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Central Banks Drive FX Moves: RBA Holds, BoJ Hints at Hikes | 4th November 2025

RBA Holds, Yen Rises Global currency markets opened the week on a cautious tone as central bank signals dominated sentiment. The Australian Dollar initially strengthened after the Reserve Bank of Australia (RBA) held interest rates steady at 3.6%, though gains were tempered by a stronger U.S. Dollar and renewed volatility in commodity prices. Meanwhile, the Japanese Yen advanced as speculation grew over potential rate hikes by the Bank of Japan (BoJ). Elsewhere, the British Pound paused its recent slide, while the Canadian Dollar weakened amid softer crude oil prices and firm U.S. yields. GBP/USD Forecast Current Price and Context GBP/USD steadied near 1.3150 after a prolonged downtrend, as the Pound found support from softer U.S. Treasury yields and short-term profit-taking on the Dollar. Market participants remain cautious ahead of key U.S. data, which could redefine expectations for the Federal Reserve’s policy path. Key Drivers Geopolitical Risks: Global market unease over Middle East tensions continues to boost demand for the U.S. Dollar as a defensive play. US Economic Data: Investors await U.S. nonfarm payrolls and CPI data for signs of economic resilience. FOMC Outcome: Fed officials’ hawkish tone limits Pound recovery potential. Trade Policy: UK trade deficit concerns may weigh on Sterling’s long-term outlook. Monetary Policy: The Bank of England is expected to maintain its cautious stance as inflation remains sticky. Technical Outlook Trend: Downtrend moderates, with early signs of base formation. Resistance: 1.3220 Support: 1.3080 Forecast: Consolidation likely before potential rebound toward 1.3200 if U.S. data disappoints. Sentiment and Catalysts Market Sentiment: Mixed, with traders hesitant to build fresh long positions ahead of U.S. data. Catalysts: BoE commentary, U.S. labor market data, and risk sentiment shifts. EUR/JPY Forecast Current Price and Context EUR/JPY slipped toward 177.00 as rising speculation about potential BoJ rate hikes strengthened the Yen. The Euro’s weakness was amplified by softer Eurozone manufacturing data, dampening risk appetite across the region. Key Drivers Geopolitical Risks: Ongoing European energy security concerns limit Euro support. US Economic Data: Limited direct impact but could shift global yield sentiment. FOMC Outcome: A sustained hawkish Fed keeps risk sentiment fragile. Trade Policy: Japan’s trade balance improvement adds confidence to Yen buyers. Monetary Policy: BoJ officials signaling potential tightening weighed heavily on EUR/JPY. Technical Outlook Trend: Bearish bias persists. Resistance: 178.20 Support: 176.60 Forecast: Potential further downside toward 176.00 if BoJ rhetoric strengthens. Sentiment and Catalysts Market Sentiment: Bearish amid rising BoJ rate expectations. Catalysts: BoJ policy updates, Eurozone inflation figures. AUD/NZD Forecast Current Price and Context AUD/NZD hovered near 1.1480, its highest level since September 2022, as the Australian Dollar benefited from the RBA’s steady rate stance and a mildly upbeat tone on inflation control. The Kiwi lagged amid slower New Zealand growth expectations. Key Drivers Geopolitical Risks: Limited direct influence but overall market caution supports carry trades. US Economic Data: Indirectly influences risk appetite and commodity demand. FOMC Outcome: Hawkish Fed limits broader AUD upside against USD but not NZD. Trade Policy: Stable regional trade ties support AUD relative to NZD. Monetary Policy: Divergence between RBA’s steady stance and RBNZ’s dovish tone favors AUD strength. Technical Outlook Trend: trong uptrend continuation. Resistance: 1.1500 Support: 1.1400 Forecast: Bullish momentum could extend if AUD maintains yield advantage. Sentiment and Catalysts Market Sentiment: Optimistic, driven by strong AUD fundamentals. Catalysts: RBA minutes, Australian retail sales, NZD GDP updates. USD/CAD Forecast Current Price and Context USD/CAD traded above 1.4050 as the U.S. Dollar strengthened on firm yields and weaker oil prices weighed on the Canadian Dollar. Investors anticipate cautious tones from both the Fed and the Bank of Canada (BoC) this week. Key Drivers Geopolitical Risks: Global oil supply uncertainty keeps CAD under pressure. US Economic Data: Robust U.S. data reinforces Dollar demand. FOMC Outcome: Fed’s hawkish bias favors USD resilience. Trade Policy: U.S.-Canada trade flows remain stable but sensitive to energy prices. Monetary Policy: BoC likely to stay neutral amid fragile domestic growth. Technical Outlook Trend: Uptrend remains intact. Resistance: 1.4100 Support: 1.3980 Forecast: Potential test of 1.4100 if oil remains under pressure. Sentiment and Catalysts Market Sentiment: Bullish USD bias. Catalysts: Crude oil prices, U.S. ISM manufacturing data, BoC policy remarks. AUD/JPY Forecast Current Price and Context AUD/JPY slipped after the RBA held rates steady at 3.6%, triggering selling pressure on the Aussie. The pair currently trades near 96.50, as traders shift focus to Japan’s evolving rate outlook. Key Drivers Geopolitical Risks: Asia-Pacific trade stability provides mild support. US Economic Data: Indirect impact via global risk sentiment. FOMC Outcome: Hawkish Fed keeps JPY demand steady as a funding currency. Trade Policy: Strong Japan export performance underpins Yen demand. Monetary Policy: BoJ’s hawkish signals add downside pressure to AUD/JPY. Technical Outlook Trend: Bearish correction phase. Resistance: 97.20 Support: 96.10 Forecast: Further weakness likely if BoJ rhetoric strengthens and AUD momentum fades. Sentiment and Catalysts Market Sentiment: Bearish due to divergent central bank tones. Catalysts: RBA meeting minutes, BoJ rate policy commentary. Wrap-up Traders are now eyeing this week’s U.S. employment and inflation data for clearer clues on the Federal Reserve’s rate trajectory. With policy divergence among major central banks becoming more pronounced, short-term volatility in FX markets is likely to remain elevated. The spotlight stays on the RBA’s forward guidance, BoJ policy shifts, and U.S. Dollar strength as key drivers shaping cross-asset sentiment through the week. Ready to trade global markets with confidence? Join Moneta Markets today and unlock 1000+ instruments, ultra-fast execution, ECN spreads from 0.0 pips, and more! Start now with Moneta Markets!

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Publication date:

2025-11-04 08:16:27 (GMT)

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