EUR/USD falls 0.43% for a fifth lower close on French bond worries

EUR/USD posted a fifth lower close in a row on our feed as pressure on French government bonds returned, Action Forex said, and Investing.com said the dollar hit a two-week high a day before the Fed decision. USD/JPY closed back above 157.50 even after Japan's finance minister said the government was ready to act in the currency market, and gold closed above $4,000 for a second session.

The euro's fifth lower close

• EUR/USD fell 0.43% to 1.11257, below each of its previous ten closes, back to 13 October. Its low, 1.11229 at 20:52 UTC, stayed about 10 pips above 1.1113, the key support Scotiabank said was now exposed.

• Action Forex said France's 10-year yield rose 5.2 basis points to 4.955% while Germany's fell 3.1, widening the gap between them from around 153 to 162 basis points and partly reversing Monday's relief after Moody's kept France's rating. French consumer confidence fell to 80 in October, its lowest since 2013, against 85 expected, investingLive reported.

• The pound fell 0.26% to 1.33070, its third lower close in a row and its first close below 1.3341 since 19 October, after five above that Action Forex line. Its low, 1.33042 at 20:51 UTC, held above 1.3294, the support Action Forex's daily outlook watches. FXStreet said France's fiscal concerns let the pound outperform the euro before Wednesday's UK budget, and EUR/GBP fell 0.17% to 0.83608.

The dollar and the yen before the Fed

• The dollar extended Monday's gains. Investing.com said it hit a two-week high, and ING said it started the week on a firm footing, helped by stabilising AI sentiment, a hawkish Federal Reserve backdrop and high energy prices. Action Forex said markets priced a 90% chance that the Fed holds this week, and BNY expects no hike at this meeting but a possible one in December.

• USD/JPY rose 0.28% to 157.941, its first close above 157.50 since 21 October, after three closes below it. Japan's Finance Minister Satsuki Katayama said the government was prepared to take decisive steps in the currency market, FXStreet reported. The same outlet tied the yen's retreat to fading AI-related worries, which reduced its safe-haven appeal.

• In US data, the Conference Board's consumer confidence index rose to 91.7 in October, against a forecast of 81.2 and from a revised 84.2 in September.

Gold, oil and the loonie

• Gold rose 1.20% to $4,060.03 on our feed, its second close in a row above $4,000. It traded below that line in every hour from 05:00 to 10:00 UTC, with a low of $3,989.02 at 08:53 UTC, and Commerzbank noted the drop below $4,000 came despite easing US rate expectations and lower real yields. It then climbed to $4,065.01 at 17:37 UTC, and FXStreet said falling oil prices gave it a leg up.

• WTI fell to around $100 in Asian hours as Middle East diplomacy raised hopes of avoiding a wider US-Iran escalation, then rose back above $101 in European trade before easing again, FXStreet said.

• USD/CAD rose 0.28% to 1.40520, its second higher close in a row and its highest since 20 October. Its range, 1.40049 to 1.40543, stayed between 1.3985 and 1.4080, the two Action Forex levels our weekly wrap flagged. Scotiabank said in the New York morning that the loonie, flat against the dollar, lagged other commodity currencies but gained against other majors, and National Bank of Canada said sustained high oil prices and firmer growth now point to a Bank of Canada hike.

• AUD/USD rose 0.13% to 0.70257, its sixth close in a row above 0.70, as hawkish Reserve Bank of Australia expectations helped the Australian dollar outperform, FXStreet said. NZD/USD closed flat at 0.56815, while FXStreet said money markets priced a 100% chance of a 25 basis-point Reserve Bank of New Zealand hike to 3%.

Market gauges and what's next

Our proprietary metrics at the close of the session:

• Readings: an MRS of 61, unchanged from Monday's close, with its news component at its full 20 on both days. A CTS of 54 with its carry backdrop at 60 out of 100, and an FSI of 54, Neutral, down from 58.

• Our strength table: it has no reading for this session, so we name no leader and no laggard.

• The dollar: it closed higher against five of the seven majors, from 0.18% against the Swiss franc to 0.43% against the euro, and lower against the Australian dollar and, by 0.01%, the New Zealand dollar.

This week: after the close, the RBNZ held its cash rate at 2.75% in a 4–3 vote, Action Forex reported, a decision FXStreet said surprised markets. The Bank of Canada (forecast 2.50%, from 2.25%), the UK budget and the Fed (forecast 4.00%) follow on Wednesday, the European Central Bank on Thursday and the Bank of Japan on Friday.