Dollar, Euro and Pound News: US Politics Meets European Rate Risks
The US Dollar Index trades near 101.260, while EUR/USD trades near 1.12592 and GBP/USD near 1.3491. Traders are watching US employment data and Thursday’s Bank of England decision.
Dollar: Election Outcome Leaves the Fed Outlook Intact
Democratic control of Congress has encouraged expectations that President Donald Trump will face greater constraints on his policy agenda, according to Reuters’ Thursday report. That has helped weaken the dollar, although expectations for Federal Reserve tightening have changed little. The election has altered market sentiment before any resulting policy changes have taken effect.
Attention now turns to Thursday’s jobless claims, which track new applications for unemployment benefits, and Friday’s employment report. ADP’s Wednesday release showed continued private-sector hiring in October. Resilient employment could keep pressure on the Fed to raise rates, limiting how far political developments alone can weaken the dollar.
Euro: Slower Growth Meets Rising Business Costs
The eurozone composite PMI, a survey of manufacturing and services activity, fell to 51.7 in October from 53.1, Reuters’ survey coverage showed. It was the weakest reading in four months, though still above the 50 threshold separating expansion from contraction. Services demand edged lower, employment slipped and input-cost inflation reached a five-month high. France returned to contraction as other major economies continued growing more slowly.
Those findings complicate the European Central Bank’s task. Higher rates could help restrain inflation but also weaken customer demand further. For the euro, slower activity and persistent cost pressure leave the next policy move dependent on whether inflation risks outweigh the loss of growth momentum.
GBP/USD Price Forecast
Every new GBP/USD analysis as it publishes, today's technical signal and key levels, live price — on one page.
See all GBP/USD forecastsPound: Bank of England Guidance Matters Beyond the First Hike
The Bank of England announcement is scheduled for 12:00 GMT on November 5 and had not been released at this update. Economists in Reuters’ rate preview expect a quarter-percentage-point increase to 4%, the first rise since August 2023. The Office for National Statistics puts September inflation at 3.5%, keeping price pressure central to the decision.
Resilient activity supports the case for action, but evidence that higher costs are spreading into sustained wage and price increases remains limited. The vote split, new forecasts and Governor Andrew Bailey’s guidance will help show whether officials support investors’ expectations for several further increases next year. An expected hike alone may offer less direction for sterling than the signal on what follows.
US Dollar Index Technical Analysis: Failed 101.535 Retest Exposes 101.097
The US Dollar Index trades near 101.260 on the four-hour chart, below both moving averages, which track average prices over time, and the descending trendline, a line connecting lower highs. The recovery into 101.535 failed, followed by renewed selling. That leaves the former support zone acting as resistance, where sellers may return.
Support, where buyers may step in, stands at 101.097. A four-hour close below it would expose 100.710. Resistance remains at 101.535, then 102.031, with the falling trendline adding another barrier. RSI, a 0 to 100 gauge of buying and selling strength, is below 40 and its signal line, a slower average of RSI. I remain bearish below 101.535, favoring failed rebounds. Reclaiming that level and the trendline would invalidate the immediate bearish view.
EUR/USD Technical Analysis: 1.12696 Resistance Holds the Recovery in Check
EUR/USD trades near 1.12592 on the four-hour chart, holding above the red moving average. Buyers have repeatedly tested the shaded resistance zone, but the falling blue moving average and 1.12696 still cap the recovery. The repeated upper wicks show that attempts to push higher have met selling.
A four-hour close above 1.12696 would open the way for 1.13150. Immediate support is 1.12249, followed by 1.11740 if the advance unwinds. RSI remains above 60 and its signal line, supporting buying momentum. My bias is slightly bullish above 1.12249, but the resistance tests make confirmation important. A close above 1.12696 followed by a successful retest would strengthen the setup; a sustained close below 1.12249 would invalidate it.
GBP/USD Technical Analysis: Rising Channel Supports Another 1.3503 Test
GBP/USD trades near 1.3491 on the two-hour chart, holding within its rising channel, two parallel lines guiding prices higher, and above both moving averages. The latest rebound has returned price toward 1.3503. Small candles beneath resistance show that buyers have yet to secure a breakout.
A two-hour close above 1.3503 would open the way for 1.3535. Initial support stands at 1.3454, then 1.3401, with the channel’s lower boundary providing additional support. RSI is near 70, showing strong momentum alongside greater pullback risk. I stay bullish above 1.3454 and favor a successful support retest or confirmed resistance breakout. A close below 1.3454 and the lower channel boundary would invalidate the immediate bullish setup.