S. LEI data and global risk sentiment linked to U.S.–China trade developments.
Market Sentiment:
- Traders are increasingly pricing in a dovish BoE stance, diminishing GBP’s appeal.
- Despite that, oversold conditions and short-term dollar softness could create brief upside opportunities.
- However, broader structural correction persists, reflecting economic stagnation and fiscal challenges in the UK.
Forecast:
- GBP/USD may trade within a narrow range early in the week, possibly testing the resistance zone before renewed weakness.
- A break below 1.3370 would signal renewed bearish momentum.
Support Levels: 1.3408, 1.3371, 1.3335, 1.3281
Resistance Levels: 1.3453, 1.3486, 1.3490, 1.3540
Outlook: Sideways-to-bearish; potential short-term rally toward 1.3450–1.3480 before resuming decline.
🇺🇸/🇯🇵 USD/JPY Outlook – U.S. Dollar vs Japanese Yen
Macroeconomic Overview:
- The yen continued to weaken, slipping to 151 per dollar as Japanese political dynamics shifted with Sanae Takaichi set to become Japan’s first female prime minister.
- The “Takaichi trade” reflects expectations for ongoing ultra-loose Bank of Japan (BoJ) policy, keeping yields suppressed and the yen under pressure.
- The U.S. dollar remains firm amid steady macro indicators and relative yield advantage.
- Markets also await signals from the U.S. Leading Economic Index and any policy adjustments from the incoming Japanese leadership.
Market Sentiment:
- Traders continue favoring USD/JPY long positions due to divergent policy paths between the Fed and BoJ.
- However, the pair trades near critical resistance, raising the risk of intervention-related volatility if the yen weakens excessively.
Forecast:
- Sideways movement likely at the start of the week, followed by renewed upward pressure toward 151.50–152.00.
- Potential correction possible later if U.S. data disappoints or intervention fears rise.
Support Levels: 150.15, 149.75, 148.83, 147.81
Resistance Levels: 151.18, 151.68, 152.50, 153.28, 154.80
Outlook: Bullish bias; potential continuation toward 152.00 before profit-taking.
🇺🇸/🇨🇦 USD/CAD Outlook – U.S. Dollar vs Canadian Dollar
Macroeconomic Overview:
- The Canadian dollar remains under pressure amid dovish Bank of Canada policy signals and weak domestic fundamentals.
- GDP contracted by 1.6% YoY, marking the weakest performance in four years.
- Declines in exports (-7.5%) and investment (-0.6%) indicate slowing growth momentum.
- Despite a modestly strong jobs report, Governor Tiff Macklem’s comments on labor weakness strengthened market expectations for another rate cut.
- Inflation data remains soft, with expectations for flat-to-negative monthly CPI and slowing annual figures—potentially prompting further easing.
Market Sentiment:
- Traders favor long USD/CAD positions amid diverging U.S.–Canada policy expectations.
- Speculation over consecutive rate cuts in October and December supports continued CAD weakness.
- Oil price softness further limits CAD recovery potential.
Forecast:
- Sideways consolidation expected early in the week, followed by potential upward continuation if CPI data disappoints.
- Sustained bullish momentum likely if the Bank of Canada maintains its dovish guidance.
Support Levels: 1.3900, 1.3850
Resistance Levels: 1.4160, 1.4210
Outlook: Bullish; likely continuation toward 1.4160 amid dovish policy tone.
🌕 Gold (XAU/USD) Outlook – Gold vs U.S. Dollar
Macroeconomic Overview:
- Gold continues to benefit from rising geopolitical tensions, U.S. fiscal strain, and market uncertainty over the prolonged government shutdown.
- Weakening U.S. data and fully priced-in Fed rate cuts strengthen the fundamental case for gold.
- Continued central bank buying, robust ETF inflows, and lingering inflationary risks add to the metal’s resilience.
- However, short-term corrections occur as trade tensions ease temporarily, limiting near-term upside momentum.
Market Sentiment:
- Despite a 2% drop on Friday, gold remains on a nine-week winning streak—its longest in years.
- Traders expect further gains once short-term profit-taking subsides.
- Rising U.S. debt levels and political uncertainty sustain medium-term bullish bias.
Forecast:
- Likely consolidation early in the week between 4160–4280, followed by a potential rebound toward 4380–4400.
- Sustained break above 4278 could signal resumption of the broader uptrend toward 4500.
Support Levels: 4167, 4090, 4050, 4000
Resistance Levels: 4278, 4380, 4400, 4500
Outlook: Bullish bias; correction phase likely short-lived with renewed upward potential.
📊 Summary Table: As of October 21, 2025
| Asset | Bias | Key Drivers | Support Levels | Resistance Levels | Short-Term Outlook |
|---|---|---|---|---|---|
| 🇪🇺 EUR/USD | Mildly Bearish | Weak German data, strong USD, easing trade risk | 1.1642 / 1.1600 | 1.1728 / 1.1786 | Consolidation before downward move |
| 🇬🇧 GBP/USD | Sideways to Bearish | Rising UK unemployment, dovish BoE | 1.3408 / 1.3371 | 1.3453 / 1.3486 | Limited upside, risk of renewed decline |
| 🇯🇵 USD/JPY | Bullish | Political shift in Japan, yield divergence | 150.15 / 149.75 | 151.68 / 152.50 | Gradual rise toward 152.00 |
| 🇨🇦 USD/CAD | Bullish | Dovish BoC, weak inflation, oil softness | 1.3900 / 1.3850 | 1.4160 / 1.4210 | Further upside likely after CPI |
| 🪙 XAU/USD | Bullish | Safe-haven demand, Fed cuts, geopolitical risks | 4167 / 4090 | 4380 / 4500 | Short-term consolidation before rally |
