Daily Market Report
10/05/2026
EUR/USD ranged in the low to mid 1.12’s overnight. The Euro (EUR) maintains its bearish tone against the US Dollar (USD) on Monday, following a string of mixed Services Activity figures and weak Investor Confidence data, with concerns about France’s fiscal health weighing heavily. The EUR/USD pair is trying to come back above 1.1200 at the time of writing after bouncing from fresh 17-month lows near 1.1160 earlier on the day, and following a 3% decline in the previous four weeks.
The Euro has come under additional pressure on Monday as France’s borrowing costs soar amid rising social unrest, and with the gridlock in the government practically discarding any credible savings plan. The yield of the French 10-year government bond hit 4.99% on Friday, surpassing the peak of 2008, which has reactivated concerns of a credit crisis that might extend to other Eurozone members.
Risk aversion keeps fueling the US Dollar against its main peers on Monday, offsetting the negative impact of the soft labor report seen on Friday and the dwindling hopes that the US Federal Reserve (Fed) will hike interest rates in October.
The British Pound (GBP) claws back some of its early losses against the US Dollar (USD), but is still 0.15% down to near 1.3220 during the European trading session on Monday. The GBP/USD pair recovers slightly as the US Dollar Index retreats after hitting a fresh annual high near 102.53.
According to the CME FedWatch tool, the odds of the Fed hiking interest rates in the policy meeting later this month have diminished to 19.4% from 70.9% seen a week ago.
Traders have scaled back hawkish Fed expectations after the release of the United States (US) Nonfarm Payrolls (NFP) data for September on Friday, which showed a moderate job growth. However, market experts believe that the negative reaction in hawkish Fed prospects after the US NFP data release could prove to be short-term, as high inflation is key challenge for the United States (US) central bank.
Societe Generale’s Kenneth Broux argues that the softer US payrolls report has reinforced the recent pullback in expectations for near‑term Fed tightening, but the bank stresses that it is “not a game changer for the hawkish predisposition of the Fed – inflation is the bogeyman.” In their view, the latest jobs print instead “justifies caution over cadence and quantity of future policy adjustments articulated last week by FOMC voter Williams,” tempering the pace and scale of any further tightening even as inflation remains the central focus for policymakers.
The USD/JPY pair struggles to capitalize on Friday’s bounce from sub-157.00 levels, touched in reaction to the weak US Nonfarm Payrolls (NFP) report, and seesaws between tepid gains/minor losses through the first half of the European session. Spot prices currently trade just below the 158.00 mark, nearly unchanged for the day amid mixed cues.
Traders have been pricing in a greater chance that the Bank of Japan (BoJ) will hike interest rates again as soon as October, which, along with looming intervention risks, underpins the Japanese Yen (JPY). The US Dollar (USD), on the other hand, retreats slightly after hitting a fresh high since April 2025 and contributes to capping the USD/JPY pair. However, persistent geopolitical uncertainties might continue to benefit the safe-haven USD and help limit the downside for the currency pair.
Source: FX Street