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EUR/JPY gains ground after two days of losses, trading around 176.50 during the European hours on Monday. The technical analysis of the daily chart indicates a prevailing bullish bias as the currency cross remains within the ascending channel pattern.

Trump arrived in Tel Aviv earlier Monday to mark the release of Israeli hostages by Hamas after more than two years in captivity.

The dollar dropped on Friday as Trump threatened to escalate the trade war with fresh tariffs against China again. But as markets sense that he might back down from that, we are seeing risk trades bounce back modestly today and that includes the greenback as well. For many months now, the dollar has been hurt by Trump’s policy incoherence and penchant for conflict. So, we’re skipping the drama today and going straight to the TACO trade reversal.

USD/JPY is up 0.8% to 152.30 levels with EUR/USD down 0.3% to 1.1580 levels at the moment. The dollar is sitting mostly higher across the board, most notably only lower against the aussie. AUD/USD is up 0.7% to 0.6517 with the high earlier contesting its 100-day moving average of 0.6531. The aussie is mostly recovering on better risk sentiment after having fallen by over 1% on Friday.

Circling back to the dollar, the near-term charts continue to side with dollar buyers for the time being. And that’s setting the tone to start the new week, even with it being a US holiday (Wall Street will be open for trade though).

USD/JPY is now nudging back above its own 100-hour moving average (red line), with buyers hoping to establish back a more bullish near-term bias. Hold above and that will invalidate the drop on Friday below the key near-term level. But keep below, and sellers will still be staying in the game to try and wrestle back some semblance of control in the early stages this week.

As for EUR/USD, we are continuing to see sellers keep price action pinned under its 100-hour moving average (red line) as well. That continues to reinforce a more bearish near-term bias for the pair for now.

This article was written by Justin Low at investinglive.com.

Gold (XAU/USD) stands firm near an all-time peak during the first half of the European session on Monday and seems poised to appreciate further amid a supportive fundamental backdrop. Investors now seem worried that a prolonged US government shutdown will affect the economic performance.

Fundamental
Overview

The USD came under some
pressure on Friday as the risk-off sentiment caused by Trump’s threat of
substantially increasing tariffs on China weighed on Treasury yields. Over the
weekend, we had more soothing comments from Trump and other US officials which
triggered a recovery in risk sentiment.

The positive mood is
weighing a bit on the greenback amid lack of bullish catalysts. Domestically,
nothing has changed for the US dollar as the US government shutdown continues
to delay many key US economic reports. The dollar “repricing trade” needs
strong US data to keep going, especially on the labour market side, so any
hiccup on that front is likely to keep weighing on the greenback.

The market pricing shifted
more dovish with 47 bps of easing by year-end and 115 bps cumulatively by the
end of 2026. The BLS announced last week that it will release the US CPI report
despite the shutdown on October 24, so that’s going to be a key risk event. In
case we get hot data, we will likely see a hawkish repricing in interest rates
expectations with the December cut being priced out. Conversely, a soft report
shouldn’t change much in terms of pricing, but it will likely weigh on the
greenback anyway.

On the EUR side, the single
currency came under some pressure last week following the resignation of the
French PM Lecornu on Monday. Just four days later though, Lecornu was
reinstated as French PM and announced a new cabinet. He will now have to
present a 2026 draft budget before the deadline tomorrow. That will give
parliament the required 70 days to scrutinise the plan.

On the monetary policy
side, nothing has changed. The ECB is not expected to adjust rates for a long
time unless we get significant deviation from their inflation target. In fact,
the vast majority of ECB members is comfortable with the current rate setting
and will not respond to small or short-term deviations from their target barring
a clear shock in the economy.

EURUSD Technical
Analysis – Daily Timeframe

On the daily chart, we can
see that EURUSD couldn’t sustain the break below the key support zone around
the 1.16 handle. The price rose back above the support zone and the buyers will
now look to pile in for a rally back into the 1.18 handle. The sellers, on the
other hand, will want to see the price breaking lower again to position for a
drop into the 1.14 handle next.

EURUSD Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
that we some consolidation right above the key support zone. This is where we
can expect the buyers to step in with a defined risk below the zone to position
for a rally into the trendline. The sellers, on the other hand, will want to
see the price breaking lower to pile in for a drop into the 1.14 handle next.

EURUSD Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that we have a minor upward trendline
defining the current bullish momentum. The buyers will likely lean on the support
zone and the trendline to keep pushing into new highs, while the sellers will
look for a break lower to increase the bearish bets into new lows. The red
lines define average daily range for today.

Upcoming
Catalysts

This week is going to be very light again in
terms of data releases given the US government shutdown. Data like Retail Sales
and Jobless Claims won’t be released. We will have lots of Fed speakers though
with Fed Chair Powell scheduled for tomorrow. Given the lack of key US data
though, it’s very unlikely to see a change in stance. For now, we know that
only the US CPI will be published despite the shutdown, which is scheduled for
Friday October 24.

This article was written by Giuseppe Dellamotta at investinglive.com.

Dow Jones futures climb 1.12% to trade above 46,200 during European hours on Monday, ahead of the opening of the United States (US) regular session. The S&P 500 futures gain 1.52% to rise toward 6,700, while Nasdaq 100 futures surge 2.07% to trade around 24,900 at the time of writing.

Chinese tech giant Xiaomi saw its shares fall over 7%, following reports that the doors of one of its EVs failed to open after a fiery crash in China.