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7th October 2026 | view in browser
Records on Wall Street, risks in the Gulf

Markets head into Wednesday with US equities holding near record highs, while renewed oil supply concerns lift crude, Treasury yields and the dollar, keeping investors focused on the tension between softer US hiring and persistent inflation risks ahead of the Fed minutes.

 
 
Performance chart 30day v. USD (%)
Performance Chart
 
 
Technical & fundamental highlights
EURUSD: technical overview

The Euro continues to show signs of wanting to carve out a major bottom after trading down to a 20-year low in 2022. Setbacks should be exceptionally well supported above 1.1200 on a weekly close basis ahead of the next major upside extension back above 1.2000.

EURUSD Chart
R2 1.1337 - 1 October high - Medium
R1 1.1286 - 2 October high - Medium
S1 1.1161 - 4 Octoberber/2026 low - Strong
S2 1.1100 - Figure - Strong
EURUSD: fundamental overview

The euro remains under pressure as French fiscal concerns and political uncertainty weigh on confidence in the region, with investors questioning the government’s ability to deliver spending cuts and contain its budget deficit. Pressure on French government bonds is adding to concerns about wider euro area risk, while the prospect of using constitutional powers to push through the budget highlights the difficulty of securing parliamentary support. Softer US jobs data and reduced expectations for another Fed rate hike offer some support to EURUSD, but hawkish Fed commentary continues to underpin the dollar, limiting that relief. The upcoming FOMC minutes will be closely watched for signals on the policy outlook, while substantial systematic short positioning could amplify a euro recovery if sentiment improves.

 
GBPUSD: technical overview

The Pound remains exceptionally well supported on dips into the 1.3000 area, with the price largely consolidating above the psychological barrier and previous resistance turned support in the form of the 2023 high. Look for the market to continue be well supported on dips ahead of the next major upside extension through the yearly high at 1.3870 and towards a retest of the 2018 high at 1.4377 further up. Only a monthly close below 1.3000 negates.

GBPUSD Chart
R2 1.3407 - 17 September high - Medium
R1 1.3312 - 30 September high - Medium
S1 1.3181 - 1 October low - Medium
S2 1.3140 - 24 June/2026 low - Strong
GBPUSD: fundamental overview

Sterling is under pressure as renewed US dollar strength and rising oil prices revive inflation concerns ahead of the FOMC minutes, although softer US jobs data have tempered expectations for another Fed rate hike and helped limit the downside. On the UK side, persistent price pressures continue to support expectations that the Bank of England will keep interest rates higher for longer. Catherine Mann’s warning that inflation could approach 4% around year-end highlights the risk that elevated energy costs feed into wage negotiations and prolong inflation persistence. This leaves the pound caught between support from a cautious BoE and the drag from energy costs on UK growth, with near-term direction sensitive to the dollar’s response to the Fed minutes.

 
USDJPY: technical overview

The recent breakdown below 155.00 suggests the market could be on the verge of a bigger structural shift, with the possibility for an end to a longer-term uptrend and the start to a period of persistent weakness. Critical support now comes in the form of the 2026 low from January at 151.97, with a drop below to strengthen the bearish outlook and open the door for a major downside extension targeting the 2024 low at 139.58.  The market would need to get back above 160.00 to take the immediate pressure off the downside.

USDJPY Chart
R2 159.04 - 24 September high - Strong
R1 158.52 - 7 October high - Medium
S1 156.37 - 30 September low - Medium
S2 155.33 - 17 September low - Medium
USDJPY: fundamental overview

The yen is under pressure as expectations for another near-term Bank of Japan rate hike fade, with policymakers favoring a gradual approach while assessing how recent tightening is feeding through to the economy. Markets have shifted their focus towards December for the next move, leaving interest rate differentials supportive of the dollar despite weaker US employment data tempering expectations for further Fed tightening. Hawkish Fed commentary and persistent inflation concerns continue to limit the yen’s recovery, with the upcoming FOMC minutes in focus for further policy guidance. However, the BoJ’s continued commitment to raising rates and the risk of Japanese currency intervention if depreciation accelerates could help contain further yen weakness.

 
AUDUSD: technical overview

There are signs of the formation of a longer-term base with the market recovering out from a meaningful longer-term support zone. The latest monthly close back above 0.7000 takes the big picture pressure off the downside and strengthens the case for a bottom, with the focus now on a push towards 0.8000. Setbacks should now be well supported ahead of 0.6700.

AUDUSD Chart
R2 0.7142 - 15 September high - Strong
R1 0.6995 - 30 September high - Medium
S1 0.6904 - 1 October low - Medium
S2 0.6865 - 30 June low - Strong
AUDUSD: fundamental overview

The Australian dollar is under pressure as reduced expectations for another RBA rate hike weaken its interest rate support, with inflation coming in line with forecasts and markets increasingly favoring a November hold. On the US side, softer inflation and employment data have reinforced expectations for an October Fed pause, but hawkish comments from Kansas City Fed President Jeff Schmid have kept concerns about persistent inflation alive, offering the dollar some support. Attention now turns to the FOMC minutes for guidance on the Fed’s appetite for further tightening, with the Aussie sensitive to any shift in relative rate expectations and broader risk sentiment.

 
Suggested reading

The global energy order after Hormuz, C. Moseley, Financial Times (October 6, 2026)

Market Is Looking to Earnings Season— Likes What It Sees, P. La Monica, Barron’s (October 2, 2026)

 

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