FX Markets Calm: USD Stabilises, EUR Supported, GBP Under Pressure.

• USD – Stabilises After Recent Softness, Markets Await Fresh Catalysts

• EUR – Euro Holds Firm as Rate Differentials Continue to Support the Single Currency
  

• GBP – Sterling Still Soft as Post-Budget Repricing Continues

USD:

The U.S. dollar is trading in a more stable range this morning after several sessions of gradual weakening driven by shifting expectations around Federal Reserve policy. With investors increasingly confident that the Fed may begin easing in early 2026, the broader trend of narrowing yield spreads has kept USD on the defensive. However, the holiday-shortened U.S. trading week has limited volatility and kept the dollar from extending its decline. Most traders are now looking ahead to next week’s economic releases — including the ISM surveys and core PCE revisions — to determine whether the dollar’s recent pullback marks the start of a deeper correction or merely a pause. For now, USD remains steady but vulnerable should incoming data reinforce the easing narrative.

EUR: 

The euro continues to trade with a steady tone, underpinned by the ongoing realignment in interest-rate expectations relative to the U.S. As markets increasingly anticipate Fed cuts, the eurozone’s more stable monetary outlook has helped EUR retain support even in the absence of strong regional data. While euro-area indicators remain mixed, the currency has shown resilience, particularly against sterling, and is holding comfortably within its recent ranges versus the dollar. With limited high-impact eurozone releases today, EUR’s direction is likely to be driven by broader USD sentiment and positioning adjustments heading into month-end. The balance of risks remains mildly tilted toward euro strength if the U.S. easing narrative deepens.

GBP: 

Sterling remains on the back foot as markets continue to digest the UK’s Autumn Budget and its implications for growth, public finances, and Bank of England policy. While the budget delivered clarity on fiscal direction, investor response has been cautious, with concerns persisting about the UK’s growth trajectory into 2026. GBP/USD continues to trade near the lower edge of its weekly range, pressured by rising expectations that the BoE may adopt a more dovish stance if domestic momentum softens further. Against the euro, sterling remains fragile, with EUR/GBP still biasing higher as investors remain wary of UK-specific risks. With no major domestic data today, GBP flows are likely to be driven by broader sentiment and post-budget positioning into month-end.