What to Know
- EUR/USD fell roughly 0.4% last week and ended near 1.1160, with the pair still trading in a longer-term bearish trend.
- Technical traders are watching 1.1300 as a key level for EUR/USD, with short exposure favored below that area by some market participants.
- The US Dollar Index remains above important support at 101.39, although its latest weekly candle showed hesitation after failing to make a new long-term high.
- NZD/USD dropped below 0.5600 after the Reserve Bank of New Zealand unexpectedly held its cash rate at 2.75%.
- WTI crude oil briefly traded above 104 and held the 100 area as support, with Middle East supply risks still dominating sentiment.
- The S&P 500 fell 1.8% on Friday and finished the week approximately 0.6% lower after breaking below a bearish head and shoulders neckline around 7626.2.
- Bitcoin lost roughly 4% over the week as speculative appetite weakened and news of a massive Binance hack added pressure.
- Gold fell roughly 3% and broke well below 4,000, failing to act as a straightforward haven during the broader risk-off move.
- US non-farm payrolls, US average hourly earnings, the Bank of England, the Reserve Bank of Australia and US Congressional elections are among the week’s main event risks.
Risk Appetite Weakens as Central Banks and Politics Take Center Stage
Global markets enter the new week with a more defensive tone after a cluster of central bank decisions, political risks and renewed worries about technology valuations reshaped sentiment. The shift was not a clean move into traditional havens. Instead, investors faced a more complicated mix of inflation anxiety, doubts over the durability of artificial-intelligence investment returns, geopolitical tension and signs that risk assets may be losing momentum after a strong run.
The prior week delivered important signals across major asset classes. In currencies, the Euro remained weak against the US dollar, while the New Zealand dollar absorbed a sharper domestic shock after the Reserve Bank of New Zealand delivered a highly unexpected rate hold. In commodities, crude oil stayed supported by Middle East supply risk, while gold struggled despite falling equities. In equities, the S&P 500 broke a closely watched bearish chart pattern, reinforcing concerns that the market’s leadership may be vulnerable.
For FXCOINZ market coverage, the key theme is that investors are no longer treating growth risk, inflation risk and geopolitical risk as separate issues. Higher energy prices can keep inflation concerns alive, which may keep central banks cautious. At the same time, expensive financing conditions can weigh on equities and speculative assets. This tension explains why gold could fall even as stocks weakened, and why crude oil could remain firm while broader risk sentiment deteriorated.
EUR/USD Remains Pressured Below 1.1300
EUR/USD remains one of the clearest focal points in the currency market. The pair declined roughly 0.4% last week and ended near 1.1160, extending a longer-term bearish structure. The weekly candle was bearish, but it also included a notable lower wick, showing that buyers reacted near the 1.1150 support area and almost near the 1.1100 round number.
The broader technical structure still leans negative. EUR/USD made a new 17-month low, confirming that sellers continue to control the larger trend. However, the lower wick suggests that bearish momentum may be slowing. That distinction matters because a market can remain in a downtrend while still becoming vulnerable to short-covering rallies, consolidation or choppy two-way price action.
Some technical traders continue to favor short exposure while the pair holds below 1.1300. A daily close above 1.1300 would weaken that bearish setup and may force traders to reassess. Even then, a move above that area followed by renewed selling could attract fresh short interest if bearish price action returns. For now, the balance of evidence still favors caution toward the Euro, especially given concerns around French and Eurozone debt, energy stress, conflict with Russia, and unrest centered on France but spreading to other Eurozone countries.
The fundamental picture is not entirely one-sided. The US dollar has lost ground over the past two consecutive weeks, and expectations around future US rate hikes have softened alongside falling 10-year Treasury yields. Even so, the Euro was one of the major currencies that failed to benefit meaningfully from that environment, underscoring its own weakness.
US Dollar Index Holds Key Support Despite Hesitation
The US Dollar Index printed a bearish pin candlestick after giving up much of its earlier gain and failing to set a new long-term high. That price action raises the possibility of near-term hesitation. However, the index remains within a long-term bullish trend and inside an ascending price channel, keeping the broader structure constructive unless support gives way.
The 101.39 level is central to the outlook. If the index continues to hold above 101.39 into the new week, dollar bulls may view that as a sign that the longer-term uptrend can resume. If the level fails, the market may begin treating the recent high as a potential top or at least as the start of a deeper bearish retracement.
Currency traders are likely to watch incoming US labor data closely. US average hourly earnings, non-farm payrolls and the unemployment rate will help shape expectations around the Federal Reserve’s policy path. The Federal Reserve’s latest meeting was interpreted as a barely hawkish rate hold, while US Core PCE came in as expected and US advance GDP was higher than expected at 3.4%, a result that may offer some support to the dollar if growth remains resilient.
NZD/USD Tests Long-Standing Support After RBNZ Surprise
NZD/USD came under sharp pressure after the Reserve Bank of New Zealand unexpectedly held its cash rate at 2.75% rather than delivering the widely anticipated hike. The decision surprised markets because inflation remained firmly above the central bank’s target rate. The vote was narrow, and even policymakers favoring a hold indicated that the decision was intended to allow more time to assess whether earlier hikes would reduce inflation.
The immediate reaction sent NZD/USD below 0.5600. Yet the weekly chart also showed a significant lower wick, indicating that the market did not sustain all of the post-decision weakness. The 0.5600 area has acted as strong support for a long time, making it a key level for traders watching whether the selloff becomes a decisive breakdown or a failed downside move.
If 0.5600 continues to hold, some chart watchers may begin to look for a longer-term buying opportunity, even though that could feel counter-intuitive after a dovish surprise. The logic is that the RBNZ did not abandon the possibility of further tightening. Instead, markets repriced the timing of that tightening. A sustained break below 0.5600 would carry a different message and could extend bearish pressure.
WTI Crude Oil Stays Firm as Middle East Risks Dominate
WTI crude oil remains heavily influenced by geopolitical risk in the Strait of Hormuz and the Gulf. Prices rose again over the past week, with the 100 area holding as support and the market briefly trading at a new 5-month high above 104. The price action remains supported by a long-term bullish trend, and recent gains have largely been contained by an ascending technical structure.
An attack on a tanker in the Strait of Hormuz helped lift oil prices by more than 2% on Friday, although WTI finished approximately flat for the week. That combination highlights the market’s sensitivity to headlines. Oil can rally quickly on supply threats, but sustained follow-through depends on whether traders believe disruption risks will persist or escalate.
Political timing is also important. The US mid-term Congressional elections are expected this coming Tuesday, while an election in Israel took place last week. Market participants are watching whether a political window opens as soon as 4th November for a potential US or Israeli strike on Iran. Such an event might be short, but it would very likely lead to a spike higher in crude oil prices.
Some traders are watching for a new 6-month high on a daily closing basis as a potential bullish trigger. However, the oil market remains difficult to trade because military and geopolitical decisions can override technical signals. If conflict resumes and oil rises significantly, there is speculation that 120 could be tolerated for a while, although that scenario is highly uncertain and timing would be critical.
S&P 500 Breaks Bearish Pattern as AI Doubts Grow
The S&P 500 fell 1.8% on Friday and ended the week approximately 0.6% lower. The weekly decline appeared modest on the surface, but the internal message was more serious because the index reversed sharply and closed below the neckline of a bearish head and shoulders pattern. The neckline was identified around 7626.2, and the index also closed below the 7600 round number.
The index has now posted its third consecutive down week after moving close to a test of its all-time high above 7800. The next major round number in view is 7500, while the 200-day simple moving average sits at 7330 and is rising. Those levels may become important reference points for investors deciding whether to reduce exposure or treat weakness as a buying opportunity.
Shorting the S&P 500 has historically been difficult, and that remains a relevant warning. Even when technical conditions deteriorate, the index can rebound sharply. However, risk-off sentiment, broad declines in speculative assets, worries over a potential AI bubble and the possibility of renewed US-Iran military action have strengthened the bearish argument. A bullish bounce from 7500 could change the tone, but a daily close below that level would likely deepen caution.
Gold and Bitcoin Fail to Offer Clear Shelter
Gold fell roughly 3% and broke well below 4,000, failing to provide its customary counterweight to falling equities. The weakness reflects the uncomfortable connection between crude oil, inflation and interest-rate expectations. If higher oil prices sustain inflation concerns, investors may anticipate tighter monetary policy for longer. That dynamic can weigh on non-yielding bullion, even when equity markets are under pressure.
Bitcoin also struggled, losing roughly 4% over the week. The decline came as broader speculative appetite weakened and news of a massive Binance hack compounded negative sentiment. The move showed that crypto remained exposed to risk-off conditions rather than acting as a consistent hedge against equity weakness.
Together, the action in gold and Bitcoin suggests that investors are not simply rotating into alternative stores of value. Instead, they are reassessing valuation risk, liquidity conditions and event risk across asset classes. That creates a more selective and potentially volatile trading environment.
Key Events for the Week Ahead
The coming week is packed with catalysts. US average hourly earnings, non-farm payrolls and the unemployment rate are likely to dominate the macro calendar because they feed directly into expectations for Federal Reserve policy. The Bank of England and Reserve Bank of Australia policy meetings will also be watched closely, especially after a week in which five major central banks already delivered important decisions.
US Congressional elections add another layer of uncertainty, with expectations pointing to Democratic control of both Houses. New Zealand unemployment data and New Zealand parliamentary elections also matter for NZD traders, particularly after the RBNZ surprise. Volatility remained flat last week, with 26% of notable currency pairs and crosses moving by more than 1% in value. Next week’s volatility is likely to be similar or perhaps a little lower, though event risk could still produce sharp intraday moves.
For now, the strongest market message is caution. EUR/USD remains weak below 1.1300, WTI crude oil remains vulnerable to geopolitical spikes, and the S&P 500 has delivered a bearish technical warning. Traders may need to stay flexible, because this is not a single-theme market. It is a market balancing inflation pressure, political risk, central bank caution and fading confidence in high-growth narratives.
Frequently Asked Questions (FAQs)
Why is EUR/USD still under pressure?
EUR/USD remains under pressure because the Euro is facing multiple headwinds, including debt concerns, energy stress, conflict with Russia and unrest in parts of the Eurozone. The pair also remains in a longer-term bearish trend and recently made a new 17-month low.
What is the key level for EUR/USD traders?
The 1.1300 level is a major reference point. Some market participants continue to favor a bearish stance while EUR/USD remains below 1.1300, while a daily close above that level would weaken the short setup.
Why did NZD/USD fall sharply?
NZD/USD fell after the Reserve Bank of New Zealand unexpectedly held its cash rate at 2.75% despite inflation remaining above target. The decision forced markets to reprice the timing of future tightening.
What makes 0.5600 important for NZD/USD?
The 0.5600 level has acted as strong support for a long time. If it continues to hold, some traders may look for stabilization, but a decisive breakdown below that area would keep bearish pressure in focus.
Why is WTI crude oil staying firm?
WTI crude oil is staying firm because supply risks in the Strait of Hormuz and the Gulf remain central to pricing. An attack on a tanker in the Strait of Hormuz helped lift prices by more than 2% on Friday.
What levels matter for the S&P 500?
The S&P 500 has broken below a bearish head and shoulders neckline around 7626.2 and closed below 7600. Traders are now watching 7500 and the rising 200-day simple moving average at 7330.
Why did gold fall during a risk-off week?
Gold fell because inflation concerns and expectations for further interest-rate increases weighed on non-yielding bullion. Higher crude oil prices can support inflation fears, making the environment less favorable for gold even when equities weaken.
What are the main events to watch this week?
Key events include US average hourly earnings, non-farm payrolls, the unemployment rate, the Bank of England policy meeting, the Reserve Bank of Australia policy meeting, US Congressional elections, New Zealand unemployment data and New Zealand parliamentary elections.