EUROPEAN FX UPDATE: DXY recovers amid EUR losses and as Trump softens tone on China over the weekend

USD: DXY +0.2%; 99.21

• Overall, a firmer day for the Dollar (amid recent EUR losses, see below) following Friday's hefty fall from grace after US President Trump said there is no reason to meet Chinese President Xi, and thereafter threatened China with 100% tariffs. An update that led to downside in both the CNH and the DXY, with the latter closing at 98.85 and towards the bottom of a 98.81-99.43 range.


• Over the weekend, US President Trump softened his tone and suggested the Xi meeting is not cancelled and “might” still happen, and added the US wants to help, not hurt China, although Trump did not withdraw his tariff threat.


• Overnight, Chinese export data were released and, as ever, dissected for supply/demand dynamics. Analysts at ING highlight that "Export data released from China overnight confirms that China has managed to diversify its export base away from the US reasonably well."


• Back on US soil, the government shutdown seemingly has no end in sight. The BLS said it will publish the September CPI report on Friday, 24th October 2025, at 08:30EDT/13:30BST - before the Fed's October 29th announcement.


• The Columbus Day holiday in the US means that cash bond markets are closed, although equity markets are open today.


• DXY resides in a current 98.83-99.21 band, and within Friday's 98.81-99.43 range

EUR: EUR/USD -0.3%; 1.1584

• Subdued but within relatively tight parameters with ECB’s Vujcic suggesting he’s comfortable with current policy settings as he noted that “markets predict that interest rates will stay where they are” and stated "they are at a good place".


• Attention also remained on the political situation in France, where Lecornu returned as French PM and a new government was unveiled ahead of the budget deadline, with Lecornu asked to present a revised budget to parliament. ING suggests "That seems likely to fail and result in a no-confidence vote later this week, which will leave France without a government. That's not a good story for the euro, although one which probably plays out in the likes of EUR/CHF rather than EUR/USD.",


• EUR/USD posts modest losses after finding resistance upon a rejection of Friday's high (1.1630), as technicals drive micro price action in quiet newsflow. Thereafter, losses accumulated with market contacts noting of stops around 1.1691, a level EUR/USD later breached and losses picked up, with today's current range now between 1.1583-1.1630.

JPY: USD/JPY +0.8%; 152.24

• JPY stands as the clear laggard, closely followed by the CHF, as the haven FX unwind some of the recent haven flows from Friday and amid the Japanese holiday closure overnight.


• USD/JPY gapped higher overnight after ending Friday's session towards the bottom of a 151.10-153.27 range, with today between 151.72-152.37 parameters.

GBP: GBP/USD -0.3%; 1.3316

• Cable sees mild losses despite a lack of pertinent catalysts this morning, but as the DXY clambers off worst levels, while press reports over the weekend noted that UK Chancellor Reeves is eyeing up a GBP 7bln tax raid on pensions to plug a black hole in the Budget.


• The pair trades in a 1.3329-1.3366 range at the time of writing.

Antipodeans: AUD/USD +0.7%; 0.6518. NZD/USD +0.2%; 0.5730

• The clear outperformers this morning amid the partial unwind of Friday's fall, with the AUD surpassing peers and being aided by a boost in base metals and gold also holding firm despite a recovery in the dollar and in spite of the unwind of risk premium across other havens, albeit amid the ongoing US government shutdown.


• AUD/USD found some resistance at its 100 DMA (0.6533) as it resides in a 0.6491-0.6533 range.


• NZD/USD has come off its best levels as the AUD/NZD cross is boosted.

13 Oct 2025 - 09:55- ForexEU Research- Source: Newsquawk