Major Currencies Hold Steady as Yen Slips, Dollar Resilient

Dubai, UAE, 27 October 2025 – Major global currencies traded within tight ranges last week, as investors navigated a mix of economic data and geopolitical developments. The US dollar demonstrated notable resilience despite limited economic signals, holding firm even after September inflation data undershot expectations. This underperformance has all but guaranteed rate cuts at the next two Federal Reserve meetings, though uncertainty remains high due to the ongoing federal government shutdown.

The Japanese Yen was the week’s main mover among G10 currencies, weakening amid investor concerns over potential fiscal and monetary easing under the Takaichi administration. Meanwhile, the Chilean peso emerged as the top performer, buoyed by hopes for a conservative victory in the upcoming presidential elections and a rebound in copper prices.

Enrique Díaz-Álvarez, Chief Economist at Ebury, commented: “Markets will focus heavily on the Federal Reserve’s October meeting on Wednesday. While a rate cut is widely expected, the Fed’s subsequent path remains uncertain amid inflation persistently above target and the lack of comprehensive economic data.”

GBP Outlook:

The UK’s September inflation report offered a welcome relief, showing a slight decline in the core subindex and inflation stable from the previous month. Despite this, rates remain closer to 4% than the 2% target. Market expectations suggest a 50% probability of a rate cut before year-end, but absent a sharp downturn in economic activity, the Bank of England is likely to maintain its cautious stance, providing modest support to the Pound.

EUR Outlook:

Eurozone PMI indices surprised positively, particularly in Germany’s services sector, indicating that the ECB’s fiscal stimulus measures may be taking effect. The European Central Bank is expected to keep rates unchanged this week, signaling limited appetite for further easing. This combination of data and central bank policy is likely to offer moderate support for the Euro heading into year-end.

USD Outlook:

Despite the federal government shutdown, recent US economic data showed slightly lower-than-expected September inflation. While inflation remains elevated and above the Fed’s long-term target, rate cuts are still anticipated in the near term. The dollar’s medium-term trajectory, however, may face downward pressure given the scarcity of reliable data during the shutdown.

Overall, global currency markets remained in a tight range, reflecting cautious investor sentiment as central banks balance growth concerns with inflationary pressures.