On Monday, the New Zealand Dollar (NZD/USD), Euro (EUR/USD), and British Pound (GBP/USD) all traded near or at fresh lows against the US Dollar, reflecting a combination of domestic economic developments, central bank policy expectations, and political events [1][2][3]. The NZD/USD hovered just above 0.5600 after briefly dipping below this level, marking a return to its November 2025 low. This came despite a significant jump in business confidence, with a net 43% of New Zealand firms expecting improved conditions, up from 8%, according to the NZIER survey. However, the survey also showed fewer firms raising prices and a drop in reported higher costs to 47% from 54%, which may reduce the likelihood of further near-term rate hikes by the Reserve Bank of New Zealand (RBNZ). Traders had been betting on a third consecutive hike on October 28, but the softer pricing data weakens this expectation. RBNZ Governor Breman is scheduled to speak Thursday, with the next major data release being the Q3 CPI on October 21, ahead of the November 7 election [1].
The Euro fell to its lowest level since May 2025 against the Dollar, briefly dropping just above 1.1150 before recovering to trade above 1.1200. The decline was triggered by reports of Spain calling a snap election for November 29 after Prime Minister Sánchez's housing plan was rejected, which added political risk and prompted hedge-fund selling in Asia. Euro area inflation reached 3.8% in September, the highest since September 2023, and producer prices were reported 8.2% higher year-on-year. ECB Chief Economist Lane suggested that higher energy costs and borrowing rates are already slowing demand, potentially limiting further rate hikes, while Bundesbank President Nagel noted no clear signs of inflation feeding into wages. The ECB's deposit rate stands at 2.50%, with markets pricing in two to three more hikes over the coming year, but Lane's comments and upcoming data could shift expectations. The ECB will release the account of its September 10 meeting on Thursday, which does not cover the recent widening of French-German yield spreads [2].
The British Pound remained range-bound against the Dollar, trading just above 1.3200 and flatlining as US Treasury yields climbed to a 10-year high of 5.35%, the highest since April 2002. The odds of an October Fed hike have dropped from about two in three in late September to roughly one in five, following a weak US jobs report. Despite this, rising long-term yields are supporting the Dollar. The Pound has been stronger against the Euro, trading near its highest level of 2026, as investors view British assets as a safer European bet amid France's bond selloff. The UK has no major data releases this week, with attention focused on upcoming Bank of England speeches and the FOMC minutes on Wednesday, which could influence expectations for further Fed hikes. Traders are already pricing in most of a quarter-point BoE hike for November 5, and Chancellor Healey is set to present his first budget on October 28, coinciding with the next Fed decision [3].
Technical indicators for all three pairs suggest a continued bearish bias against the Dollar unless key resistance levels are breached. For NZD/USD, resistance is at 0.5650 and support at 0.5550 and 0.5500, with the Stoch RSI near 9. EUR/USD faces resistance at 1.1250 and 1.1300, with support at 1.1150 and 1.1100, and a Stoch RSI near 3. GBP/USD is capped at 1.3250, with support at 1.3200 and 1.3150, and a Stoch RSI near 14 [1][2][3].
CONCLUSION
Major currencies are under pressure against the US Dollar due to a mix of central bank policy uncertainty, political developments, and rising US yields. While New Zealand's improved business confidence is offset by softer pricing data, the Euro faces political risk and a potential slowdown in ECB tightening, and the Pound is supported by relative strength against the Euro but constrained by US yield dynamics. Market sentiment remains cautious, with further direction likely to come from upcoming central bank communications and economic data.