Forex Today: BoJ Set to Keep Interest Rates on Hold

The US Dollar (USD) fell to three-day lows on Thursday. Renewed selling weighed on the currency as investors weighed the ECB’s interest rate decision and continued to track the Middle East crisis.

102.00 briefly gave way as the US Dollar Index (DXY) declined for a second consecutive day, slipping below this key support zone. The remaining data calendar features the Chicago PMI alongside the quarterly Employment Cost Index.

EUR/USD climbed above 1.1170 as its recovery gained support from the ECB’s hawkish tone and fresh US Dollar selling. Germany’s upcoming releases include the labour market report, flash Q3 GDP growth figures and preliminary inflation data. Advance Q3 GDP growth figures for the wider euro area are also scheduled.

Extending Wednesday’s rise, GBP/USD reached three-day highs and brought the key 1.3400 resistance level back into focus. Nationwide house price data are scheduled ahead of the BoE’s Decision Maker Panel (DMP).

A recovery above the 158.00 benchmark saw USD/JPY reverse the previous day’s pullback. Expectations are for the BoJ to hold interest rates steady. Japan’s calendar also includes the unemployment rate, Tokyo CPI, retail sales, preliminary industrial production, housing starts and construction orders.

After reaching five-week highs near 0.7070, AUD/USD quickly ran out of momentum and closed with modest losses in the low 0.7000s. Quarterly producer price data are due alongside housing credit/private sector credit figures.

Renewed hopes for a diplomatic resolution to the Middle East conflict briefly pushed front-month WTI futures (December contract) below $100.00 per barrel. Prices subsequently recovered some ground but remained slightly lower.

After three consecutive daily gains, Gold turned lower, bringing attention back to the key  $4,000 level per troy ounce. Pressure on the precious metal persists as elevated US inflation continues to support the Fed’s tighter-for-longer policy stance.