The U.S. dollar is starting the new trading week higher, but the bigger story is what lies ahead. A Fed decision, a flood of corporate earnings and important U.S. economic releases will test expectations for interest rates, growth and the returns on massive artificial intelligence investments.
In the morning video above, I take a look at the three major currency pairs—EURUSD, USDJPY and GBPUSD—from a technical perspective. For each pair, I outline the bias, the risk-defining levels and the targets that would give either the buyers or sellers more control.
U.S. stock futures are pointing modestly higher, while crude oil is down about 2% in the supplied morning snapshot. Diplomatic efforts involving Iran offer some encouragement, but the threat of renewed fighting and Tuesday’s Israeli election keep geopolitical risks firmly in the picture.
The dollar is higher across the board
The greenback has gained against every major currency in the morning snapshot. Its largest gains are against the Japanese yen and New Zealand dollar, while the euro and Canadian dollar have shown the smallest declines against the USD.
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EURUSD: 1.1196, down 0.05%.
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USDJPY: 157.35, up 0.31%.
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GBPUSD: 1.3350, down 0.16%.
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USDCHF: 0.8262, up 0.16%.
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USDCAD: 1.4011, up 0.05%.
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AUDUSD: 0.7028, down 0.07%.
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NZDUSD: 0.5682, down 0.30%.
The direction is consistent, but the magnitude is different. The dollar’s gains against the euro and Canadian dollar are modest. The moves against the yen and New Zealand dollar are more pronounced.
Currency ranges: Where has the movement been?
The high-low readings show:
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EURUSD: 1.1194 to 1.1226 — 32 pips vs 22 day average of 65 pips
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USDJPY: 156.66 to 157.40 — 74 pips vs 22 day average of 94 pips.
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GBPUSD: 1.3343 to 1.3387 — 44 pips vs 22 day average of 71 pips.
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USDCHF: 0.8233 to 0.8266 — 33 pips vs 22 day average of 51 pips.
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USDCAD: 1.3999 to 1.4048 — 49 pips vs 22 day average of 62 pips.
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AUDUSD: 0.7023 to 0.7039 — 16 pips vs 22 day average of 45 pips.
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NZDUSD: 0.5683 to 0.5707, or 30 pips vs 22 day average of 30 pips.
USDJPY has the largest range in pips, while AUDUSD has the smallest.
U.S. stock futures point higher
The latest futures indications show:
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Dow industrial average futures: up 168 points.
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S&P 500 futures: up 14.32 points.
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Nasdaq 100 futures: up 76 points.
The opening indication is positive, but earnings and company guidance will provide a series of tests throughout the week.
Meta reverses its initial decline
Meta is a good example of why traders need to watch the reaction after a headline.
The company announced approximately $35 billion in concurrent equity offerings and plans for a future stock-sale program of up to $60 billion. The financing would support its AI infrastructure expansion.
The supplied headline also notes that Nvidia, AMD and Broadcom have expressed nonbinding interest in purchasing up to $5 billion of shares collectively. That is an expression of interest, rather than a completed investment.
After initially falling on the announcement, Meta shares have reversed higher and are now up 1.90% in the latest update.
Issuing stock raises questions about dilution and the cost of funding the AI buildout. Nevertheless, the early sellers have not maintained control. The reversal is encouraging for buyers, although they still need to sustain it through the trading session.
Tecnically, the price tumble last week, took the price to the 100/200 day MAs at $630 and $632.50 respectively. The low on Friday reached just above those MAs at $633.27. The bounce today is off key MA support. Those MAs will continue to be a barometer for buyers and sellers control. Stay above keeps the buyers in play.
A flood of earnings will test the AI story
Alphabet, Microsoft and Amazon are among the major companies reporting this week. Investors will be looking beyond revenue growth to spending plans, margins and evidence that AI investments are producing returns.
That distinction matters. A company can beat the headline earnings estimate and still see its shares fall if guidance disappoints or spending rises faster than investors expected. The report matters. The price reaction tells traders how the market is judging it.
Oil retreats, but Middle East risks remain
The commodity snapshot shows:
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WTI crude oil futures: $101.19, down $2.08, or 2.01%.
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Spot gold: approximately $4,017.30, up $21.49, or 0.54%.
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Silver: approximately $53.98, up 0.28%.
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Copper: $6.5210, up 0.24%.
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Bitcoin: $80,256, up $207, or 0.26%.
Oil is lower as regional diplomacy continues. Qatari mediators visited Tehran, while delegations from Saudi Arabia, Pakistan and Turkey are also pursuing talks aimed at preventing renewed fighting.
However, diplomacy is taking place alongside threats of further military action. Exchanges involving the Houthis and Saudi Arabia add another potential source of disruption.
For traders, lower oil offers some relief from inflation pressure. Sustained relief would require greater confidence that energy supplies and shipping routes are becoming more secure. One morning’s decline does not establish that.
Israeli election adds another catalyst
Israel holds its legislative election on Tuesday, with Benjamin Netanyahu’s leadership and security record central to the debate. The result—and the coalition negotiations that follow—will be watched for implications for regional policy and the Iran conflict.
Elsewhere, Brazil’s Lula da Silva won a fourth presidential term, while Serbia’s Aleksandar Vucic conceded an electoral defeat. Those outcomes add to an already busy political backdrop.
German Ifo: Better expectations, weaker current conditions
Germany’s October Ifo readings were mixed:
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Business climate: 90.2 versus 90.0 expected and 89.9 previously.
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Expectations: 91.6 versus 90.0 expected and 90.4 previously.
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Current conditions: 88.8 versus 89.9 expected and 89.5 previously.
The improvement came from expectations. Businesses see a better outlook, but their assessment of current conditions deteriorated.
That is a useful distinction for euro traders. Optimism improved, but the current economy has yet to deliver the same message. EURUSD remains modestly lower in the morning snapshot.
European markets and borrowing costs
European equities are mostly higher:
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Germany’s DAX: up approximately 0.95%.
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France’s CAC 40: up 0.77%.
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UK FTSE 100: up 0.42%.
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Spain’s IBEX 35: down 0.04%.
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Italy’s FTSE MIB: up 1.01%.
European 10-year yields show:
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Germany: 3.373%, up 1.8 basis points.
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France: 4.970%, down 4.3 basis points.
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UK: 5.352%, down 1.8 basis points.
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Spain: 4.041%, down 1.0 basis point.
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Italy: 4.569%, down 1.8 basis points.
France’s yield is lower today, but its spread over Germany remains near 160 basis points. French borrowing costs remain an important market barometer. They also survived a potential credit rating down-grade on Friday.
The North American calendar: A quieter start before the flood
All times are Eastern.
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Monday, October 26, 10:30 a.m.: Dallas Fed manufacturing survey.
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Tuesday, October 27, 8:30 a.m.: Durable goods orders.
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Tuesday, 10:00 a.m.: Consumer confidence, new-home sales and the Richmond Fed manufacturing survey.
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Wednesday, October 28, 2:00 p.m.: Fed policy decision, followed by the press conference at 2:30 p.m.
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Thursday, October 29, 8:30 a.m.: Advance third-quarter GDP, September personal income and spending, PCE inflation and weekly jobless claims.
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Friday, October 30, 8:30 a.m.: Third-quarter Employment Cost Index.
The sequencing matters. The Fed announces its decision before Thursday’s GDP and PCE reports. Those releases can therefore reshape expectations for the next meeting even after this week’s decision is behind us.
Growth, consumer spending, inflation and employment costs will all be in focus. Traders should be prepared to reassess the outlook as each report arrives.
EURUSD: Sellers have the early advantage
EURUSD is trading near 1.1196, just above the session low at 1.1194. The session high is 1.1226.
From the supplied price snapshot, sellers have the early advantage. A break below 1.1194 would extend the session’s decline. Buyers need to move the price away from that low and sustain a recovery before they can argue that control is shifting.
The video examines the technical levels that define that risk more precisely.
USDJPY: Buyers press toward the session high
USDJPY is trading near 157.35, just below the session high at 157.40. The low is 156.66.
Buyers have the early advantage, but they are approaching a decision point. A break above 157.40 that holds would extend their control. A failure to sustain a break would give traders a reason to question the momentum.
Getting through a level is one step. Staying through it is the next.
GBPUSD: Trading near the lower end of its range
GBPUSD is near 1.3350 after trading between 1.3343 and 1.3387.
Sellers have the early advantage, with 1.3343 the immediate downside reference. A break below would extend the session low. Buyers need to defend that low and build a sustained recovery to weaken the immediate selling pressure.
The video will give more details for your trading today.
With so many catalysts ahead, I want the price action and the technical tools applied to that price action to define the trade. Know the bias. Know the risk. Know what needs to break to give the next move more control.
This article was written by Greg Michalowski at investinglive.com.