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Daily Market Update

EUR/USD UNDER PRESSURE AS FRENCH DEBT SELLOFF CHALLENGES ECB RATE OUTLOOK

EUR/USD remains under pressure as French bond market stress challenges the ECB rate outlook, while Fed-ECB policy divergence and key levels near 1.1100 shape the outlook.

Daily Market Update October 2, 2026

EUR/USD UNDER PRESSURE AS FRENCH DEBT SELLOFF CHALLENGES ECB RATE OUTLOOK

EUR/USD UNDER PRESSURE AS FRENCH DEBT SELLOFF CHALLENGES ECB RATE OUTLOOK

EUR/USD remains under pressure after a sell-off in French government bonds challenged expectations for further increases in short-term European interest rates. According to ING, the shift has raised questions about the scope for additional ECB policy tightening.

ING notes that if French bond market pressure continues, the Euro could face a higher risk premium. Following the recent break of technical support, the bank sees near-term EUR/USD risks toward 1.1100–1.1120, with 1.1000 also potentially coming into focus.

The changing rate outlook is another factor for EUR/USD. ING argues that the ECB may have less scope to tighten policy than the Federal Reserve, which could weigh on the Euro if interest-rate expectations continue to diverge.

From a technical perspective, the break of recent support has weakened the near-term structure. ING expects any upside corrections to remain relatively limited while the pair trades under pressure.

For market participants, the key factors remain French bond market conditions, ECB policy expectations, Fed-ECB rate differentials, the 1.1100–1.1120 area and the 1.1000 level, which may provide further context for the near-term direction of EUR/USD.

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EUROZONE PMI FALLS TO 51.9 AS EUR/GBP HITS FRESH LOWS

Daily Market Update

EUROZONE PMI FALLS TO 51.9 AS EUR/GBP HITS FRESH LOWS

The Eurozone’s preliminary composite PMI fell to 51.9 in October from 53.1 in September, missing expectations of 52.7 as services and manufacturing activity slowed. Rising energy costs and concerns over France’s fiscal outlook added pressure on the Euro. Meanwhile, the UK composite PMI rose to 53.1, supporting Sterling and contributing to EUR/GBP reaching an 18-month low.

GOLD FALLS BELOW $4,000 FOR THE FIRST TIME SINCE JULY AS YIELDS AND USD WEIGH

Daily Market Update

GOLD FALLS BELOW $4,000 FOR THE FIRST TIME SINCE JULY AS YIELDS AND USD WEIGH

Gold falls below $4,000 per ounce for the first time since July as elevated US Treasury yields, a firm Dollar and expectations of further Fed tightening weigh on prices. Equity market sell-offs have also triggered bullion selling, while central bank demand and ETF inflows continue to support gold's longer-term outlook. Markets now focus on the Fed's October 28 decision for clues on the metal's next move.

SNB SAYS INCREASED WILLINGNESS TO INTERVENE NO LONGER NECESSARY

Daily Market Update

SNB SAYS INCREASED WILLINGNESS TO INTERVENE NO LONGER NECESSARY

The Swiss National Bank maintains its policy rate at 0% and says a higher willingness to intervene in foreign exchange markets is no longer necessary. The Swiss Franc depreciated around 3% on a trade-weighted basis between June and September, easing overall monetary conditions. With headline inflation at 0.8% and the 2026 GDP growth forecast upgraded to 1.5%–2.0%, the SNB expects price stability to remain intact over its forecast horizon.

FRENCH YIELDS TOP 5% FOR FIRST TIME SINCE 2002 AS MOODY’S REVIEW LOOMS

Daily Market Update

FRENCH YIELDS TOP 5% FOR FIRST TIME SINCE 2002 AS MOODY’S REVIEW LOOMS

EUR/USD trades just below 1.1250 as French 10-year government bond yields exceed 5% for the first time since 2002, adding pressure on the Euro ahead of Moody’s credit rating review. Markets are monitoring Eurozone and US PMI data, ECB and Fed rate expectations, and key technical levels, with resistance at 1.1250 and support at 1.1200, 1.1150 and 1.1100.

UK CPI HITS 3.5%: CORE AND SERVICE INFLATION ALSO ACCELERATE

Daily Market Update

UK CPI HITS 3.5%: CORE AND SERVICE INFLATION ALSO ACCELERATE

UK inflation accelerated to 3.5% in September, exceeding the 3.4% forecast. Core CPI rose to 2.8%, while services inflation increased to 3.7%, reinforcing expectations that the Bank of England may maintain a restrictive policy stance. Markets are monitoring persistent inflation pressures and the outlook for further rate tightening.

DXY GIVES BACK EARLY GAINS AS AI RISKS KEEP USD UNDER PRESSURE

Daily Market Update

DXY GIVES BACK EARLY GAINS AS AI RISKS KEEP USD UNDER PRESSURE

The US Dollar Index trades near 101.80 after retreating from an intraday high of 102.01, as concerns over the AI investment cycle weigh on the Dollar. Markets are monitoring French 10-year bond yields near 4.85%, Fed rate expectations and technical support at 101.65, with the RSI at 57 indicating that bullish momentum remains above neutral.

GBP/USD REBOUNDS FROM YTD LOW TO FRESH MONTHLY HIGH

Daily Market Update

GBP/USD REBOUNDS FROM YTD LOW TO FRESH MONTHLY HIGH

GBP/USD climbs to a fresh monthly high near 1.3325 after recovering from its 1.3135 year-to-date low. Weaker US Treasury yields, expectations for the Fed to hold rates and stronger UK GDP data support the pair. Traders are monitoring resistance at 1.3343, 1.3406 and 1.3468, with initial support near 1.3265.

WARSH WON’T PRE-JUDGE OCTOBER OR DECEMBER AS DXY SLIPS TO 101.82

Daily Market Update

WARSH WON’T PRE-JUDGE OCTOBER OR DECEMBER AS DXY SLIPS TO 101.82

The US Dollar Index slips to 101.82 as Fed Chair Kevin Warsh leaves the October and December policy decisions open. Markets will monitor inflation, employment, economic output and further Fed communication for clues on the US Dollar’s near-term direction.

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