Euro Weakens and Safe-Haven Demand Eases (10.22.2025)

The euro slipped to $1.16 on Wednesday ahead of the ECB’s pre-meeting quiet period, as investors looked for clues on future monetary policy. 

The U.S. dollar strengthened modestly amid improving sentiment and optimism that the U.S. government shutdown could soon end. The yen weakened beyond 152 after Japan’s historic leadership vote brought policy uncertainty, while gold and silver fell sharply as easing U.S.–China tensions reduced safe-haven demand. The pound also retreated after UK borrowing data exceeded expectations, reinforcing concerns about fiscal policy.

Euro Weakens Before ECB Quiet Period

The euro fell to $1.16 as investors awaited ECB speeches for policy signals ahead of next week’s rate meeting. The ECB enters its quiet period on Thursday. Meanwhile, the US dollar firmed slightly amid easing US–China trade tensions and expectations that the government shutdown will be resolved this week.

Technically, 1.1575 is the key support, while resistance is seen at 1.1650.

Japanese Yen Declines Amid Political Developments

The Japanese yen dropped past 152 per dollar on Wednesday, marking its third consecutive session of losses after Sanae Takaichi won Japan's parliamentary vote to become the first female prime minister, receiving 237 out of 465 Lower House votes. Her Liberal Democratic Party formed a coalition with the Japan Innovation Party, both aiming to implement expansionary fiscal policies and spending reforms. However, questions remain about the coalition’s stability and whether Takaichi will adopt more hardline policies.

Resistance is at 152.20, while support holds at 150.30.

Gold Slides to $4,100 as Dollar Strengthens

Gold dropped 6.2% to around $4,100, its biggest one-day fall since 2013, after hitting a record $4,382 on Monday. The decline followed profit-taking and a stronger US dollar, while safe-haven demand eased amid improving global sentiment. Optimism grew as US–China trade tensions eased, with Trump and Xi Jinping set to meet next week to discuss tariffs.

From a technical perspective, support is around 4080, and resistance is at 4180.

Pound Falls as UK Borrowing Exceeds Forecasts

The pound fell to around $1.3360, a one-week low, after data showed the UK borrowed £7.2 billion more than expected in the first half of the fiscal year. The budget deficit reached £99.8 billion, above the OBR’s £92.6 billion forecast, while debt-interest payments surged 66% to £9.7 billion in September, the highest on record for that month.

From a technical perspective, support is around 1.3340, and resistance is at 1.3425.

Silver Slides as Safe-Haven Demand Eases

Silver fell over 7% to below $48, retreating from last week’s record highs as investors took profits after a strong rally. Safe-haven demand eased as risk appetite improved on easing US–China tensions, hopes of ending the US government shutdown, and strong corporate earnings. Trump said he expects to reach a fair trade deal with China’s Xi during their upcoming meeting in South Korea.

From a technical perspective, resistance is observed at 49.25, while support is located at 48.