The strengthening of the US dollar continued at the beginning of the European trading session on Tuesday (October 21, 2025). There have been no fundamental changes in the market; however, the dollar received a positive sentiment following a reduction in concerns over issues related to regional bank defaults in the United States. Zions Bancorp, which reported default issues earlier last week, released a pretty good earnings report.
Furthermore, the resumption of negotiations between the US and China has also alleviated the risk of a trade war between the two nations, contributing positive sentiment for the US dollar.
Recommended
Recommended
Recommended
Recommended
GOLD
The price of Gold (XAUUSD) plummeted by over US$111, or 1,110 pips, to US$4,244 per troy ounce by the start of the European trading session. Gold was hit by profit-taking after reaching an all-time high of US$4,381 per troy ounce earlier last week.
The profit-taking was prompted by the strengthening dollar and a decrease in tensions between the United States and China. Additionally, US President Donald Trump also opened the possibility of meeting with President Xi Jinping, which raised hopes that the planned increase of tariffs on all imported products from China by 100% effective November 1 might be canceled.
Market participants reacted positively to these developments, and this positive momentum may continue into tonight’s trading session. This suggests that profit-taking actions on Gold could persist.
OIL
Oil prices (CLS10) rose at the beginning of the European trading session, reaching a daily high of US$57.60 per barrel. Oil had dropped to its lowest level since early May, which likely triggered buying activity that pushed prices higher.
Nevertheless, concerns about weak demand remain looming, especially after China’s economy showed signs of slowing in the third quarter of 2025. This indicates that oil prices could be vulnerable to a reversal.
EURUSD
EURUSD reversed downward to 1.16064 at the start of the European trading session after previously climbing to 1.16552. This movement indicates a strong dollar, while the euro faced pressure following the release of Germany’s producer price index (PPI) data on Monday.
In September, Germany’s PPI was reported at -1.7% year-on-year (YoY). Although this was better than the previous month’s -2.2% YoY, the negative figure, which is quite significant, could indicate that future inflation pressure (consumer price index/CPI) might remain weak. This opens the possibility for the European Central Bank (ECB) to consider cutting interest rates, which would apply pressure on the EURUSD.
GBPUSD
GBPUSD fell by 327 points (32.7 pips) to 1.33654 at the beginning of the European trading session. GBPUSD faced negative sentiment from speculation that the UK government would increase taxes and cut spending budgets.
This move is expected to be announced in the upcoming autumn budget in November. Such sentiments could continue to exert downward pressure on GBPUSD during tonight’s trading.
USDJPY
USDJPY surged by 1.378 points (137.8 pips) to 152.045 at the start of the European trading session. This sharp increase resulted from the strong US dollar and the weakened yen after Sanae Takaichi officially became Japan’s Prime Minister.
Takaichi also marks the first female Prime Minister of Japan and is generally pro-fiscal stimulus. When stimulus measures are implemented, the circulating money supply rises, resulting in a decline in the yen’s exchange rate. These sentiments are likely to impact USDJPY movements in tonight’s trading.
NASDAQ
The Nasdaq index showed minimal movement at the start of the European trading session, trading within the range of 25,252-25,367. The Nasdaq hovered near its all-time high of 25,392 achieved on October 9.
Positive sentiment for the Nasdaq was fueled by easing concerns over regional bank defaults in the US. Furthermore, the US stock market has entered its earnings reporting season, which is poised to capture the attention of market participants and potentially trigger significant movements in the Nasdaq. Strong earnings reports from issuers are expected to deliver positive sentiment.
