Global Forex Monitor - October 2025

Against a backdrop of declining volatility, the US dollar resumed its slide in September against most currencies, except certain commodity currencies such as the Canadian and New Zealand dollars, with the DXY dollar index making a brief foray below 97 before recovering towards 97.6. The US dollar's depreciation continued to be fuelled by the deterioration of the US labour market as well as the Fed's rate cut on 18 September. The Fed's dot plot supports the scenario of two rate cuts, in October and December, but the market still seems hesitant, as core inflation remained on high at +3.1% in August, and the latest activity indicators proved stronger than expected (Q2 GDP up +3.8%).In the short term, however, we remain negative on the US dollar, as the Fed is set to continue its cycle of rate cuts in October and December despite the lack of economic data due to the shutdown. The US dollar will also be penalised by the slowdown in US growth and, notably, the cooling of the labour market, especially if the shutdown continues, as well as by ongoing trade uncertainties with recent announcements affecting the pharmaceutical sector. Finally, the administration is still intent on driving down the US currency, which remains overvalued in real effective exchange rate terms.In this context, the EUR/USD continued to appreciate, setting a high of 1.1919 the day after the Fed rate cut on 18 September, before falling back towards 1.175 at the month-end. The EUR/USD remains dependent on the performance of the US dollar but is also benefiting from the ECB's continued caution in the face of higher-than-expected inflation in September. In the short to medium term, the divergence in monetary policy between the Fed and the ECB will continue to support the EUR/USD, as will the improvement in European growth expected in 2026. Under these circumstances, the EUR/USD can be expected to appreciate towards 1.20 in December before stabilising between 1.18 and 1.22 in 2026.