Monthly Forex Outlook - October 2025

Global Market Overview

Global risk sentiment held steady as financial markets chose to ignore the third US Government shutdown under President Trump’s watch. It began on 1 Oct after US congressional leaders failed to agree to a short-term funding bill beyond the 30 Sep US fiscal year end.

US Economic Data

The latest economic data has been somewhat disappointing. The ISM Services PMI fell to 50 in September, its lowest since Jan 2010, and the Employment index remained weak at 47.2. Key macroeconomic data like the September Non-farm Payrolls and unemployment data due last Friday 3 Oct was not published due to government closure. Estimates put Non-Farm Payrolls at 53,000 (August 22,000) and the unemployment rate staying at 4.3%.

The data pointed to sluggishness in the labour market. Just a few short years ago, unemployment hovered at half-century lows but now at its highest point since 2021.

Federal Reserve Policy Outlook

At the 16–17 Sep Federal Open Market Committee meeting, the Fed lowered the Fed Funds rate by 0.25% to a range of 4.00%–4.25%. However, without hard data, this could potentially cloud the Fed’s monetary policy decision at the upcoming 28–29 Oct FOMC. Market watchers believe the Fed may err on the side of caution and deliver a 0.25% cut, plus one more cut by the year end.

Equity Markets

US stocks have continued their rallies in the second half of the year, hitting new record highs, indifferent to warnings by strategists, investors and Fed Chair Powell. The S&P 500 is in the midst of a 104-session streak above its 50-day moving average, which BTIG Chief Market Technician Jonathan Krinsky noted is the fifth longest since 1990. Over the last 75 years, the S&P 500 has posted an average decline of 0.7% in September, according to LPL Financial. But it is up over 2.5% this September.

“The primary trend remains firmly bullish, but a shakeout is long overdue,” Krinsky wrote. Stock “valuations and crowded positions are unlikely to become the catalysts for a correction,” JPMorgan’s Bassi said, at least while corporate earnings continue to grow.

Precious Metals

Gold’s strong rally this year, up around 48%, is impressive but almost disappointing when compared to platinum (up 75%) and silver (up 60%). The chart below explains why gold price has been moving inexorably up since 2016. The brown sections of the chart (below) show the percentage demand of gold used in jewellery fabrication and is far larger than any other demand. Once gold is turned into jewellery it permanently leaves the market unlike investment or central bank buying which may later be sold back.

Cryptocurrency

Bitcoin has risen for most of the year due to the friendly legislative climate in Washington by President Donald Trump. It climbed to an all-time high of USD126,270 on Monday 6 Oct, topping its previous record set on Aug 14, supported by renewed inflows due to the US Government shutdown.

Commodities and Energy

OPEC+ at its meeting on Sunday 5 Oct via videoconference, agreed to raise production by a modest amount instead of a larger increase to recoup market share. Oil prices remain soft with WTI trading around USD61.50 (2 Sep USD64.50).

Global Bond Markets

Overnight US 10-Year Treasuries closed unchanged at 4.16% (2 Sep 4.26%), Australian 10-Year Govt Bonds were up 0.06% at 4.39% (2 Sep 4.35%) and Euro 10-Year Bonds closed up 0.02% at 2.72% (2 Sep 2.75%).

Currency Outlook

The broader medium-term USD downtrend appears intact as the Fed appears increasingly dovish and with other Central Banks approaching the end of their easing cycles. However, the technical chart shows DXY, the USD Index, entering a consolidation phase, hence we may not see much more USD weakness going into Q4.

Sources: Bloomberg, MSNBC, Reuters, Morningstar, Business Times, 07 Oct 2025

AUDUSD
RBA, as expected, held the OCR steady in October at 3.6%. The Bank said recent data suggested the economic outlook remains uncertain. Expectations for further cuts were pushed back, with some analysts now forecasting the next move in February 2026 or later. The unemployment rate held steady at 4.2%. However, AUDUSD received lukewarm support.

AUDUSD’s challenge of the 61.8% Fibonacci Resistance Zone at 0.6460 – 0.6600 again looks like failing. We maintain a view for the next move to be down but to the higher Support area around 0.6400.

Image Source: Bloomberg 07 Oct 2025

EURUSD

In addition to weak fundamentals EURUSD is also weighed down by political instability. France's new Prime Minister Sebastien Lecornu and his Government resigned on Monday 6 Oct, hours after announcing his cabinet line-up, making it the shortest-lived administration in modern French history. 

EURUSD has again not been able to break strong Resistance at 1.1820. EURUSD range between 1.1500 – 1.1820 in the next few weeks. We maintain a view for a correction lower to around 1.1150 Support.

Image Source: Bloomberg 07 Oct 2025

GBPUSD

The UK economy and politics are just “muddling through” and this should weigh on GBPUSD. After cutting its bank rate to 4.0% in August, the BoE is likely to remain on hold, and this may provide some support for the Pound.

GBPUSD’s challenge of resistance at 1.3650 failed again and GBPUSD has fallen to below 1.3500. We maintain a view for consolidation around 1.3400 before another push down to the 1.3200 area.

Image Source: Bloomberg 07 Oct 2025

USDJPY

Japan's ruling Liberal Democratic Party picked conservative Sanae Takaichi as its leader, she will likely be the country’s first female Prime Minister. Her win triggered immediate JPY and JGB weakness, while equities rallied sharply. Analysts have reduced expectations that the BoJ will hike interest rates this month and USDJPY has broken above 150.00. She is an advocate of late Premier Shinzo Abe's "Abenomics" strategy to boost the economy with aggressive spending and easy monetary policy.

Our view for USDJPY to move lower to the 145.00 area did not happen but instead USDJPY moved higher to break above 150.00. Chart wise we see USDJPY is in a broad Uptrend Channel. Technically USDJPY is likely to move higher towards 155.00 area.

Image Source: Bloomberg 07 Oct 2025

USDSGD

Singapore’s economy has been surprisingly resilient, and the Monetary Authority of Singapore is expected to delay any further easing until its Jan 2026 monetary policy meeting. The USDSGD is expected to trade sideways to year end with a slight downward bias.

We do expect more range trading for USDSGD, likely between 1.2700 – 1.3000 levels.

Image Source: Bloomberg 07 Oct 2025

AUDSGD

AUDSGD has not been able to break decisively above the Resistance Zone at 0.8400 – 0.8500. We maintain a bearish view for a drop but to a higher target area around 0.8300.

Image Source: Bloomberg 07 Oct 2025

XAUUSD

Spot Gold has climbed 48% so far this year, adding to last year's gain of 27%. Analysts believe this current rally isn’t cyclical but systemic, driven by interest rates heading lower, a growing loss of confidence in institutions (like the US Federal Reserve) and incompetent Governments. Besides Central Bank buying there has also been a remarkable surge in global retail demand for Gold jewellery. Spot Gold price hit an all time high of USD3,977.44 this morning.

Gold is targeting the psychological price at USD4,000. The chart shows XAUUSD is very much higher than its 50-Days Moving Average around USD3,550, this indicates a very overbought market. We can expect a correction in Gold in the coming weeks.

Image Source: Bloomberg 07 Oct 2025

Note:  In Candlesticks Chart, Green bars mean the Close is higher than the Open price and Brown bars mean the Close is lower than the Open price