Market analysis

Date: Monday 13th of October 2025

EUR/USD : US federal shutdown and French turmoil triggering panic trading

GBP/USD : S ellers refuse to give up .

USD/JPY : R ebounds above 152.00 on political turmoil in Japan .

Dow Jones : S ells off as Trump hits China with more tariffs .

Gold : Will investors continue to disregard overbought conditions?

Crude Oil : Trump tariff threat pushes oil to five-month low .

EUR/USD

US federal shutdown and French turmoil triggering panic trading

The EUR/USD pair edged lower and bottomed at 1.1542 on Thursday, ending the week in the red in the 1.1570 price zone on Friday. The US Dollar (USD) surged on the back of risk aversion, triggered by political woes on both shores of the Atlantic. Markets kicked off Monday with some worrisome headlines coming from France. Prime Minister (PM) Sébastien Lecornu resigned less than a day after his cabinet was announced. The political crisis in France began over a year ago, when President Emmanuel Macron called for snap parliamentary elections, claiming France’s government needed “a clear majority in serenity and harmony.” However, the election ended with a big increase in far-right lawmakers and a hung parliament. The voting "brought more division to the National Assembly rather than solutions for the French people," Macron acknowledged a few months later . Lecornu is the fifth PM to resign amid the inability to pass a budget through Parliament to bear with France's massive debt, which now exceeds €3 trillion, equivalent to approximately 114% of its Gross Domestic Product (GDP). Macron asked Lecornu to remain in office and try to form a coalition government, but he failed miserably. In fact, far-right leader Marine Le Pen clearly stated that she would thwart any action by a new government, calling for fresh snap elections. The news negatively affected the Euro (EUR). In the meantime, the US Dollar (USD) received an unexpected boost from Japanese headlines. The Japanese ruling Liberal Democratic Party (LDP) elected Sanae Takaichi, a 64-year-old lawmaker, positioning her to become Japan's first female Prime Minister. The news heavily weighed on the JPY, with the USD/JPY pair gaping roughly 300 pips up at the weekly opening and pushing the Greenback higher across the board. The JPY plummeted on speculation that Takaichi would vow to increase federal spending and a looser monetary policy. By the end of the week, however, her future as PM was put in doubt after Japan’s ruling coalition broke up on Friday. The LDP holds the largest majority of seats, but it’s short of a majority. For the past 26 years, it has formed a coalition with the Komeito party, which ended after the head of Komeito, Tetsuo Saito, said the LDP failed to provide sufficient answers regarding political funding issues. The JPY recovered modestly with the news, but the broad USD keeps USD/JPY up by roughly 500 pips by the end of the week. And of course, the United States (US) government shutdown that began on October 1 continued. Throughout the week, the Senate has met multiple times to vote on a funding bill, to no avail. Early in the week, US President Donald Trump warned about looming massive federal layoffs, blaming Democrats for the matter. Financial markets fared relatively well with the fact that the US government is on pause until Thursday, when the latest round of failed votes in Congress triggered panic and sent the USD sharply up. In the meantime, the Federal Open Market Committee (FOMC) released the Minutes of the September meeting. The USD suffered a temporary setback afterwards, as the document showed policymakers are split on how to proceed next. For a slim majority, ten out of nineteen members favor two more interest rate cuts before the year's end. The decision to trim the benchmark interest rate by 25 basis points (bps) was pretty much unanimous amid a weakening labor market. “Participants expressed a range of views about the degree to which the current stance of monetary policy was restrictive and about the likely future path of policy,” the document added. “Most judged that it likely would be appropriate to ease policy further over the remainder of this year.” Given the US government shutdown, the American macroeconomic calendar remained pretty much empty. Beyond the FOMC meeting Minutes, the US published the October Michigan Consumer Sentiment Index on Friday, which edged lower to 55 from 55.1 in September, although better than the market expectation of 54.2. The report also showed that the 1-year Consumer Inflation Expectation ticked down to 4.6% from 4.7% in September, and the 5-year Consumer Inflation Expectation remained unchanged at 3.7%. The Eurozone reported that retail sales were up 0.1% on a monthly basis in August, meeting expectations. German factory Orders fell by 0.8% in the same month, better than the -2.7% from July, although worse than the 1.4% anticipated. Industrial Production in the country fell by 4.3% also in August, worsening from the 1.3% advance posted in the previous month. Beyond data, the macroeconomic calendar had plenty of policymakers' speeches. European Central Bank (ECB) President Christine Lagarde testified before the European Parliament's Economic and Monetary Affairs Committee on Monday and declared that the ECB achieved its disinflation targets, repeating that the central bank is “in a good place.” Her optimistic words were not enough to overshadow the ruling dismal mood. The upcoming days will bring the final estimate of the September German Harmonized Index of Consumer Prices (HICP), while the country will release the October ZEW Survey on Economic Sentiment. As for the Eurozone, the calendar will feature little of relevance, with August Industrial Production and the Trade Balance for the same month being the most relevant figures. In the US, there is a caveat: If the federal government remains shut down, the most relevant figures will not be released. The absence of fresh statistics is among the main reasons for the recent USD surge on risk aversion, as investors grow worried about how this lack of information could affect the October Federal Reserve (Fed) monetary policy decision. The macroeconomic calendar should include Consumer Price Index (CPI) and Producer Price Index (PPI) updates, alongside Retail Sales and weekly unemployment figures. None of those will out unless the US Senate agrees on a funding bill to reopen the government.

It is worth noting that on October 15, the government is due to pay military salaries, who continue to work amid their critical role in national security. Legislation would need to pass by Monday to process paychecks in time, and at this point, it seems unlikely. The US takes pride in its support for the military, so a weekend news with a partial funding bill is not out of the table .

Source : https://www.fxstreet.com/analysis/eur-usd-weekly-forecast-political-jitters-boosting-us-dollar-demand-202510101501

EUR/USD

GBP/USD

Sellers refuse to give up.

The Pound Sterling broke the previous consolidation against the US Dollar to the downside, as GBP/USD tested levels under 1.3300. It was all about the USD comeback against its major currency rivals that led to the renewed downside in the GBP/USD pair . The pair hit the lowest level in ten weeks at 1.3280, after having faced rejection once again at 1.3500 in the early part of the week. The Greenback stood tall despite the extension of the US government shutdown and persistent bets for two Federal Reserve (Fed) interest rate cuts this year. The main catalyst behind the USD strength was the sell-off in the Euro (EUR) and the Japanese Yen (JPY) in the face of political upheaval in France and Japan . French Prime Minister (PM) Sébastien Lecornu resigned, less than a month into his tenure. The move comes just 26 days after he was appointed by President Emmanuel Macron, highlighting the continuing instability that has gripped French politics since last year’s inconclusive parliamentary elections. Meanwhile, the JPY faced headwinds from “Sanae Takaichi won the Japanese ruling Liberal Democratic Party (LDP) leadership election over the last weekend, setting the country on course for more expansionary fiscal policy and complicating the task facing the Bank of Japan (BoJ),” per Reuters. Furthermore, the Artificial Intelligence (AI) frenzy-driven record highs on US indices lifted the economic optimism, bolstering the USD’s upsurge. GBP/USD also drew support from expectations of monetary policy divergence between the Fed and the Bank of England (BoE), as highlighted by a slew of central bank talks. BoE policymaker Catherine Mann noted on Thursday, “the monetary policy must remain restrictive for longer to create an environment conducive to growth.” Last week, BoE officials Dave Ramsden, Catherine Mann and Sarah Breeden warned about higher inflationary pressures, advocating the central bank’s prudence on further easing. Some delayed data publication from the US Department of Labor (DoL), Bureau of Labor Statistics (BLS) and the Census Bureau could be released in the upcoming week if the US government shutdown reopens even partially. That said, it will be a quiet start to the week, with the US markets closed in observance of Columbus Day. On Tuesday, the UK calendar will feature the employment data, which will be the only event of note that day. The US Consumer Price Index (CPI) data for September is originally scheduled for release on Wednesday, but it remains to be seen if that happens due to the Senate deadlock. However, there are reports that the US Bureau of Labor Statistics (BLS) has recalled a limited number of staff from furlough to complete the September inflation report. So, the data could be available before the Fed’s October 28-29 policy meeting. Thursday will see the publication of the British monthly Gross Domestic Product (GDP) and Industrial Production data, followed by the tentative releases such as the weekly US Jobless Claims, Producer Price Index (PPI) and Retail Sales report. On Friday, the September US labor market data, including the highly influential Nonfarm Payrolls (NFP), scheduled for October 3, could drop if the government funding is restored. Last week’s Jobless Claims will likely be released in that case. Amid lingering uncertainty over the US economic situation, speeches from Fed policymakers, alongside any fresh geopolitical and trade updates will offer some directional impetus to GBP/USD traders.

Source: https://www.fxstreet.com/analysis/gbp-usd-weekly-forecast-pound-sterling-sellers-refuse-to-give-up-202510101441

GBP/USD

USD/JPY

Rebounds above 152.00 on political turmoil in Japan.

The USD/JPY pair trades in positive territory near 152.05 during the early Asian session on Monday. The pair recovers some lost ground after facing some selling pressure in the previous session as US President Donald Trump threatened to hike tariffs against China. Traders will keep an eye on the release of China’s Trade Balance data, which is due later on Monday. China warned the United States (US) that it will retaliate if Trump fails to back down on his threat to impose 100% tariffs on Chinese imports, raising fears of how the trade war will impact the US economy. These remarks came after Trump announced on Friday that he would impose new 100% tariffs on China’s exports to the US. The escalating trade tensions between the world’s two largest economies, along with the ongoing US government shutdown, could weigh on the Greenback against the JPY in the near term. Traders will closely monitor signs of when the US federal government will reopen and release data that will shape Federal Reserve (Fed) policy. On the other hand, concerns that the Bank of Japan (BoJ) may not hike interest rates this year after Sanae Takaichi's surprise victory to lead the ruling party could weigh on the JPY and help limit the pair’s losses. Takaichi's win fueled speculations about more expansionary fiscal policy. However, some foreign exchange intervention cannot be ruled out after Japanese Finance Minister Katsunobu Kato said on Friday that the Japanese government was concerned about excessive volatility in the FX market.

Source: https://www.fxstreet.com/news/usd-jpy-rebounds-above-15200-on-political-turmoil-in-japan-202510122303

USD/JPY

Dow Jones

Sells off as Trump hits China with more tariffs.

Wall Street slumped on Friday after U.S. President Donald Trump escalated his trade conflict with China after Beijing tightened its rare earth restrictions. Late on Friday after Wall Street’s official trading session, Trump said he would impose an additional 100% tariff on imports from China, as well as export controls on critical U.S.-made software, an announcement that sent Big Tech shares tumbling. Nvidia, Tesla, Amazon and Advanced Micro Devices all fell more than 2% after the bell. Those losses added to already steep declines during Friday’s trading session after Trump warned in a post on Truth Social earlier in the day that he was weighing a "massive" tariff increase on Chinese imports and said there is no reason to meet with China’s President Xi Jinping in two weeks as planned, adding that there are "many other countermeasures" under consideration. Trump’s latest move against China shocked markets and threatened further damage to already strained relations between the world’s two largest economies. All three major U.S. stock indexes sold off sharply during Friday’s session before stocks extended losses after the bell. The S&P 500 and the Nasdaq suffered their largest single-day percentage drops since April 10. On a weekly basis, the S&P 500 logged its biggest drop since May, while the Nasdaq’s Friday-to-Friday decline was its steepest since April. "The second largest economy and the first largest economy are arguing again, and we’re seeing a sell first, ask questions later mentality to end the week," said Ryan Detrick, chief market strategist at Carson Group in Omaha. "President Trump’s post did truly come out of nowhere, which opened the door for some extreme volatility." "And it’s important to remember we haven’t had this level of volatility in a long time," Detrick added. "One could argue we were due for some spookiness this October." Trump’s erratic trade policies have rattled markets since his April 2 "Liberation Day" tariff announcement, with on-again, off-again trade negotiations, causing turbulence across asset classes. The Dow Jones Industrial Average fell 878.82 points, or 1.90%, to 45,479.60, the S&P 500 lost 182.60 points, or 2.71%, to 6,552.51 and the Nasdaq Composite lost 820.20 points, or 3.56%, to 22,204.43. The Philadelphia Stock Exchange Semiconductor Index dropped 6.3%, in the wake of Trump’s announcement. China produces over 90% of the world’s processed rare earths and rare earth magnets, which are critical for products ranging from electric vehicles and aircraft engines to military radars. An escalating trade war between the two largest global economies could trigger major supply chain disruptions, particularly for the technology, electric vehicle and defense industries. The CBOE Volatility Index, viewed as a reflection of market anxiety, reached its highest closing level since June 19. U.S.-listed shares of Chinese companies dropped sharply, with heavyweights Alibaba Group Holding, JD.com Inc and PDD Holdings down between 5.3% and 8.5%. Qualcomm fell 7.3% after China’s market regulator said the country had launched an antitrust investigation into the semiconductor manufacturer over its acquisition of Israel’s Autotalks. The U.S. government is currently in its 10th day of shutdown as a congressional impasse has so far yielded few signs of progress or serious negotiation. This has resulted in a data blackout, with official government economic indicators postponed for the time being. Still, data from independent sources continues unabated. The University of Michigan released its preliminary take on October consumer sentiment, which is drifting along near historic lows as high prices and weakening job prospects remain at the forefront of consumer worries. In the absence of official data, investors look to the U.S. Federal Reserve for clues regarding near-term interest rate cuts. Fed Governor Christopher Waller said that while private employment data continues to show labor market weakness, the central bank should act with caution when reducing the Fed funds target rate as it evaluates the economy. St. Louis Fed President Alberto Musalem echoed that sentiment, saying that another rate cut could be warranted as insurance against a weakening labor market. "I believe that we have to tread with caution" before monetary policy becomes too accommodative, he said. A spate of large financial firms - including JPMorgan Chase, Goldman Sachs, Citigroup, and Wells Fargo - is set to release quarterly results on Tuesday, marking the unofficial launch of third-quarter earnings season. Analysts currently expect third-quarter S&P 500 earnings growth of 8.8% year-on-year, on aggregate, compared with annual growth of 13.8% last quarter and 9.1% in Q3 2024, according to LSEG data. Declining issues outnumbered advancers by a 4.36-to-1 ratio on the NYSE. There were 215 new highs and 167 new lows on the NYSE. On the Nasdaq, 799 stocks rose and 3,936 fell as declining issues outnumbered advancers by a 4.93-to-1 ratio. The S&P 500 posted 18 new 52-week highs and 19 new lows while the Nasdaq Composite recorded 102 new highs and 145 new lows. Volume on U.S. exchanges was 24.26 billion shares, compared with the 20.15 billion average for the full session over the last 20 trading days.

Source : https://www.investing.com/news/economy-news/us-stock-index-futures-tick-up-ahead-of-consumer-sentiment-data-4281127

Dow Jones

Gold

Will investors continue to disregard overbought conditions?

Gold (XAU/USD) continued to ignore overbought conditions this week and extended its rally to a new record-high above $4,000. Key inflation data from the United States (US) could be postponed next week unless the government reopens, allowing risk perception and comments from Federal Reserve (Fed) officials to continue driving XAU/USD’s performance in the short term. Gold benefited from several developments in the first half of the week and notched a new record-high near $4,060 on Wednesday. Sanae Takaichi, who is known to be a fiscal dove that could oppose further monetary tightening by the Bank of Japan (BoJ), won the leadership race of Japan's ruling Liberal Democratic Party (LDP) over the weekend. Growing market expectations for pro-stimulus policies triggered a selloff in the Japanese Yen (JPY). The XAU/JPY pair opened with a huge bullish gap on Monday and gained nearly 8% in a three-day rally, showing a strong capital outflow out of the JPY into Gold. Moreover, France’s newly appointed Prime Minister Sébastien Lecornu announced his resignation on Monday, reviving fears over a deepening political crisis in Europe’s second-biggest economy. In turn, capital fleeing the Euro moved to Gold, with the XAU/EUR pair rising nearly 5% in the first half of the week. Meanwhile, lawmakers in the United States (US) failed to agree on a funding bill to end the government shutdown, causing postponements in data releases and feeding into the uncertainty surrounding the economic outlook, which in turn clouded the visions of Fed policymakers. Although the US Dollar (USD) Index, which gauges the USD’s performance against a basket of six major currencies, gathered bullish momentum throughout the week, it had little to no impact on the XAU/USD’s rally. On Thursday, easing geopolitical tensions limited Gold’s strength after US President Donald Trump announced that Israel and Hamas had agreed on a peace plan and that Israeli hostages could be released by next Monday. XAU/USD lost more than 1.5% and closed below $4,000 on Thursday before going into a consolidation phase on Friday. The US Bureau of Labor Statistics (BLS) is scheduled to release the Consumer Price Index (CPI) and the Producer Price Index (PPI) data for September on Wednesday and Thursday, respectively, although it remains uncertain whether the data will be released. Democrats and Republicans failed to make any progress in reopening the government after the funding bill was rejected with a 54-45 vote on Thursday. The Senate will return next Tuesday and there won't be any other votes on the bill until then. Meanwhile, The New York Times reported early Friday that the BLS is calling back a limited number of staff from furlough to complete the September Consumer Price Index (CPI) report. “The decision reflects the importance of September inflation data in determining the annual Social Security cost-of-living adjustment (COLA), which is calculated using third-quarter CPI figures. A prolonged delay would risk postponing the COLA announcement that affects millions of retirees,” the report explained. Still, it’s unclear whether the data will be made public. In case it’s published, the market reaction is likely to be focused on the monthly core CPI figure, which is forecast to rise by 0.3%. A reading below market expectations could hurt the USD and allow XAU/USD to continue to stretch higher. Conversely, investors could reassess the probability of a 25-basis-point (bps) rate cut in December and cause Gold to turn south if the data surprises to the upside. According to the CME FedWatch Tool, markets are currently fully pricing in a 25 bps reduction in the policy rate in October and see about an 80% probability of one more 25 bps cut in December.

Comments from Fed officials will also be watched closely by market participants, especially if the shutdown continues. If Fed officials hint that they will need to adopt a cautious approach to further policy easing, citing a lack of data and the heightened uncertainty, Gold could have a hard time gathering bullish momentum. On the other hand, the USD could come under renewed selling pressure and allow XAU/USD to hold its ground if Fed officials suggest that policy easing could be the preferred route in the case of a prolonged government shutdown and its potential negative impact on employment and consumer spending.

Source: https://www.fxstreet.com/analysis/gold-weekly-forecast-bulls-take-action-as-risk-aversion-grips-markets-202510031450

GOLD

Crude Oil

Trump tariff threat pushes oil to five-month low.

Brent and U.S. crude futures fell more than $2 a barrel, or more than 3%, on Friday as U.S. President Donald Trump’s threat to impose increased tariffs on China cast a shadow over the demand outlook in a market seen as oversupplied. "The sell-off was driven by a shift to risk-off markets following Trump’s post threatening tariffs on Chinese goods," said Giovanni Staunovo, an analyst with UBS. Brent crude futures settled at $62.73 a barrel, down $2.49, or 3.82%, the lowest since May 5. U.S. West Texas Intermediate crude finished at $58.90 a barrel down $2.61, or 4.24%, the lowest since early May. "Today is the culmination of a variety of factors of which Trump’s threat of a massive increase in tariffs on China is just the latest," said Andrew Lipow, president of Lipow Oil Associates. Production increases from OPEC, additional output gains in North and South America, and the loss of geopolitical risk after the Gaza ceasefire agreement "are all factors that can be layered on top of Trump’s announcement this morning of tariffs on China," Lipow said. Trump, who was due to meet Chinese President Xi Jinping in about three weeks in South Korea, complained on social media about what he characterized as China’s plans to hold the global economy hostage, after China dramatically expanded its export controls on rare earth elements on Thursday. China dominates the market for such elements, which are essential to tech manufacturing. In addition to threatening to cancel the meeting with Xi, Trump said he may impose a massive increase in tariffs on Chinese goods. Israel and the Palestinian militant group Hamas signed a ceasefire agreement on Thursday in the first phase of Trump’s initiative to end the war in Gaza. Under the deal, which Israel’s government ratified on Friday, fighting will cease, Israel will partially withdraw from Gaza, and Hamas will free all remaining hostages it captured in the attack that precipitated the war, in exchange for hundreds of prisoners held by Israel. Numerous vessels have been attacked by the Iran-aligned Houthis in Yemen since 2023, targeting ships they deem linked to Israel in what they described as solidarity with Palestinians over the war in Gaza. The Gaza ceasefire deal means the focus can move back to the impending oil surplus, as OPEC proceeds with the unwinding of production cuts, said Daniel Hynes, an analyst at ANZ. A smaller-than-expected November hike in output agreed by the Organization of the Petroleum Exporting Countries and allies (OPEC+) on Sunday eased some of those oversupply concerns.

"Markets’ expectations for a sharp ramp-up in crude supply have not manifested themselves in substantially lower prices," BMI analysts said in a note on Friday. Investors are also worried that a prolonged U.S. government shutdown could dampen the American economy and hurt oil demand in the world’s largest crude consumer.

Source : https://www.investing.com/news/commodities-news/oil-little-changed-amid-fading-risk-premium-after-gaza-deal-4280803

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MAJOR DATA RELEASED DURING LAST WEEK

MAJOR DATA COMING OUT THIS WEEK (Time zone GMT)

Disclaimer

Moving Average Convergence/Divergence (MACD):

MACD uses different exponential moving averages to generate buy and sell indicators. The lower pane of the chart shows two lines: a Differential Line and a Signal Line. The Differential Line is the difference between a short and long-period exponential moving average, typically 12 and 26 periods. The Signal Line is typically a 9-period exponential moving average. When the DL crosses the SL from above, a sell indicator is generated, and when it crosses from below a buy signal is generated.

Relative Strength Index (RSI):

This is a momentum indicator that measures a security's price in relation to itself. The lower pane of the chart shows a line that fluctuates on a scale of 0 to 100. Typically buy signals are generated at 30 and sell signals are generated at 70. If the line breaks 30, the security is oversold, and a reversal is imminent. If the line breaks 70, it is overbought and is due for a downward correction.

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