The wave count has now developed into a more complex structure. Wave C has taken a three-wave form, while the following wave is identified as wave D. The entire trend segment that began on January 27 may have taken the form of a five-wave corrective structure, A-B-C-D-E. If this assumption is correct, wave D has been completed, and on August 21, EUR/USD entered the wave E formation phase. Its low should be below the low of wave C at 1.1325. The pair is only a short distance from this level, and below it, the projected wave E could complete its formation at any time.

Even the Nonfarm Payrolls report was not enough...

The EUR/USD exchange rate rose by 25 points on Friday, but this modest gain could be lost by the end of the day. To be frank, it is difficult to determine what conclusion to draw from today's session. The market did not start selling the US currency even after two of the three key reports for the US economy and the outlook for monetary policy came in significantly below expectations. The unemployment rate increased, the number of Nonfarm Payrolls was three times lower than forecast, and the August payrolls figure was revised down by 30,000, as previously indicated. Therefore, today's three US reports showed figures that provide no basis for the increase in demand for the dollar observed over the past month. This once again demonstrates that the dollar's recent appreciation has not been driven by economic factors.

In addition, the euro-area inflation report showed an acceleration to 3.8% year-on-year, while the market expected an increase only to 3.6%. What do these figures indicate? They suggest that the ECB has moved one step closer to a third rate hike this year, as the previous two hikes have not had a cooling effect on inflation. This means that hawkish expectations for the ECB are strengthening while hawkish expectations for the Federal Reserve are weakening. It should be recalled that this week, Fed official John Williams said there was no need to rush into another rate hike, immediately reducing the probability of a policy tightening in October to 30%, according to the CME FedWatch tool. Today, that probability fell even further as the labor market produced figures pointing to another period of "cooling."

Overall Conclusions

Based on the EUR/USD analysis, the pair remains within a global corrective trend segment, A-B-C-D-E. If this assumption is correct, the decline will continue toward targets below the low of wave C at 1.1325. This scenario was previously considered an alternative, and without the Federal Reserve meeting, it would have remained a secondary scenario. However, the Fed delivered an unexpected outcome, leaving the market with no other option but another wave of US currency buying. Yet the dollar has continued to attract buying for several weeks, despite the absence of new supporting factors. Opening short positions would not be appropriate against such a fundamental backdrop; instead, preparations should be made for a potential reversal.

On the larger timeframe, a downward trend segment can be seen taking the form of A-B-C-D-E. Therefore, EUR/USD may continue to decline below the low of wave C, while the internal wave structure of wave E could take the form of a five-wave impulse.

Main Principles of the Analysis:

1. Wave structures should be simple and clear. Complex structures are difficult to trade and often require adjustments.
2. If there is no confidence in what is happening in the market, it is better not to enter a trade.
3. There can never be 100% certainty about the direction of a market move. Do not forget to use protective Stop Loss orders.
4. Wave analysis can be combined with other forms of analysis and trading strategies.

EUR/USD has been declining for seventeen consecutive days, apart from several minor pauses. During this period, the euro has lost 440 points. The decline in the European currency began a month ago as the market prepared for an FOMC rate hike. Since then, the market has continued to buy the dollar based on the Fed's hawkish monetary policy stance, which has already been contradicted several times by FOMC policymakers. Many Fed officials have openly stated that further monetary tightening is necessary, while at the same time providing no specific guidance on the pace of tightening. The latest dot plot showed that another 0.25% rate hike should be expected. This week, New York Fed President John Williams said that the Federal Reserve should not rush into further policy tightening. Has the dollar become too expensive for two rate hikes, especially when the timing of the second hike remains uncertain? The dollar is currently rising as if the Federal Reserve had shifted from a completely neutral stance to an ultra-hawkish one, with the market having no reason to expect such a scenario. In reality, however, monetary easing could begin as early as 2027, as Fed policymakers themselves have stated that the impact of high oil prices will be limited in duration. The same applies to the impact of Donald Trump's trade tariffs. Today's data deserve particular attention. The Nonfarm Payrolls report and the unemployment rate came in not merely below forecasts but significantly below expectations, causing the dollar to decline by 30 points.

Nothing is currently able to stop the euro's decline. Neither tighter ECB policy, nor positive economic data from the European Union, nor disappointing US labor-market data, nor the technical picture and bullish patterns have been sufficient. With imbalance 19 invalidated, the European currency now has every chance of falling below the psychological level of $1.10. Bullish imbalance 19 has turned into a bearish inverted imbalance and generated a sell signal. The bulls failed to capitalize on bullish imbalance 19, failed to hold above two bullish swings, and failed to benefit from disappointing US labor-market data. Nothing will help the euro if traders simply continue to buy the dollar.

Last week, the FOMC indicated its readiness to continue tightening monetary policy, which proved sufficient to extend the broad bearish move. Even after the Fed tightened monetary policy in September and potentially tightens again in October or December, what other factors could cause traders to continue buying the US currency? The dollar has indeed performed strongly in recent weeks, but what factors have supported it during this period? FOMC monetary tightening and nothing else?

Overall, the fundamental backdrop remains supportive of the bulls. Although the Fed has adopted a more hawkish monetary policy stance, it is not the only factor affecting exchange rates. US Treasury yields remain at elevated levels, placing significant pressure on the federal budget. The US economy has slowed in recent quarters, while US labor-market data have more often disappointed than exceeded expectations. Donald Trump resumed trade and other disputes with numerous countries in 2026. The US stock market also continues to raise concerns over highly leveraged investment in technology companies involved in AI development.

The current technical picture indicates that bearish momentum remains intact. There are currently no valid patterns, either bearish or bullish. However, the current week could end with the formation of a new bearish imbalance. The bulls currently have no identifiable technical patterns, even on a theoretical basis.

Friday's economic backdrop gave the bulls an opportunity to launch a strong counterattack. Not only did the Nonfarm Payrolls report and the US unemployment rate come in significantly worse than market expectations, but euro-area inflation also rose more than expected. Three of the most important reports were supportive of the European currency. Yet all the bulls managed to achieve was a marginal rise in the euro, which did not even offset the previous day's decline.

The bulls still have numerous reasons to mount an attack in 2026. Structurally and globally, Trump's policies, which led to a significant decline in the dollar last year, have not changed. At present, there are no significant factors supporting the US currency despite the FOMC's hawkish stance. Geopolitical developments, which supported demand for the US currency for most of the first half of 2026, are no longer having the same effect.

US and European Union Economic Calendar:

• European Union – Producer Price Index (09:00 UTC).
• US – ISM Services PMI (14:00 UTC).

On October 5, the economic calendar contains two entries, of which the ISM index stands out as the most important one. The economic backdrop will affect market sentiment during the second half of Monday's trading session.

EUR/USD Forecast and Trading Recommendations:

The pair remains in the process of forming a bullish trend that has paused for an entire year. The fundamental backdrop shifted sharply in favor of the bears seven months ago, but the broader trend, which has lasted for four years, cannot be considered canceled or complete. In the long term, the pair can be described as trading within a range. A range does not invalidate the broader bullish trend. Thus, the bulls could resume their advance in 2026, but there are currently no real opportunities to do so. The bears have received a new sell signal from imbalance 19, and another bearish imbalance could form this week. Even weak Nonfarm Payrolls and a sharp rise in euro-area inflation have failed to support the bulls.

GBP/USD declined for eleven consecutive days, but this week the pair has made several attempts to begin a corrective pullback. In the first half of the week, the pound failed to attract traders' attention, and there was little news during those days. However, on Wednesday, several important events supported the pound, and several important reports provided further support on Friday. It all began with a speech by John Williams, who made traders less confident that the Federal Reserve would raise interest rates for a second consecutive time in October. The UK GDP report for the second quarter then showed year-on-year growth of 1.4%, compared with the market expectation of 1.2%. Next, an important US inflation report came in below market expectations, partly confirming John Williams' remarks. In just one day, the market almost completely abandoned its expectations of another round of Fed tightening in October, yet this did not help the pound. On Friday, the US Nonfarm Payrolls report and unemployment rate showed disappointing figures, but this only allowed the pound to recover to its average levels for the current week. Thus, despite highly favorable economic news, the pound was effectively unable to post any meaningful growth.

It should also be noted that traders expect the Bank of England to deliver the same two monetary policy tightenings as the Federal Reserve. Moreover, as noted above, the dot plot points to just one policy tightening. Thus, the Bank of England could ultimately tighten monetary policy even more than the Federal Reserve, which clearly should not support further gains in the US dollar. Yet the dollar is rising in most cases.

Despite the unfavorable picture for the British pound that has developed in recent weeks, the dollar has also faced numerous negative factors in recent months. Had the Federal Reserve not decided to raise interest rates in September and indicated its readiness to tighten policy at least once more before the end of the year, the US dollar would still be expected to decline. That remains the expectation, but from lower levels. However, the bulls' chances now depend only on a liquidity sweep of the low from July 28 or June 24, as well as the formation of new bullish patterns, which would require a sustained upward move. The chart clearly shows that most reversals over the past year occurred after liquidity sweeps, so this represents a potential opportunity. Yesterday, the price reacted to bearish imbalance 30, but the reaction was rather weak, which could indicate that the bearish momentum is fading. This could provide an opportunity for the pound. A limited one, but still an opportunity.

Do the bears have further potential? There appears to be little, but it should be acknowledged that the dollar remains in a favorable phase and retains strong potential for further gains until imbalance 30 is invalidated. The Federal Reserve not only decided to raise interest rates but also signaled to traders this week that it is prepared to continue tightening. A prolonged decline in GBP/USD is unlikely to be driven by this factor alone, but in recent weeks the market has done little other than price in the FOMC rate hike. What could prevent it from buying the dollar for several more weeks amid Fed monetary tightening?

Chart analysis shows that the picture became fully bearish after the liquidity sweep of the May highs. The pound reacted to bearish imbalance 27, triggering a 320-point decline. Imbalance 25 was the target of the decline, and this pattern was both reached and broken through. Bearish imbalance 30 represents a strong resistance zone for the bulls.

The economic news flow on Friday supported the pound, as the two most important US labor-market reports of the week, covering employment and unemployment, showed very weak figures. However, although the bulls launched a counterattack, they failed to change the market situation. The outlook for the pound remains highly uncertain.

The overall news backdrop remains such that, over the long term, a decline in the US dollar remains the only expected scenario. The war between Iran and the United States has not changed this outlook. Geopolitical developments prompted the market to return to the dollar's safe-haven status for several months, but the conflict has already passed its most acute phase. The future of FOMC monetary policy remains uncertain, while the market continues to anticipate only further tightening, which is the main reason for the bears' positive sentiment. Any gains in the dollar appear to be temporary and driven by short-term factors. It should also be noted that GBP/USD has been trading within a range for an entire year. A range allows for virtually any price movement within its boundaries.

US and UK Economic Calendar:

• US – ISM Services PMI (14:00 UTC).

On October 5, the economic calendar contains one event that can be considered important. The economic backdrop will affect market sentiment during the second half of Monday's trading session.

GBP/USD Forecast and Trading Recommendations:

The long-term outlook for the pound remains bullish. The bears have controlled the initiative in recent weeks, but the range is clearly visible even on the daily chart. The liquidity sweep of the swing low from May 1 triggered a new decline, while the sell signal within inverted imbalance 27 allowed the decline to continue. Thus, the pound remains in a near free fall that could continue toward the June lows, where a liquidity sweep could occur, followed by a reversal in favor of the pound. However, in the near term, the price could react once again to bearish imbalance 30, potentially generating a sell signal.

Terms of Trade Dynamics

The asymmetry of the shock is clearly visible in the terms of trade. Citi's terms-of-trade index for the euro area has been falling since January, while the index for the United States, a net energy exporter, has been rising. EUR/USD is being pressured by the fact that the bloc remains a net importer of oil and gas.

For the euro, the energy shock is unfolding in two phases. Initially, higher prices push up inflation and expectations of higher deposit rates, supporting the currency. The second phase is less favorable. Persistently high prices undermine real incomes and demand and will eventually reduce inflationary pressure. The market expects three more ECB moves by September 2027, while more cautious estimates allow for only two.

EUR/USD and Bond Yield Differential Dynamics

A clearer picture on the other side of the Atlantic is a bullish factor for the dollar. The core personal consumption expenditures price index remains around 3%, while unemployment at 4.2% indicates full employment. A tight labor market requires the Federal Reserve to continue its monetary tightening cycle to prevent wage growth and services inflation from accelerating.

Political risks in France remain a negative factor for the euro. Investors no longer consider the country a safe haven. The yield on its 10-year bonds experienced its worst quarter since the introduction of the single currency, while the premium over German Bunds jumped to 152 basis points, the highest level since 2011. The deficit was expected to fall to 5% in 2026, but is instead rising, while the country's fiscal watchdog called the new budget "optimistic."

Euro-area inflation unexpectedly accelerated to 3.8% in September, its highest level since 2023, from 3.2% a month earlier. The core rate rose to 2.5%, as expected, while services inflation increased to 3.2%. Bloomberg Economics believes the acceleration was driven by a one-off increase in airfares and expects the ECB to skip October and raise rates for the final time in December.

Traders sharply reduced expectations for ECB monetary tightening to two or three moves by the end of next year, compared with four moves that had previously been fully priced in. The difference in the pace of monetary tightening by the Federal Reserve and the ECB remains a key factor for EUR/USD and will determine the direction of the pair in the coming months.

Thus, high euro-area inflation and the ECB's hawkish rhetoric are supporting the euro. The currency is under pressure from the asymmetric energy shock, the political crisis in France, and the more decisive stance of the Federal Reserve.

Technically, an inside bar is highly likely to form on the daily EUR/USD chart. This provides grounds for placing pending buy orders at 1.127 and sell orders at 1.122.

Central Bank Rate Dynamics

A negative factor for the yen remains the ambiguity in the BoJ meeting summary. Board members acknowledged the limited effect of monetary tightening measures already implemented and a neutral rate that was higher than expected. However, even the proposal to act preemptively failed to convince investors that a series of consecutive moves was on the way.

The overnight rate market reduced the probability of a rate hike by the end of October to almost 20% from more than 30% the previous day, although a December move is already fully priced in. Long-term Japanese bond yields are rising, signaling concern that the central bank may fail to keep pace with inflation. If USD/JPY rises above 159, currency intervention could come into play.

The Bank of Japan's caution is another unfavorable factor for the yen. Commonwealth Bank of Australia considers the threshold for a hawkish shift to be high, while the split on the board means that expectations alone will not be enough to support the yen without clear forward guidance.

Tokyo Inflation Dynamics

Accelerating inflation in Tokyo is a bullish factor for the yen. The core consumer price index rose 2.7% year-on-year in September, above the 2.3% forecast and significantly faster than the 1.8% recorded in August. For the first time since January, the indicator exceeded the 2% target, although Prime Minister Sanae Takaichi's energy subsidies are holding down the headline index by almost 0.4 percentage points.

Core inflation excluding energy and fresh food accelerated to 3% from 2% month-on-month, reinforcing the Bank of Japan's concerns. Bloomberg Economics expects a 25-basis-point rate hike in December, as the report strengthens the central bank's view that inflation is becoming firmly established around the target.

Signals from across the Pacific are also putting pressure on USD/JPY. Federal Reserve Vice Chair Philip Jefferson said the central bank needs more time to determine whether another increase in the federal funds rate is necessary. He supported New York Fed President John Williams, who said there is no need to rush into the next move following the September decision. The rate market reduced the probability of a Fed rate hike in October from 73% to 28%, weighing on the dollar.

The USD/JPY rally should not yet be considered over. The Bank of Japan still needs to demonstrate that it is prepared to act faster than its rhetoric suggests.

Technically, an inside bar may have formed on the daily USD/JPY chart. A decline below the fair value level of 157.4 would provide a basis for selling. A rebound from this level would allow long positions to be increased.

More than 50,000 people have written to the European Commission asking it to soften restrictions on rewards for stablecoins as part of the MiCA review, Global Times reports. The group seeks permission for regulated issuers to offer cashback, loyalty programs and fee discounts. Remember, MiCA — in force since mid?2024 — currently bans issuers and crypto?service providers from paying interest on stablecoins. The group argues that this makes crypto products uncompetitive with bank deposits and electronic money, where customer bonuses are allowed.

Supporters say strong euro?stablecoins are important for the euro's global role and the EU's payment sovereignty. The US has clearly embraced stablecoins as a settlement layer for tokenization; Europe shouldn't simply copy that approach but rather compete with it. For context: USDT's market cap once approached $190 billion, and that is part of why Brussels is weighing whether a euro token should even be allowed to pay cashback. The beneficiaries, if lobbyists win, are obvious: euro?stablecoin issuers and platforms that need incentives to attract holders.

But today's events matter more. Intraday trading still revolves around the US labor market. The September jobs report is due at 15:30 Moscow time. The market expects roughly +90,000 jobs and a 4.1% unemployment rate; some estimates drop to 85,000 after August's +162,000. Recall the market reaction to the prior release: on September 4 Bitcoin fell about 2.1% intraday, and the drawdown from the September 15 peak reached 8.9%. If payrolls are strong and exceed 90,000, I expect Bitcoin and Ether to fall: the odds of an October Fed hike would rise, supporting the dollar and yields. If the data disappoint, upside momentum should remain, and Bitcoin could move toward $90,000.

Bitcoin technicals The instrument is trading in a narrow corridor between support at $85,985 and resistance at $86,687, and the plan is built around two mirrored scenarios with breakout and rejection setups. There are two buy entries. First, a confirmed break above $86,687: buy targeting $87,600, where I would take profits and consider a short on a pullback — provided price stays above the 50?day MA and the Awesome Oscillator is positive. Second, a bounce off $85,985 if a downside break fails and the drop proves false: buy for a return to $86,687 and, in case of weak employment, potentially onward toward $90,000.

Sell setups are symmetrical. A confirmed break below $85,985 invites a short targeting the next support at $85,000 — but only if the moving average sits above price and Awesome is negative. If an upside break above $86,687 fails to confirm and price returns below, initiate a short from resistance targeting $85,985 and then $85,000.

Ethereum technicals The logic for Ethereum mirrors Bitcoin on its own price scale: an inner corridor between support $2,727 and resistance $2,755, outer bands at $2,682 and $2,793. We can open a buy position on a confirmed break above $2,755m targeting $2,793, where profit is taken and a short positions on the pullback may be considered — conditions: price above the 50?day MA and Awesome positive. A bounce buy off $2,727, if a downside break is false, targets $2,755 and then $2,793.

Sell scenarios: a confirmed break below $2,727 opens a short to $2,682 — provided the MA is above price and Awesome is negative. A failed break above $2,755 followed by a return under the level opens a short targeting $2,727 and then $2,682.

On Friday, GBP/USD remained near yesterday's low and is trading slightly above 1.3200 amid consolidation in the US dollar. Traders are awaiting the release of the monthly US labor market data, which could provide a new impulse for the market.

Particular attention should be paid to the Nonfarm Payrolls (NFP) report, which will provide additional clues about the Federal Reserve's future policy direction amid declining expectations for an interest-rate hike in October. This data will be a key factor in shaping the dollar's short-term dynamics. Meanwhile, the US Dollar Index (DXY), which tracks the value of the US currency against a basket of other currencies, remains near a one-and-a-half-year high, as concerns about inflation driven by rising oil prices are limiting the pullback in US Treasury yields from multi-year highs.Persistent geopolitical uncertainty stemming from the confrontation between the United States and Iran is also supporting the dollar as a safe-haven asset. At the same time, the yield on 30-year UK government bonds has exceeded 6% for the first time since early 1998, intensifying concerns about fiscal policy ahead of the autumn budget scheduled for October 28.

This, in turn, is putting pressure on the pound, becoming another factor weighing on GBP/USD. Nevertheless, the potential for further declines is limited, as traders may refrain from opening large positions while awaiting important economic data.

From a technical perspective, GBP/USD maintains a bearish bias in the near term. The break below 1.3200 during overnight trading has created conditions for further declines and a retest of the current-year low of 1.3136, recorded in June. The next level is the round 1.3100 level. A break below this level would likely open the way for a continuation of the downward trend observed over the past month.

As for a potential recovery, any attempts to move higher are likely to face strong resistance before the 1.3300 level. A sustained break above this barrier would be required to confirm the scenario of further growth. In that case, GBP/USD could attempt to test 1.3335. However, as the oscillators are negative, the bears have the advantage.

Gold (XAU/USD) remains below the $4200 level as traders await the release of US labor market data. According to forecasts, the September Nonfarm Payrolls (NFP) report is expected to show an increase of 90,000 jobs, below the August figure of 162,000. The unemployment rate is expected to remain at 4.1%. Important data on annual wage growth, based on average hourly earnings, could also provide new signals regarding the Federal Reserve's future actions, especially amid easing expectations for an interest-rate hike in October. This, in turn, will affect the US dollar exchange rate and could provide a significant impulse for gold.

Influential members of the Federal Open Market Committee (FOMC) recently expressed the view that there is no need for an immediate interest-rate hike after the rate was raised by 25 basis points in September. At the same time, the Institute for Supply Management (ISM) reported on Thursday that economic activity in the US manufacturing sector had increased for the ninth consecutive month.

Additional surveys show that commodity prices have been rising for 24 months. These factors are increasing concerns about inflation driven by fluctuations in energy prices, supporting expectations of further Federal Reserve policy tightening and limiting the decline in US Treasury yields observed the previous day. The situation between the United States and Iran also continues to support the US dollar and acts as a limiting factor for commodity assets.

According to The Wall Street Journal, the Pentagon may soon deploy a third carrier strike group to the Persian Gulf, along with an additional 10,000 sailors and Marines. In addition, Iran's Persian Gulf Straits Affairs Authority (PGSA) reported recent incidents involving attacks on several tankers in the Strait of Hormuz. US President Donald Trump said that he would soon make a decision on the possibility of "destroying Iran," adding that the war would end very soon, regardless of the circumstances.

This creates a high geopolitical risk premium and supports dollar bulls, so gold buyers should exercise caution. Therefore, it would be reasonable to wait for clear signals before opening long positions rather than concluding that gold has found a short-term bottom around $4100 and is ready for a significant rise.

From a technical perspective, XAU/USD remains in a short-term "bearish" trend, trading below all key moving averages. The oscillators are negative, confirming the bears' advantage. Resistance is provided by the round $4200 level. Gold finds support slightly above the round $4100 level. Nevertheless, the path of least resistance is currently to the downside.

The market had already priced in such a result. The ECB's 25-basis-point rate hike on September 10, to a 2.50% deposit rate, has already put the regulator on a tightening path, and the odds of an October move rose to about 70% from 50%. Markets are also fully pricing three more hikes by the end of 2027. The new data confirmed that picture and did not change it, so the currency shrugged. The main beneficiaries are the hawks on the Governing Council, while the losers are those who had hoped for a pause.

The driving force behind the acceleration is clear from the breakdown. Energy prices rose 18.8% year-on-year versus 14.3% in August and 10.3% in July, meaning the pace nearly doubled in two months. The overall CPI added 0.6 percentage points, and most of that increase came from energy. The chain is simple: the war around Iran and risks to the Strait of Hormuz pushed Brent to $105–107 in September; the September 12 closure of Saudi Arabia's East-West pipeline added tension; and European gas trades at 2023 highs. That hit fuel and household bills, producing the direct path to the Eurostat numbers. Energy exporters get extra revenue, while European households and industry pay the bill.

Other components show that second-round effects are only beginning, which is what the ECB and Christine Lagarde fear. Services accelerated to 3.2% from 3.0% in August, though they were 3.3% in July, so it is too early to call a new trend.

Food, alcohol, and tobacco rose to 1.4% from 1.1%—noticeable but modest in absolute terms. Non-food industrial goods, by contrast, slowed to 1.1% from 1.2%. That segment typically responds last to rising costs, so its weakness so far gives the ECB no cause for complacency. Isabel Schnabel on the Executive Board warned of this in advance: "At the current rate level, inflation is unlikely to return to target over the medium term," she said, citing gas as a particular concern.

Now the data challenge the regulator's own forecasts. The ECB staff's September projections envisaged headline inflation of 3.0% in 2026, 2.5% in 2027 and 2.1% in 2028, with core inflation at 2.5% in 2026 and 2.6% in 2027. Those estimates were prepared before the flash release, and I expect they will be revised upward in December when the ECB publishes forecasts through 2029. Christine Lagarde already warned in September that the energy shock would keep headline inflation well above target into the first half of 2027. September's data make that scenario closer to the baseline than to a tail risk.

The hawks' position has a weakness that should not be underestimated. Eurozone GDP grew 0.6% quarter-on-quarter in Q2, but the contribution was mainly net exports. Retail sales fell 0.6% month-on-month in July, down 3.4% in Germany. The composite PMI in August was stuck at 52.0, and the ECB's 2026 growth forecast is only 0.9%. Tightening in the face of a price shock and weak demand hits German consumers and industry, and that is why the regulator is unlikely to hurry every step.

In my view, the coming weeks will favor an October hike. I expect the probability of a 2.75% deposit rate to rise above 70%, and if oil returns above $100, the ECB will be reluctant to wait until December.

Technical picture for EUR/USD

Buyers now need to reclaim 1.1265. Only that would allow a run at 1.1300. From there the path to 1.1315 opens, but doing so without support from large players will be difficult. On the downside I expect serious buying only around 1.1220. If there is no one there, it would be reasonable to wait for a fresh low at 1.1175 or to open longs from 1.1140.

Technical picture for GBP/USD

Pound buyers need to take the immediate resistance at 1.3225. Only then will a move to 1.3265 be plausible, above which further gains will be difficult. The farther target is the 1.3300 area. In case of a decline, bears will seek control of 1.3180; a successful break there would seriously damage bulls and push GBP/USD toward 1.3145 with the prospect of reaching 1.3110.

Markets are in turmoil: Brent crude has broken the $100 mark amid the Middle East crisis and an unexpected export ban from China.

In this briefing, we examine why Bitcoin is stuck in an October sideways range and what to expect from the standoff between crypto whales and macro forces.

We'll also cover corporate battles in IT: why investors are disappointed with Alphabet's AI monetization and how Meta's AI agents could strip Apple of billions in App Store revenue.

All these events are fundamental drivers that open new opportunities to profit from global trends.

China's export ban and geopolitics push Brent above $100

Commodity markets are once again in a fever. On Thursday, benchmark Brent climbed past the psychologically and economically painful $100/bbl level. The spike was driven not only by another round of geopolitical tension but by an unexpected decision in Beijing that forced the market to revise forecasts for a global fuel shortfall.

The trading session began quietly — prices even dipped about 1% early on. Everything changed after an urgent Reuters report. Citing four informed sources, the agency said Chinese refiners had effectively frozen exports of petroleum products "until further notice" (with exemptions for Hong Kong and Macau).

That was followed by news that PetroChina canceled several October shipments of gasoline and jet fuel.

Critically, the ban targets refined products, not crude oil.

For markets, this was a red flag. "The Chinese export ban suggests concern about domestic product availability," UBS analyst Giovanni Staunovo said.

Beijing's move landed on already fertile ground for an energy crisis. Refining capacity worldwide is strained by the fallout from conflicts in the Middle East and Ukraine. Russia has exacerbated the squeeze by banning diesel exports at least until the end of October.

The biggest spark in this tinderbox, however, was news from the Middle East.

Reports that Washington is moving additional forces into the region and deploying another carrier instantly fanned traders' fears of escalation and fresh supply chain shocks.

The result was a bull win. The December Brent futures contract closed at $102.31/bbl (up 4.37% or $4.28). US WTI also rallied, finishing at $92.87 (+2.71%). Recall that Brent gained nearly 14% in September alone.

The supply squeeze showed up immediately in refiner margins. Asia's gasoline crack vs. Brent surged to a record $50.53/bbl. European diesel softened slightly to a $78/bbl premium, though on September 23, it hit an all-time high of $95.

Hamad Hussein at Capital Economics notes that while the Chinese ban alone is not comparable to the loss of Russian or Middle East volumes, it is yet another powerful source of stress on top of an already acute deficit.

As analysts model scenarios and governments scramble to balance domestic markets, professional traders have an excellent chance to profit from elevated turbulence.

All instruments mentioned, including Brent and WTI futures, are available on the InstaForex platform. Grab the chance to capitalize on global macro shifts: open an InstaForex trading account and download the mobile app to monitor prices in real time and trade from anywhere.

Bitcoin at crossroads: illusion of beating inflation, whale "walls," and October stress test at $82,000

The top crypto has put investors through a roller-coaster ride heading into October. A bullish breakout attempt, fueled by fresh US macro data, quickly faded: after a short-lived push toward $85,500, Bitcoin retraced back to the $83,500 area. The market has gone into wait-and-see mode, and traders' eyes are fixed on a critical support zone.

The initial burst of optimism followed the August PCE report. Inflation slowed to 3.4% year-over-year, and the core PCE price index eased to 3.0%, beating analysts' forecasts. Bitcoin immediately reacted with a roughly 2% spike, but euphoria was soon replaced by profit-taking.

It's too early to celebrate: the surprise versus forecasts reflects more technical methodological changes than a genuine economic cooling. The inflation dragon isn't slain — it's merely lying low.

Entering the new month, the market faces a serious test of resilience. The key defensive line is $82,000. The main liquidation zone is concentrated between $82,000 and $82,500. If that floor gives way, a slide to $80,000 could accelerate avalanche-style. For the optimistic scenario to materialize, Bitcoin needs not only to hold $82,000 but to mount a confident push above $87,500.

Historically, October has been a strong month for Bitcoin, but in today's environment, seasonality alone is not a sufficient investment thesis.

What is blocking bulls right now? On-chain analytics provide the answer. Large players have already built formidable sell walls. Coinglass data shows heavy limit sell orders clustered at $85,700, $87,000, $88,000, and $89,000, with the most impenetrable shield sitting near the psychological $90,000 mark.

The situation is worsened by long-term holders (LTH). The 84,000–85,000 range is where many traders accumulated in the past. Today, those holders are around breakeven, and any approach by the price toward their entry levels triggers them to sell to lock in at least a flat outcome. That behavior creates strong resistance and prevents Bitcoin from sustaining a break above $85,000.

The further fate of Bitcoin now hinges on two factors:

• institutional willingness to buy the dips
• upcoming US macro releases over the next weeks.

Volatility is guaranteed, which means ample opportunities to profit on both the upside and downside.

Alphabet stumbles after Gemini 4 Argon launch

Thursday, October 1, was supposed to be a day of triumph for Alphabet. Google unveiled its new advanced neural network, Gemini 4 Argon, and the market reacted immediately. In pre-market trading, the tech giant's shares jumped by nearly 2%. It looked like a new milestone in AI. However, investor euphoria was short-lived.

By the open, the optimism had evaporated. Shares didn't just pull back — they lost about 2%, making Alphabet an underperformer even as the broader tech sector advanced.

For comparison: the Technology Select Sector SPDR ETF rose by about 1%, and the Invesco QQQ Trust posted a modest gain. Even Alphabet's main rivals in the fight for corporate IT budgets fared better: Microsoft shares were essentially flat, and Amazon dipped only slightly, avoiding the fate of the day's headline maker.

So what caused the skepticism? Analysts generally rated the model launch positively and highlighted an attractive entry price. But, as always, the devil is in the details. Wall Street was spooked by the release format.

Google chose not to roll Argon out widely. Instead, it granted initial access only to a narrow circle of vetted cybersecurity experts under a closed Fairwind program. Corporate customers, developers, and ordinary subscribers will have to wait: the company is pausing to implement additional safeguards.

To investors, that looked like delayed monetization of the innovation — and therefore deferred near-term superprofits from the AI juggernaut.

Alphabet's case again shows that building a brilliant product is only half the battle in the stock market. Monetization timing matters, and investors need to read beyond the headlines to the subtle elements of corporate strategy.

Meta's AI puts $10b of Apple revenue at risk, Wall Street on alert

The era of Apple's unquestioned dominance in mobile apps — and the steady "toll" it collected from every digital user action — may be ending. Wall Street is sounding the alarm: Meta's consumer AI agent Muse is targeting the role of the Internet's primary intermediary, and Apple's hugely profitable App Store is directly in its sights.

Needham analysts estimate that Meta's ambitions could cost Apple roughly $10 billion in lost annual revenue. The threat is a paradigm shift. Why should a user open an app, search for a service, and pay Apple's built-in commission when an AI agent can do it for them? If a neural agent books a table, buys a ticket, or signs up for a subscription autonomously, transactions can bypass the App Store entirely.

Needham analyst Laura Martin lays out the stark math:

• Apple's service revenue in FY2026 is about $123 billion, of which roughly 40% comes from the App Store.
• If only 20% of that App Store volume flows into Meta's Muse Connectors ecosystem (where developer fees are zero), Apple could see about $10 billion of revenue evaporate and around $7.5 billion of EBITDA at risk.

For investors, this is a red alert. Wall Street values recurring service revenue well above hardware sales, and a hit to services would materially compress Apple's multiples and growth outlook.

Developers long constrained by Apple's terms are already sensing change. "You bring the API. Muse brings the agent, the browser, and the context of what the person actually wants," Mark Zuckerberg succinctly framed the new reality on X, launching Muse Connectors in mid-September.

The market response was immediate: within 168 hours of the platform launch, Meta received more than 1,500 developer applications. Martin warns that if Apple does not rethink what she calls its "greedy" economic model, developers could migrate en masse to Zuckerberg's ecosystem.

Ironically, the Muse app, designed to reduce dependence on app stores, shot to the top of the very App Store charts it threatens. Sensor Tower reports more than 3.4 million downloads already.

The challenge arrives at an awkward moment for Apple: it coincides with John Ternus taking the reins as CEO.

Morgan Stanley is watching the looming storm too. Analyst Erik Woodring acknowledges that "agent-based AI" can reroute search and transactions away from Apple's ecosystem. While the risk is still early, it has forced Cupertino into a frenzied effort to revive Siri. Woodring stresses that Apple's future now hinges on its success in AI. Still, while maintaining an Overweight rating, Morgan Stanley trimmed its Apple price target from $360 to $355 — a nod to rising execution risk.

As Silicon Valley giants tussle over who will own trillions in the neural-net era, markets are volatile. For traders, volatility equals opportunity.

Apple and Meta shares, the protagonists in this battle, are available on the InstaForex platform. To trade tech shifts and respond swiftly to Wall Street news, open an InstaForex account and download the mobile app to monitor markets and execute trades from anywhere.

The test of 157.90 occurred when the MACD indicator had just started moving upward from the zero line, confirming the validity of the entry point for buying the dollar. However, as shown on the chart, the pair did not make a significant move higher, resulting in a loss being taken on the position. Selling at 157.60 also failed to generate a satisfactory profit.

The next major event is the US employment report, which is of interest for the yen primarily as a signal for Treasury yields, as these largely determine the direction of USD/JPY. Nonfarm employment is expected to increase by 90,000, while the market will also assess the unemployment rate, average hourly earnings, and changes in private-sector employment. Strong data would push yields higher and restore buying interest in the pair. The 160 level remains a psychological reference point, around which Japanese authorities have already intervened this year. Its very presence limits appetite for further gains in the pair.

If the data significantly exceed expectations, USD/JPY could receive an upward impulse toward higher levels, while the risk of verbal intervention by Japanese officials would increase. A weak report would give the yen a better chance of a downward correction in the pair at the end of the week. Falling yields and a weaker dollar would push USD/JPY lower, while expensive oil, which is weighing on Japan's trade balance due to energy imports, would be the only limiting factor.

As for the intraday strategy, greater emphasis will be placed on the implementation of Scenarios No. 1 and No. 2.

Buy Signal

Scenario No. 1: USD/JPY can be bought today when the entry point is reached around 158.48 (the green line on the chart), with the target of rising toward 158.84 (the thicker green line on the chart). Around 158.84, the long position can be closed and a short position opened in the opposite direction, targeting a move of 30–35 points in the opposite direction from the level. A rise in the pair today is possible, but the upward potential appears limited. Important! Before buying, make sure that the MACD indicator is above the zero line and is only beginning to rise from it.

Scenario No. 2: USD/JPY can also be bought today if the price tests 158.21 twice consecutively while the MACD indicator is in the oversold zone. This would limit the pair's downward potential and lead to a reversal of the market to the upside. A rise toward the opposite levels of 158.48 and 158.84 can be expected.

Sell Signal

Scenario No. 1: USD/JPY can be sold today after the price breaks below 158.21 (the red line on the chart), which would lead to a rapid decline in the pair. The key target for sellers will be 157.72, where the short position can be closed and a long position opened immediately in the opposite direction, targeting a move of 20–25 points in the opposite direction from the level. Downward pressure on the pair could return today if the central bank intervenes. Important! Before selling, make sure that the MACD indicator is below the zero line and is only beginning to decline from it.

Scenario No. 2: USD/JPY can also be sold today if the price tests 158.48 twice consecutively while the MACD indicator is in the overbought zone. This would limit the pair's upward potential and lead to a reversal of the market to the downside. A decline toward the opposite levels of 158.21 and 157.72 can be expected.

What Is Shown on the Chart:

• Thin green line – the entry price at which the trading instrument can be bought;
• Thick green line – the estimated price at which Take Profit orders can be placed or profits can be taken manually, as a further rise above this level is unlikely;
• Thin red line – the entry price at which the trading instrument can be sold;
• Thick red line – the estimated price at which Take Profit orders can be placed or profits can be taken manually, as a further decline below this level is unlikely;
• MACD indicator. When entering the market, it is important to consider the overbought and oversold zones.

Important. Beginner Forex traders should be very cautious when making market-entry decisions. Before the release of important fundamental reports, it is generally preferable to stay out of the market to avoid being caught in sharp exchange-rate fluctuations. If trading during news releases, always use stop orders to minimize losses. Without stop orders, the entire trading account can be lost very quickly, especially when money management is not used and large position sizes are traded.

Remember that successful trading requires a clear trading plan, such as the one presented above. Making spontaneous trading decisions based on the current market situation is inherently a losing strategy for an intraday trader.

The test of 1.3204 occurred when the MACD indicator had just started moving downward from the zero line, confirming the validity of the entry point for selling the pound. However, the pair did not experience a significant decline.

The pound approached the end of the week without any domestic drivers. There are no UK economic data releases, leaving the market with little new information to reassess the Bank of England's interest-rate trajectory, especially since the domestic picture remains mixed. The current subdued trading is more indicative of preparation than indifference. The US employment report could alter expectations for the Federal Reserve within minutes, and the market is aware of this. As a result, positions are being reduced and the trading range is narrowing. If the US data exceed expectations, pressure on GBP/USD will return, and the risk of a move toward the monthly low will increase significantly. A weak figure, by contrast, would create an opportunity for an upward correction at the end of the week, and the pound could recover considerably. Without a significant deviation from 90,000, the pair is likely to remain within a narrow range, while the actual direction will become clearer only after the market reacts to the wage data.

As for the intraday strategy, greater emphasis will be placed on the implementation of Scenarios No. 1 and No. 2.

Buy Signal

Scenario No. 1: The pound can be bought today when the entry point is reached around 1.3216 (the green line on the chart), with the target of rising toward 1.3245 (the thicker green line on the chart). Around 1.3245, the long position can be closed and a short position opened in the opposite direction, targeting a move of 30–35 points in the opposite direction from the level. A rise in the pound today can be expected only after very weak US data. Important! Before buying, make sure that the MACD indicator is above the zero line and is only beginning to rise from it.

Scenario No. 2: The pound can also be bought today if the price tests 1.3201 twice consecutively while the MACD indicator is in the oversold zone. This would limit the pair's downward potential and lead to a reversal of the market to the upside. A rise toward the opposite levels of 1.3216 and 1.3245 can be expected.

Sell Signal

Scenario No. 1: The pound can be sold today after the price breaks below 1.3201 (the red line on the chart), which would lead to a rapid decline in the pair. The key target for sellers will be 1.3181, where the short position can be closed and a long position opened immediately in the opposite direction, targeting a move of 20–25 points in the opposite direction from the level. Strong pressure on the pound will return if the economic data are strong. Important! Before selling, make sure that the MACD indicator is below the zero line and is only beginning to decline from it.

Scenario No. 2: The pound can also be sold today if the price tests 1.3216 twice consecutively while the MACD indicator is in the overbought zone. This would limit the pair's upward potential and lead to a reversal of the market to the downside. A decline toward the opposite levels of 1.3201 and 1.3181 can be expected.

What Is Shown on the Chart:

• Thin green line – the entry price at which the trading instrument can be bought;
• Thick green line – the estimated price at which Take Profit orders can be placed or profits can be taken manually, as a further rise above this level is unlikely;
• Thin red line – the entry price at which the trading instrument can be sold;
• Thick red line – the estimated price at which Take Profit orders can be placed or profits can be taken manually, as a further decline below this level is unlikely;
• MACD indicator. When entering the market, it is important to consider the overbought and oversold zones.

Important. Beginner Forex traders should be very cautious when making market-entry decisions. Before the release of important fundamental reports, it is generally preferable to stay out of the market to avoid being caught in sharp exchange-rate fluctuations. If trading during news releases, always use stop orders to minimize losses. Without stop orders, the entire trading account can be lost very quickly, especially when money management is not used and large position sizes are traded.

Remember that successful trading requires a clear trading plan, such as the one presented above. Making spontaneous trading decisions based on the current market situation is inherently a losing strategy for an intraday trader.

The test of 1.1266 occurred when the MACD indicator had moved significantly above the zero line, limiting the pair's upward potential. The second test of 1.1266 coincided with the MACD being in the overbought zone, which led to the implementation of Scenario No. 2 for selling the euro. As a result, the pair declined by 20 points.

The main uncertainty surrounding September inflation in the euro area is related less to the 3.8% figure itself than to how it will affect the debate within the ECB. The preliminary estimate showed an acceleration from 3.3% in August, while the euro barely rose because traders had already priced in such a result immediately after the regulator's September decision. There was little reason to buy the currency on an expected event, so the market reaction was muted.

The next focus is the September US employment report, which is important for the euro not only as macroeconomic data but also as a way to assess how far apart the trajectories of the two central banks are. Nonfarm employment in the United States is expected to increase by 90,000, and initial market reactions will be based on this figure. The other components are no less important. The unemployment rate shows how tight the labor market remains, average hourly earnings reflect wage pressure on prices, while private-sector employment provides a clearer picture by excluding the influence of government hiring, which has often distorted the overall result in recent months.

For EUR/USD, the situation is asymmetric. The euro already has support from interest-rate expectations, as euro-area inflation accelerated to 3.8% in September, while the ECB has raised its rate and has not ruled out further tightening. Therefore, strong US data would not eliminate the arguments in favor of the euro, but would force the market to reassess the policy gap between the two central banks. A strong report would strengthen the dollar and bring the pair closer to the nearest support levels. Oil would add to the downward risks, as it continues to put pressure on the euro area's terms of trade, while France is also facing its own turbulence. A weak report would give the euro an opportunity to rebound at the end of the week, and the move could be more pronounced than usual because positions have already shifted in favor of the dollar.

As for the intraday strategy, greater emphasis will be placed on the implementation of Scenarios No. 1 and No. 2.

Buy Signal

Scenario No. 1: Today, the euro can be bought when the price reaches around 1.1261 (the green line on the chart), with the target of rising toward 1.1295. At 1.1295, the position can be closed, while the euro can also be sold in the opposite direction, targeting a move of 30–35 points from the entry point. A rise in the euro today can be expected following weak US data. Important! Before buying, make sure that the MACD indicator is above the zero line and is only beginning to rise from it.

Scenario No. 2: The euro can also be bought today if the price tests 1.1243 twice consecutively while the MACD indicator is in the oversold zone. This would limit the pair's downward potential and lead to a reversal of the market to the upside. A rise toward the opposite levels of 1.1261 and 1.1295 can be expected.

Sell Signal

Scenario No. 1: The euro can be sold after the price reaches 1.1243 (the red line on the chart). The target will be 1.1218, where the position can be closed and the euro bought immediately in the opposite direction, targeting a move of 20–25 points in the opposite direction from the level. Downward pressure on the pair could return at any time. Important! Before selling, make sure that the MACD indicator is below the zero line and is only beginning to decline from it.

Scenario No. 2: The euro can also be sold today if the price tests 1.1261 twice consecutively while the MACD indicator is in the overbought zone. This would limit the pair's upward potential and lead to a reversal of the market to the downside. A decline toward the opposite levels of 1.1243 and 1.1218 can be expected.

What Is Shown on the Chart:

• Thin green line – the entry price at which the trading instrument can be bought;
• Thick green line – the estimated price at which Take Profit orders can be placed or profits can be taken manually, as a further rise above this level is unlikely;
• Thin red line – the entry price at which the trading instrument can be sold;
• Thick red line – the estimated price at which Take Profit orders can be placed or profits can be taken manually, as a further decline below this level is unlikely;
• MACD indicator. When entering the market, it is important to consider the overbought and oversold zones.

Important. Beginner Forex traders should be very cautious when making market-entry decisions. Before the release of important fundamental reports, it is generally preferable to stay out of the market to avoid being caught in sharp exchange-rate fluctuations. If trading during news releases, always use stop orders to minimize losses. Without stop orders, the entire trading account can be lost very quickly, especially when money management is not used and large position sizes are traded.

Remember that successful trading requires a clear trading plan, such as the one presented above. Making spontaneous trading decisions based on the current market situation is inherently a losing strategy for an intraday trader.

Dynamics of US benchmark stok indices

Selling in Treasuries is putting pressure on stocks. The 10-year yield has risen to 5.34% — the highest since 2002. Loss-making tech firms and issuers with weak balance sheets are taking the worst hits. They began lagging the broad index after the Fed's September move, the first rate hike in three years.

Small caps are exposed to the rate shock because of leverage. Bloomberg data show the Russell 2000 posted its second-worst quarter relative to the S&P 500 since 1999, underperforming by nearly 10 percentage points. The small-cap index is down 8.5% from its August 14 high and sits on the brink of a correction. The index contains a larger share of financials and industrials — sectors sensitive to the economic cycle — and more than a third of its components are "zombie" firms barely servicing their debt. Such stocks react to rate rises like dry grass to a spark.

Russell 2000 vs. S&P 500 divergence

Fed officials have lent a hand to the market. Vice Chair Philip Jefferson said the Fed may need more time to judge whether another policy move is necessary, echoing New York Fed President John Williams' view that there is no urgency to tighten further. Yields have pulled back from highs, and the S&P 500 recovered losses sparked by an industrial commodity price jump.

A supportive factor for the broad index is the still-resilient US labor market. Companies announced the fewest September layoffs since 2022, and initial jobless claims fell to their lowest since July. Economists expect nonfarm payrolls to rise by about 90,000 and the unemployment rate to hold near 4.1%.

AI boom underpins the S&P 500. Tallbacken Capital Advisors interprets the market's narrowness as a hallmark of a strong bull trend rather than a fatal flaw — they project the index at 8,500 by year-end, nearly 11% above current levels.

But AI is also the biggest risk. If tech earnings forecasts are cut, the pain will spread across the market like a crack in the ice. Geopolitics, expensive money and US midterms have historically rocked markets — how long can the S&P 500 keep smiling?

Technically, the daily S&P 500 chart formed a doji with a long lower shadow, signaling bear exhaustion. A breakout above its high near 7,685 would be a reason to build long positions in the broad index.

Inflation fears driven by rising oil prices are holding back the pullback in US Treasury yields and supporting the dollar

The US Dollar Index (DXY), which tracks the dollar's value against a basket of currencies, is consolidating near yesterday's high — the strongest level since April 2025 — and appears set for a confident third week of gains as traders await key monthly US employment data.

The nonfarm payrolls (NFP) report for September is expected to show about 90,000 new jobs, a notable slowdown from the previous month's 162,000, while the unemployment rate is forecast to remain at 4.1%. The annual wage-growth metric (change in average hourly earnings) will also be watched closely for clues about the Fed's future policy, especially as markets have trimmed the odds of an October rate hike — a dynamic that could meaningfully move the DXY.

Ahead of those reports, the ISM reported on Thursday that US manufacturing activity expanded for the ninth consecutive month in September. A deeper look at the survey showed commodity price pressures rising for the 24th straight month. Those conditions amplify inflationary risks tied to volatile oil prices and are limiting the retracement of US sovereign yields that had been seen earlier. Moreover, geopolitical uncertainty stemming from US–Iran tensions continues to support the US dollar as a safe-haven asset, which benefits dollar bulls.

Against the backdrop of the Middle East conflict, the Wall Street Journal reported that the Pentagon may soon deploy a third carrier strike group to the Persian Gulf along with 10,000 sailors and marines — a decision taken after President Donald Trump warned of possible military escalation with Iran after the November midterms. At the same time, Iran's PGSA has confirmed recent attacks on several tankers in the Strait of Hormuz. These factors increase the geopolitical risk premium and continue to underpin a constructive outlook for the DXY.

Technically, the DXY is comfortably trading above key moving averages and has cleared the round level at 102.00. Resistance sits at 102.22 and support at 101.76. Oscillators are positive, although the RSI shows overbought readings, indicating consolidation. The path of least resistance is to the upside.

The main news for the euro was the preliminary September inflation estimate for the euro area, released this morning. Headline consumer price inflation rose to 3.8% year-on-year, compared with 3.3% in August. It answers a simple question: how much more expensive has the usual basket of goods and services become over the past year? The higher the figure, the more inclined the central bank is toward a tighter policy stance. The currency, however, reacted only modestly. The market has already priced in the ECB's September deposit rate hike to 2.50%, so traders are concerned not with the acceleration itself, but with how much further the regulator is prepared to go.

The acceleration was driven primarily by energy prices, which rose by almost 19% year-on-year, compared with 14.3% a month earlier. Oil and petroleum products remain expensive because of the war involving Iran and tensions around the Strait of Hormuz. Gas is adding to Europe's problems, as storage levels are lower than in any autumn since 2009. More concerning is the increase in the prices of services and food, because such prices tend to remain elevated longer than commodity price spikes. Industrial goods, by contrast, have slowed, so it is still too early to speak of broad-based price increases, but secondary effects are gaining strength.

The picture for the euro is mixed. The policy rate is significantly below inflation, arguments for a pause are weakening, and expectations for October therefore continue to favor another rate hike, which remains the main scenario. On the other hand, weak demand, high gas prices, and more expensive energy imports are weighing on the region's economy and preventing the currency from gaining strong upward momentum. Declines in the euro are likely to be bought, but a sharp upward move is not expected.

There are no UK economic data releases today. The calendar contains neither inflation, labor market, nor business activity data, while such releases usually provide guidance on the Bank of England's interest-rate outlook and shape sentiment toward the pound. Without them, GBP/USD loses some of its independence and becomes largely a reflection of the US currency. In addition, the British currency remains vulnerable because of the budget situation. The government bond market is nervous, and the country's borrowing remains near multi-year highs, so strong demand for the pound is not evident.

The main event of the week after midday will be the September US labor market report, which will largely determine how the euro and pound behave through the end of the trading session. The market is watching four things: the change in nonfarm employment, unemployment, hourly earnings growth, and private-sector employment. The first figure is the most closely watched, with 90,000 new jobs expected for the month. Wages are important because rapidly rising incomes push prices higher and force the central bank to keep interest rates high. The forecast is relatively low, but August showed an increase of 162,000 compared with a forecast of 55,000. Therefore, each new report is now being viewed as a test of whether the August figure was an isolated result or the beginning of a sustained shift.

If employment growth is significantly above forecast, the dollar will receive support and there will be more arguments for a hawkish Fed stance. In that case, the euro and pound will have little reason to rise. The euro would appear more resilient in such a situation, as the ECB has already raised rates and an October hike remains on the table. The pound is more vulnerable because budget uncertainty adds to external pressure, making further dollar strength more difficult for the currency to absorb. The opposite scenario appears more favorable. If employment growth is much weaker and wage growth slows, the dollar and US yields could retreat, significantly increasing the chances of an upward correction in both pairs. Until the end of the day, this report will remain the main market reference point, and before its release the market is unlikely to open large positions.

Momentum

The strategy here is based on breakouts: an entry is made when the price moves beyond a level and consolidates beyond it.

For the euro, the upside reference level is 1.1264. If the pair breaks above it and holds there, the first target is 1.1307 and the second is 1.1346. This move appears realistic mainly if the US data are weak, as the morning's euro-area inflation data failed to provide upward momentum. The downside breakout level is 1.1218, followed by targets at 1.1174 and 1.1136. This scenario would be triggered by strong employment data and a stronger dollar, and after the August surprise it cannot be ruled out. There are only 46 points between the two levels, meaning that the pair is likely to move within this range before the report is released. Therefore, trading touches of these levels before the release does not appear justified. The upside scenario appears slightly more likely, but the report itself will determine the outcome.

For the pound, buying opportunities are considered above 1.3223, with targets at 1.3265 and 1.3307, while selling opportunities are considered below 1.3180, with targets at 1.3137 and 1.3097. The range between the two levels is 43 points. The pound has no domestic news today, so it will follow the dollar, and the key question is where the US currency moves after the data. With a strong report, a downward breakout appears more natural for the pound than for the euro, as the budget issue leaves the currency with less room for resilience. With a weak report, the pound could reach 1.3265, but maintaining that advance would be more difficult. Therefore, it would be prudent not to be overly ambitious at the first target.

Mean Reversion

In this section, the focus is on a false breakout beyond a boundary followed by a quick return inside the range.

For the euro, the upper reference level of 1.1288 is 24 points above the breakout level of 1.1264 and lies directly on the way to the first target at 1.1307. This leads to a simple conclusion. If the price breaks above 1.1264 and consolidates there, then 1.1288 is merely an intermediate level on the way higher, and selling there would not be appropriate. If, however, the pair moves above the level, fails to hold there, and returns below 1.1264, selling opportunities can be considered, with a stop above the recent high. The lower reference level of 1.1210 is only 8 points below the breakout level of 1.1218, so beginners need to exercise particular caution here. The difference between a breakout and a false breakout can occur within a matter of minutes, so the first test of the level should be ignored until the outcome of the attempt becomes clear. If the price moves below 1.1210, fails to continue lower, and returns above 1.1218, this would provide a basis for buying. Such reversals most often occur when the report is close to expectations and the market, after initially reacting to the figure, begins to reverse that move.

For the pound, the upper reference level of 1.3239 is 16 points above the breakout level of 1.3223 and also lies on the way to the first target at 1.3265. Here, the focus is on a move above the level, failure to consolidate there, and a return below 1.3223. Only after such a return would selling opportunities be considered, with the stop placed above the high of the failed attempt. If the price holds firmly above 1.3223, then 1.3239 is merely an intermediate level and the move should be treated as a breakout. The lower reference level of 1.3177 is the most difficult of all, as it is only three points away from the breakout level of 1.3180. Such a narrow gap is smaller than normal market noise, making it impossible to distinguish a breakout from a false breakout based on a single test. If the price moves below 1.3177 and consolidates there, it is a breakout, and buying should be avoided. If it briefly declines below the level and quickly returns above 1.3180, this constitutes a reversal, and buying opportunities can be considered with a stop below the low of the false breakout. For the pound, which has no domestic news, this scenario is particularly relevant if the US report comes in around 90,000. The initial reaction may send the pair sharply in one direction, after which a reversal could bring it back into its usual range.

The USD/JPY pair is trading slightly lower on Friday, below 158.00, while remaining close to the weekly high reached yesterday.

Today's data showed that consumer inflation in Tokyo accelerated in September. This factor, together with the Bank of Japan's "Summary of Opinions," which discussed the need for further rate increases to counteract loose financial conditions, supports the Japanese yen. In addition, traders remain on alert amid rumors of possible authorities' intervention to strengthen the yen, which also weighs on USD/JPY.

The pair's decline is, however, capped by strong bullish sentiment toward the US dollar. Expectations for a rate jump from the Federal Reserve in October have eased, as concerns about inflation driven by energy price volatility limit a pullback in US Treasury yields from multi-year highs. That dynamic, along with ongoing geopolitical uncertainty, supports the dollar as a safe-haven asset near highs not seen since March 2025 and may continue to contribute to upside in USD/JPY.

Traders should exercise caution and refrain from opening directional positions ahead of key US labor data due later in the North American session. The high profile nonfarm payrolls report will have a material impact on market expectations for Fed policy and, in turn, on dollar dynamics, providing a significant impulse for USD/JPY. Spot prices, nonetheless, have registered moderate gains for a third consecutive week.

From a technical perspective, the pair is attempting to hold above the 9-day EMA. Oscillators are mixed, signaling some market indecision, but the relative strength index is positive, indicating that bulls have the capacity to keep the pair at current levels. The next important resistance is the 200-day SMA; a clear breach of that level would hand control of the market to the bulls.

Deutsche Bank analysts attribute the weakening of EUR/USD to widening spreads in Europe and declining banking-sector share prices amid a sell-off. The euro fell sharply against the dollar amid growing market doubts about the European Central Bank's (ECB) ability to raise interest rates again this year.

Revised ECB monetary policy expectations are also weighing on the euro

"Increased financial stress is adding to doubts about whether central banks such as the ECB will be able to raise interest rates as aggressively as previously expected."

"Tighter financial conditions are putting downward pressure on inflation by themselves, while the sell-off in assets is raising concerns about whether the economy can withstand another rate hike."

"Therefore, market expectations regarding ECB policy have changed: the amount of rate hikes priced in ahead of the December meeting fell by 6.1 basis points in a single day, to 23.5 basis points."

On the other side of the pair is the US dollar, while continued geopolitical uncertainty caused by the confrontation between the United States and Iran is supporting the dollar as a safe-haven asset. The US Dollar Index has reached a new yearly high.From a technical perspective, the pair set a new yearly low while holding above the round 1.1200 level. However, as the pair is trading below key moving averages, selling pressure is increasing. A break above the nearest resistance at 1.2700 would give the bulls an opportunity to push the pair toward 1.3220. However, as the oscillators are negative, the bears remain in control of the market. The Relative Strength Index is in oversold territory, suggesting a correction, but this correction is likely to be limited and is more likely to be followed by renewed selling.

The wave structure has now transformed into a more complex formation. Wave C has taken a three-wave form, while the next wave is identified as wave D. The entire trend section that began on January 27 may take the form of a five-wave corrective structure, A-B-C-D-E. If this assumption is correct, wave D is complete, and on August 21, EUR/USD entered the phase of forming wave E, whose low should be below the low of wave C at 1.1325. The instrument is now only a short distance from this level, and below it, the presumed wave E could complete its formation at any time.

The Most Challenging Period for the Euro Is Ahead

EUR/USD declined by another 90 basis points on Thursday. Attempts to explain the continued strengthening of the US currency, which has occurred almost every day, are unlikely to produce a definitive answer. There are always possible explanations, but it is impossible to be certain that these particular factors are driving the market's demand for the dollar. At present, economists' views are not particularly diverse. Almost all point to rising geopolitical tensions (although this is not entirely the case when referring to the Middle East), as well as stronger "hawkish" rhetoric from Fed officials in September (which the market has already been pricing in for almost a month). These factors could certainly have supported demand for the US currency. However, it is unlikely that anyone could have expected such a sharp decline in EUR/USD after the Fed meeting, given that the pair had also been declining before the meeting.

Today, the market will focus on the US labor market and unemployment reports, as well as inflation data from the European Union. The current significance of the Consumer Price Index in the euro area appears limited, as the market did not react even to two rounds of ECB monetary policy tightening. If the market is not responding to ECB interest rates, then what significance does inflation have for it? The US labor market is a different matter, as approximately 50% of the latest strengthening of the dollar is related specifically to the Fed's "hawkish" outlook. Therefore, a weak Nonfarm Payrolls reading or a high unemployment rate could finally cool sellers' momentum. However, it should be noted that in recent weeks the market has been buying the US currency not because of a high probability of tightening in October or over a longer-term horizon. The probability of monetary policy tightening in October actually declined following John Williams' remarks and the weak PCE indices.

General Conclusions

Based on the EUR/USD analysis, the pair remains within the global A-B-C-D-E corrective section of the trend. If this assumption is correct, the decline in quotes will continue toward targets below the low of wave C at 1.1325. This scenario was considered an alternative, and if not for the Fed meeting, it would have remained a reserve scenario. However, the Fed delivered a surprise, leaving the market with no other options but a new wave of US currency buying. However, buying has continued for several weeks, despite the absence of new factors supporting the dollar. Opening short positions in such a news environment would not be advisable; instead, preparations should be made for a reversal.

On the higher time frame, a downward section of the trend can be seen taking the form of A-B-C-D-E. Consequently, EUR/USD may continue declining below the low of wave C, while the internal wave structure of wave E may take the form of a five-wave impulse.

Main Principles of the Analysis:

1. Wave structures should be simple and clear. Complex structures are difficult to trade and often require adjustments.
2. If there is no confidence in what is happening in the market, it is better to stay out of the market.
3. There can never be 100% certainty about the direction of a market move. Do not forget to use protective Stop Loss orders.
4. Wave analysis can be combined with other types of analysis and trading strategies.

The wave situation on the hourly chart remains "bearish." The latest completed upward wave failed to break the previous peak, while the latest downward wave broke the previous low and has continued forming for the fourth consecutive week. Following the September FOMC meeting, traders expect at least one more monetary policy tightening before the end of the year and another one next year. This factor continues to provide the strongest support for the US currency.

The news background on Thursday did not suggest any strengthening of the US currency. The US ISM manufacturing PMI came in at 54.5 in September, although traders had expected a higher reading. The index is certainly not weak, as any reading above 50.0 signals a positive trend. Thus, the dollar may not have deserved to decline on the basis of this report, but at the same time, the sharp rally looks rather unusual. Clearly, the dollar is currently being influenced by a whole range of factors, including FOMC monetary policy, a strong increase in US bond yields, and rising geopolitical tensions, now not in the Middle East but in Europe. Even Donald Trump has failed to bring the conflict between Ukraine and Russia to an end, and investors are concerned that it could expand geographically in the near future. Thus, risk-off sentiment in the market is currently very strong. The current strengthening of the US currency still appears somewhat unjustified, while yesterday's decline looks like its final move. Therefore, further growth in the pair is expected today.

On the 4-hour chart, the pair declined to the 127.2% Fibonacci level at 1.1220. Consolidation below this level would allow traders to expect a continuation of the decline, but a rebound and corrective retracement are currently expected, supported by a whole series of "bullish" divergences in the CCI indicator and the RSI indicator being in oversold territory.

Commitments of Traders (COT) Report:

During the latest reporting week, professional traders opened 11,708 Long positions and 37,049 Short positions. Over the seven weeks in February and March, the bulls' overwhelming advantage disappeared because of the war in Iran, while over the past twenty-six weeks, the situation has become more balanced amid market hopes for an end to the conflict. The total number of Long positions held by speculators currently stands at 221,000, while the number of Short positions stands at 273,000. The bears remain in the lead.

Overall, over the long term, large market participants continue to show strong interest in the euro. Naturally, events of various kinds around the world, of which there has been no shortage in recent years, affect investor sentiment and put pressure on risk-sensitive currencies. In particular, the market is currently keeping a close eye on the situation in the Middle East, where the war alternately appears to end and then resume. However, geopolitics no longer determines the dollar's fate on its own. At the same time, the FOMC's more hawkish monetary policy stance has strengthened the dollar in recent months.

News Calendar for the United States and the European Union:

• European Union – Consumer Price Index (09:00 UTC).
• United States – Change in Nonfarm Payrolls (12:30 UTC).
• United States – Unemployment Rate (12:30 UTC).
• United States – Change in Average Hourly Earnings (12:30 UTC).

On October 2, the economic calendar contains four entries, all of which can be considered important except for US wage data. The economic news background may have a strong influence on market sentiment throughout Friday.

EUR/USD Forecast and Trading Tips:

Buying the pair is possible today if it rebounds from 1.1220 on the hourly chart, with targets at 1.1325 and 1.1416. Selling opportunities were available when the pair closed below 1.1325, with a target of 1.1220. The target has been reached. New selling opportunities may arise if the pair closes below 1.1220, with a target of 1.1087.

The Fibonacci grids are drawn from 1.1325–1.1712 on the hourly chart and from 1.1325–1.1712 on the 4-hour chart.

The market situation remains "bearish." The latest completed upward wave failed to break the previous peak, while the new downward wave (which is still forming) broke the previous low. Thus, bears continue to control the initiative. FOMC monetary policy tightening and the "hawkish" outlook conveyed by Kevin Warsh sharply strengthened the dollar's position. A break in the current trend is now possible only above 1.3567 or after the formation of two "bullish" waves.

The news background on Thursday did not allow the bears to continue their attacks, but the weak ISM manufacturing index in the United States only encouraged them. The wave of US dollar buying continued throughout the previous day, causing the pound to fall to its yearly lows. Today, the bulls will be hoping for weak Nonfarm Payrolls and the US unemployment rate figures; however, it is entirely possible that both indicators will show high readings. For the bears to stop their attacks and take a pause, neither of the labor market reports needs to show figures significantly above traders' expectations. However strong the bears may be, they cannot continue attacking constantly, without a break and against the same news background. The lower GBP/USD falls and the higher the pound climbs, the more difficult it becomes for the market to maintain the current momentum. Therefore, only very strong US labor market data could lead to a new decline below the 1.3164–1.3177 level today.

On the 4-hour chart, GBP/USD returned to the 76.4% retracement level at 1.3277 and rebounded from it once again. Therefore, the pound's decline may continue toward the 100.0% Fibonacci level at 1.3159. A rebound from this level would allow the pound to recover somewhat, but the hourly chart shows a support level above 1.3159 that could also stop the bears' attacks. The CCI indicator is showing signs of another "bullish" divergence.

Commitments of Traders (COT) Report:

The sentiment of the "Non-commercial" trader category became even more "bearish" over the latest reporting week. The number of Long positions held by speculators decreased by 14,876, while the number of Short positions increased by 8,977. The current gap between Long and Short positions is effectively 54,000 versus 137,000. The gap and the bears' advantage are increasing again. Previously, the bears' dominance was not in question, but it is now, as the news background has changed in recent months.

The "bearish" trend in the pound is still not considered convincing, but in the near term everything will depend on Trump's trade policy, the monetary policies of the Federal Reserve and the Bank of England, as well as the duration, scale, and consequences of the war in the Middle East. In recent months, the market has shifted toward expectations of peace, but negotiations between Iran and the United States failed without really getting started. There is also no guarantee that they will resume in the near future.

News Calendar for the United States and the United Kingdom:

• United States – Change in Nonfarm Payrolls (12:30 UTC).
• United States – Unemployment Rate (12:30 UTC).
• United States – Change in Average Hourly Earnings (12:30 UTC).

On October 2, the economic calendar contains three entries, at least two of which are very important. The economic news background will influence market sentiment in the second half of the day on Friday.

GBP/USD Forecast and Trading Tips:

Selling the pair is possible today if it consolidates below the 1.3164–1.3177 level on the hourly chart, with a target of 1.3025. Buying is possible today if the pair rebounds from the 1.3164–1.3177 level, with a target of 1.3272.

The Fibonacci grids are drawn from 1.3272–1.3674 on the hourly chart and from 1.3158–1.3655 on the 4-hour chart.

The final puzzle piece in the macro picture is September's nonfarm payrolls, to be released at the start of US trading on Friday. If that report also sides with the greenback, EUR/USD bears will again test the 1.1220 support level, which corresponds to the lower band of the Bollinger Bands on the D1 timeframe.

A few words on the ISM manufacturing index mentioned above: the headline did miss the forecast in September, printing 54.5 versus a 55.0 forecast. The index retreated only marginally from August's 54.6 and remained in expansion. Yet dollar bulls were impressed by the report's internals. The new orders index accelerated to 55.3, employment rose to 52.7, and the backlog orders measure jumped to 56.4. Inflation components also favored the greenback: the prices index jumped 6.8 points to 77.9—the highest reading since the start of the Middle East conflict. The share of firms reporting higher input costs rose to 58.6%, and no sector reported falling prices.

Reacting to the release, EUR/USD fell by more than 100 pips to around 1.1216. A modest corrective bounce followed, but the pair remains under background pressure, trading in a narrow range for now.

Today's official US labor data could provide additional support for the dollar, allowing EUR/USD sellers to probe the 1.11 area for the first time since May last year.

Preliminary forecasts call for the unemployment rate to remain at August's 4.1%. A key focus will be the labor force participation rate. Recall that in July US unemployment fell from 4.2% to 4.1% while participation slipped to 61.4%, meaning the headline improvement partly reflected a smaller labor force. In August participation recovered to 61.6%. Therefore, a further rise in participation in September would be a positive signal for the dollar even if unemployment stays at 4.1%.

Turning to the nonfarm payrolls detail, the consensus expects nonfarm employment to increase by 90,000 in September, down from 162,000 in August. Private sector payrolls are forecast to add about 85,000 jobs (after 127,000 in August). In other words, the market expects a slowdown in hiring, not a collapse.

The composition of the payroll gain will matter: broad contributions from industry, construction, and professional services would be materially stronger for the dollar than a concentration of new jobs in health care and education.

Wage dynamics are also important. Average hourly earnings are expected to rise 0.3% month-on-month and 3.2% year-on-year (after 3.1% in August). If wages meet or exceed expectations, hawkish bets will firm and provide further support to the greenback. Weak wage growth would be an unwelcome signal for dollar bulls, especially if NFP and participation also print on the soft side.

This week's ADP and JOLTS reports were mixed but on balance pointed to a reasonably resilient labor market. ADP showed private sector payrolls up by 90,000 versus a 75,000 forecast, led by health care, education, leisure, and hospitality; financials and professional services weakened. Core wages rose 3.2% year-on-year, so ADP did not signal further acceleration in wage inflation. JOLTS showed open vacancies fell to 7.1 million in August while hires rose to 5.2 million and separations remained low at about 1.6 million—a pattern of low hires and low quits. Weekly initial jobless claims fell to 197,000 yesterday—the lowest reading since July—which also supports the view of labor market resilience.

In summary, today's nonfarm payrolls are particularly important for the dollar. Markets have already priced in roughly one 25-bp Fed hike this year, and the September ISM strengthened the inflationary case. A strong NFP would reinforce the fundamental backdrop and boost the dollar; a weak report would make traders question labor market durability and limit further greenback gains. The interplay of three key factors—payrolls, participation, and wages—will determine whether the current EUR/USD impulse is a prelude to a sustained southward trend (with a decisive break of 1.1220) or whether the pair returns toward the 1.13 area.

The market was also heated by today's US employment report (NFP), due October 2. In August payrolls rose by 162,000, well above expectations in the 42,000–65,000 range, and it was the strongest month since March. Unemployment remained at 4.1%, and July's result was revised up to plus 21,000 from minus 23,000. That raised the odds of a Fed rate hike because a strong labor market gives the central bank reason to tighten policy. Now everyone expects a weaker September print: the consensus forecast is about 90,000 new jobs.

The logic of expectations is simple. A moderately weak report reduces the chance of a rate increase, which, after August's PCE, was already priced at about 37% for October, and that supports risk assets, including crypto. Expensive money weighs most on non-yielding assets, so any easing of hike odds benefits Bitcoin and Ethereum, while the dollar and bond yields lose; yields reached about 5.25% this week. But the market is already positioned, so the risk is two-sided: a print well above 90,000 would again strengthen hike bets, while a fall below zero could scare investors with recession risk and prompt a pullback.

There is a second caveat. Moves built on liquidations typically hold only if new buyers step in, because forced buying ends with the shorts. Here support exists: Bitcoin ETFs have attracted money for nine trading days in a row. October is historically strong with an average return of 18.52% and a median of 12.73%, and Q3 closed up 42.71%. Still, neither ETF flows nor seasonality eliminate the fact that false breakouts are especially common at data releases.

I expect that with a report around 90,000 or slightly below, but without a crash, Bitcoin will hold above $86,000 and head to $88,000, with the next target near $90,000. With a strong print and rising hawkish odds, the price will likely return to $85,000 and trade sideways. A close below $85,000 would invalidate that bullish scenario and indicate a false breakout and return into the range.

Bitcoin

Price trades between support at $85,800 and resistance at $86,200, and the plan is built around that corridor. For buyers the first scenario is a confident break of $86,200 to the upside targeting $86,900, where I would take profit and consider reversing into a short on the pullback, provided the price remains above the 50-day moving average and the Awesome indicator stays above zero. The second buy scenario applies if a downside breakout fails: a rebound from $85,800 or a false drop to $85,000 opens a long with an initial return to $86,200 and then $86,900.

Sell conditions are mirrored. A confirmed break below $85,800 gives a short toward $85,000, but only when the 50-day moving average is above price and Awesome has fallen below zero. If the break of $86,200 upward fails and the price is rejected at that level, a short targets a return to $85,800 and then $85,000.

Ethereum

The logic mirrors Bitcoin on its own scale: the working corridor is between support at $2,722 and resistance at $2,735. Buy on a break above $2,735 targeting $2,755, where profit would be taken and a short on the pullback might be considered, or buy on a rebound from $2,722 or a false drop to $2,700, with initial targets of $2,735 and then $2,755. Sell on a confirmed break below $2,722 toward $2,700, or on a rejection at $2,735 after a failed upside breakout, with targets of first $2,722 and then $2,700. The 50-day moving average and Awesome are applied in the same way as for Bitcoin. Both indicators serve as filters to avoid false moves, not as prompts to enter in advance, so trades are taken only after price confirms the designated levels.

Demand for the American currency has increased for the fourth consecutive week, and, in my view, if the reasons were purely the Fed's monetary policy, the move would have ended long ago. I believe the Fed's stance did become more hawkish in September, but not to the extent that the US currency would strengthen for almost a month without rest or pauses. Moreover, this week some FOMC officials clarified that a hawkish tilt does not automatically mean rate increases at every meeting through year-end. Therefore, the market's hawkish hopes are unlikely to be fulfilled in full.

Economists note that a bundle of factors supported the dollar in September, including the Fed's firmer stance, heightened global geopolitical tensions, and the ongoing artificial intelligence boom. Why, for example, the AI factor did not support the dollar earlier is not explained. As for geopolitical tensions, the situation in the Middle East has not changed in recent weeks and months. Iran and the US continue to pretend to seek a deal, while in reality neither side is prepared to make meaningful concessions, at least on key issues. Each side seeks a low-cost victory without significant compromise.

Lately, however, statements from Moscow and some European leaders warning of the possibility of war have become more frequent, which does not improve investor sentiment. It is possible that capital is already beginning to flow out of the European Union, and, combined with sovereign bond sales in both the US and Europe, that is creating a serious imbalance across financial markets.

Economists also point to risks for the dollar such as dedollarization, US public debt rising above $40 trillion, and the prospect of global tariffs under Donald Trump. Yet it appears that an age-old financial proverb is at work again: in any unclear situation, buy the dollar. Bank of America said it expects further dollar strength for the remainder of the year. HSBC does not expect anything remarkable from the US currency. Citi believes dollar gains will be moderate, even though the US currency has been rising for almost a month. Views differ because no one really understands the precise causes of the September rally. In my view, after the completion of wave E, an extended upward segment of the trend will begin.

Other articles to read

- Analysis of EUR/USD. October 2. How USD may react to Nonfarm Payrolls?

Wave analysis of EUR/USD

Based on my analysis of EUR/USD, I conclude the instrument remains within a global corrective trend segment A-B-C-D-E. If this assumption is correct, declines will continue toward targets below the low of wave C—1.1325. I considered this scenario an alternative, and if not for the Fed meeting, it would have remained so—a reserve case. But the Fed surprised markets, leaving no option but a new wave of dollar buying. Purchases have continued for several weeks, however, despite the absence of fresh supporting factors for the dollar. I would not open shorts in such a news environment and would, instead, prepare for a reversal.

Wave analysis of GBP/USD

The wave structure for GBP/USD has become fairly clear but could become more complex. Charts show a distinct A-B-C corrective structure, which after the Fed meeting could transform into A-B-C-D-E. If that assumption holds, the pound will continue to decline toward targets below the 1.31 area near the low of wave C. However, completion of a similar structure on the euro could prompt the pound's structure to finish at any stage.

Core principles of my analysis:

1) Wave structures should be simple and comprehensible. Complex structures are hard to trade and often change.

2) If you are not confident about what is happening in the market, it is better not to enter.

3) There is never 100% certainty about direction. Do not forget protective stop-loss orders.

4) Wave analysis can be combined with other analytical methods and trading strategies.

The dollar's appeal in this moment is explained by bond yields, which exceed 5% on 10- and 30-year paper, drawing capital away from riskier assets. Since yesterday's dollar reversal, which followed a strong ADP employment report, the market has largely not retraced; the French story merely added to the pressure. I lean toward this trend continuing at least until today's US labor market data, because those figures are the most likely to outweigh the political factor.

The pound suffered only tangentially in this episode. The UK released a solid manufacturing activity report, and the eurozone showed a similar picture, yet that did not help the currencies: attempts to buy the move after monthly lows failed. It appears that a strong PMI no longer serves by itself as a reason to buy the pound while the dollar remains in favor.

The US ISM manufacturing index came in at 54.5 versus a forecast of 55 and a preliminary 54.6, broadly in line with expectations, and that was enough to support the dollar. Initial jobless claims for last week were 197,000 versus a forecast of 200,000, confirming labor market resilience. The dollar was again the beneficiary, while the euro and the pound lack answers to such a backdrop.

In the first half of the day, the flash eurozone consumer price index for September will be the key event. Preliminary readings from France, Germany, and other countries have already shown notable acceleration, so the aggregate eurozone CPI is forecast at 3.7% after 3.2% in August. Inflation has accelerated for the fourth consecutive month: 2.8% in June, 2.9% in July, 3.2% in August, and expected to be 3.7% in September. This is a serious problem for the ECB, which has already raised rates but has not yet achieved a noticeable effect, and apparently more decisive measures may be required. Core CPI is forecast at 2.5% after a decline to 2.4% in August, and it will be the main argument for those on the council who oppose further hikes.

US nonfarm payrolls will be no less important. September payrolls are expected to rise by only 90,000 after a sharp 162,000 jump in August, while June and July each produced only 20,000. The ADP report already exceeded expectations this week, and weekly claims have averaged around 200,000, so an outcome above forecast is quite possible and would give the Fed additional reason to keep raising rates. The unemployment rate is forecast at 4.1%; attention will also focus on average hourly earnings, expected to rise 0.3%, and on private sector employment dynamics. Fed officials' speeches this week, in my view, are unlikely to add much: the stance that hikes are not expected in October but could occur before year-end has been repeated for some time, and the market will probably react to the employment data rather than rhetoric.

EUR/USD

On the hourly chart, I consider 1.1264 as the level for initiating shorts. A false breakout there would be a trigger for short positions targeting 1.1218, while a full breach of that range is likely only after a strong U.S. employment report. A close below 1.1218 with a subsequent bottom-up retest would increase pressure on the euro and open the way to 1.1174 and then 1.1136, where I would look to buy the bounce for a 25–30 pip move. If bears do not show up at 1.1264 and the employment report is weaker than expected, a break and hold above that level is possible, which would justify adding long positions toward 1.1307 and then 1.1346, where I would sell the rebound for 25–30 pips.

GBP/USD

No major UK fundamental data are due today, so the pound will most likely follow the dollar. Before U.S. employment data the pair is unlikely to fall below 1.3180; I will consider buying if there is a failed close below 1.3223 after attempts to move down to that range, and short positions are possible on a false breakout of 1.3265. A weak US labor report could lift the pound to 1.3307, where I would sell the rebound for 30–35 pips, while if weakness continues, I will consider buys from 1.3180, from 1.3137 on a false breakout, or on a bounce from 1.3097, aiming for a 25–30 pip correction.

Can the employment report reverse today's dynamic in favor of the euro and the pound? I do not think that will happen even with weak figures, because the French political crisis will remain and will weigh on the euro regardless of US statistics. I would risk saying that strong employment data would only accelerate the dollar's upward move, while weak data would at best give the euro and the pound a temporary respite before another wave of selling.