Daily Market Report
10/28/2026
EUR/USD ranged in the low 1.11’s overnight. The EUR/USD pair trades on a weaker note near 1.1120 during the early European trading hours on Wednesday. Markets could turn cautious later in the day ahead of the Federal Reserve (Fed) interest rate decision on Wednesday. On Thursday, the European Central Bank (ECB) policy meeting will be in the spotlight.
Markets expect the Fed to hold benchmark rates steady in a range of 3.75%-4.00% when it releases its decision Wednesday. Fed funds futures are pricing in an implied 92.8% chance the Federal Open Market Committee (FOMC) will keep its policy interest rate on hold, according to the CME FedWatch tool. The likelihood of a US rate hike in December stands at 84.4%.
“The Fed doesn’t need to hike today to move markets,” said Chris Weston, head of research at Pepperstone Group in Melbourne. “It simply needs to change the perceived probability of hiking in December.”
On the Euro’s front, the ECB is likely to leave its key interest rates unchanged at its upcoming meeting on Thursday following a 25 bps hike in September. Meanwhile, high energy costs, the volatility in French government bonds and worries about France’s fiscal position might cap the upside for the shared currency in the near term.
The British Pound (GBP) is heading south against the US Dollar (USD) for the fourth consecutive day on Wednesday, with investors awaiting the release of the UK budget and the US Federal Reserve’s (Fed) monetary policy decision, both due later in the day. The GBP/USD pair has reached a fresh two-week low at 1.3275, before picking up to 1.3295 at the time of writing.
In the UK, the highlight of the week is the release of the first budget of Prime Minister Andy Burnham’s cabinet, with the main focus on the plans to finance the tax exemptions announced by the cabinet to ease British citizens’ cost of living.
Markets remain wary, with the UK’s public finances strained as total public debt surpassed GBP 3 trillion in September, amid a significant increase in net borrowing. The previous chancellor, Rachel Reeves, left a GBP 23.6 billion buffer, but the surge in debt costs is likely to have eaten up approximately half of it. With bond markets jumpy, and the 2022 Liz Truss fiasco still fresh, the details of Chancellor Healey’s budget are likely to trigger some Pound volatility.
The Japanese Yen (JPY) continues to underperform against the US Dollar (USD) as the latter strengthens amid caution ahead of the Federal Reserve’s (Fed) monetary policy at 18:00 GMT.
As of writing, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades 0.1% higher to near 102.50, the highest level seen in over a week.
Strategists at OCBC expect the Fed to remain patient in the near term, writing that they “expect the Federal Reserve to stay on hold in October, with the focus shifting quickly to December.” They highlight that “September CPI surprised to the upside,” and note that this comes against a backdrop where “most FOMC participants had already indicated that another hike could be appropriate by year-end,” keeping attention firmly on the policy path into the final meeting of 2024.
Source: FX Street