The euro and the pound briefly rose in the Asian session yesterday, but dollar demand returned, and both currencies fell almost in sync. When EUR and GBP behave so similarly, the cause is usually market sentiment rather than country-specific news. The dollar gained support while risky assets remained under pressure. As a result EUR/USD hit monthly lows and GBP/USD returned nearly to the lower boundary of its sideways channel.
No European or UK data came out yesterday, so euro and pound moves were driven by the dollar. US equity markets were open, but the US bond market was closed for Columbus Day, leaving dollar-pair trading on a thin market. In such conditions any high-profile comment moves prices more than on a normal day. That comment came from Cleveland Federal Reserve president Beth Hammack, who said returning inflation to 2% in a reasonable time requires restrictive policy, while noting it wasn't a rate forecast. Hammack voted against the committee decision in July, so her hawkish tone was unsurprising—but in a thin market, it hit hard.
She referenced figures that look worrying: the core PCE (the Fed's preferred inflation gauge) was 3.4% in August versus 2.7% a year ago, and core (excluding food and energy) rose to 3.0% from 2.9%. For the euro and pound this implies the US central bank is unlikely to rush to ease. The market already prices a pause for the October 28 meeting and a possible hike in December, so Hammack's words found fertile ground. The Middle East remains a background risk: Iran continues strikes near the Strait of Hormuz and the Houthis attack Saudi airports in response to the Yemeni government offensive, threatening Red Sea routes used to bypass Hormuz. As long as that threat persists, the dollar stays a safe-haven asset.
Today the euro faces an inflation check. In the first half of the day, Germany will release the final September CPI. The reference is August, when annual inflation was 2.9% (after 2.8% in July and 2.3% in June) and monthly prices rose 0.2%, with energy contributing strongly (energy up ~10.5% year-on-year). For EUR/USD everything depends on the strength of the print. The European Central Bank deposit rate is currently 2.50% and the market expects a final hike to 2.75% in December. A notable acceleration in inflation would support that view and attract interest to the euro; a print at or below expectations would leave the dollar advantaged, especially after Hammack's remarks. Price rises only help the euro when they translate into higher rate expectations.
For the pound the main event this morning is the speech by Bank of England MPC member Swati Dhingra. UK data today are minimal, so the market will look for hints in her words about how the BoE views inflation and what it means for rates. Dhingra's stance is less well-known than some colleagues', adding uncertainty. With GBP/USD sitting near the lower channel boundary after yesterday's fall, any clear signal today will move the pair more than usual. If Dhingra stresses that inflation risks remain elevated, the pound could recover part of its losses; if her tone is cautious, dollar pressure will persist.
For the euro the range between breakout points is 42 pips, from 1.1155 to 1.1197, and price at 1.1175 sits inside it, slightly closer to the lower boundary. A breakout above 1.1197 opens the way to 1.1238 and then 1.1275. I treat that scenario cautiously because it requires two things at once: strong German inflation and a dovish tone from Waller and Collins. If either catalyst fails, the rally will quickly fizzle. A break below 1.1155 leads to 1.1126 and 1.1097, and I consider that direction primary—but only if price closes below the level, not merely touches it.
For the pound the picture is different. The range here is only 19 pips, from 1.3221 to 1.3240, and price at 1.3220 lies one pip below the lower boundary. A novice trader should understand that one pip is noise, and on such a touch you cannot tell whether a breakout has started or it is a normal level-bounce. Therefore I would not rush and would wait for Dhingra's remarks. A breakout above 1.3240 opens the road to 1.3259 and 1.3282, while a break below 1.3221 targets 1.3202 and 1.3183. The narrow range means moves between the points can occur very quickly, and a mistaken entry will be more costly.
For the euro there are two reversion reference points: 1.1189 and 1.1154. The upper one lies 8 pips below the breakout point 1.1197 and 34 pips above the lower 1.1155. I view it as a short-term idea inside the range. If price reaches 1.1189, fails to hold, and returns lower, selling is justified, and a protective stop above 1.1197 is reasonable. The lower reference at 1.1154 is just one pip below the breakout point at 1.1155, so special caution is required there. A single touch will not distinguish a real breakout from a false one, so I would skip the first reaction in this zone. If price moves below 1.1155, lingers, and closes firmly, that is a breakout, and you should not buy there. If it quickly returned above, the reversion trade works.
For the pound, the upper reference at 1.3229 stands 8 pips above the breakout point at 1.3221 and 11 pips below 1.3240. I will look for short positions there if the pair rises to that level, fails to hold, and drops back below 1.3221, for example, on Dhingra's cautious remarks. In that case, a stop above 1.3240 is convenient, since a move beyond that level changes the picture. The lower reference 1.3205 is 16 pips below 1.3221 and only 3 pips above the first target 1.3202, so the scenarios almost merge. A downside breakout with a return above 1.3205 offers a buying idea, but the room to run is limited by the nearby target for a breakout scenario. Therefore, I treat it more as an option for a careful short-term reaction than the main plan for the day. A stop here is better placed below 1.3202.
*تعینات کیا مراد ہے مارکیٹ کے تجزیات یہاں ارسال کیے جاتے ہیں جس کا مقصد آپ کی بیداری بڑھانا ہے، لیکن تجارت کرنے کے لئے ہدایات دینا نہیں.
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