Today’s Market Outlook
October 27, 2026
Dollar Buying Broadens, Lifting USD/JPY into the Upper 157s; Caution Ahead of the FOMC
Market Overview
Dollar buying is dominant today as last week’s risk aversion eases.
Buying in AI-related stocks has helped temper yen strength, and USD/JPY climbed to 157.88 in the London session. The rebound in oil has also supported the dollar, while EUR/USD and GBP/USD have declined.
The U.S. Dollar Index briefly rose to around 102.289, its highest level since October 15. A notable feature of today’s market is that dollar buying has broadened beyond USD/JPY.
However, the FOMC is followed by the UK Autumn Budget, the ECB meeting, the BOJ meeting and U.S. GDP data. Although the dollar is firm for now, traders may be reluctant to chase it higher aggressively ahead of these major events.
USD/JPY
USD/JPY moved above its Tokyo morning high of 157.76 and rose to 157.88 in the London session.
Equity-market weakness, which drove yen buying last week, has eased. In addition to renewed selling of the yen, broader dollar strength is supporting the pair.
The immediate focus is whether USD/JPY can remain above its 10-day moving average at 157.79 and break through resistance from the 21-day moving average at 157.89 to the 158 level.
A sustained break above this resistance zone would bring the Ichimoku cloud’s upper boundary at 158.44 and the 200-day moving average at 158.54 into focus.
Conversely, if the rebound stalls before 158, watch for profit-taking ahead of the policy events. To the downside, the Ichimoku baseline at 157.56 and conversion line at 157.34 are reference levels, followed by 157.
The rebound is gaining ground, but the pair is still testing whether it can break above and hold beyond a major resistance zone.
FOMC and This Week’s Policy Events
The FOMC meeting begins today, with the decision due on October 28 U.S. time.
In addition to the rate decision, markets will focus on how Fed Chair Kevin Warsh assesses inflation, higher oil prices and the risk of slower growth.
A strong emphasis on inflation concerns could support dollar buying through expectations of further rate increases. On the other hand, if the Fed focuses on the economic burden of high rates, the dollar’s recent gains could face a correction.
The ECB and BOJ meetings follow later this week, so the initial move after the FOMC may not determine the broader direction. Watch whether differences in the central banks’ policy stances lead to sustained changes in relative currency strength after the events.
U.S. Durable Goods Orders
U.S. preliminary durable goods orders for September will be released at 13:30 London time.
- Headline orders: forecast +1.3% month over month; previous −0.1%
- Core orders excluding transportation: forecast +0.6%; previous +0.2%
Both measures are expected to improve from the previous month.
A stronger-than-expected result could point to resilient business demand and investment, potentially lifting U.S. yields and supporting the dollar.
If headline orders are strong but core orders are weak, however, it will be important to assess whether demand is improving broadly. Watch both the headline and core figures.
U.S. Consumer Confidence and Housing Data
The Conference Board Consumer Confidence Index, new home sales and the Richmond Fed Manufacturing Index will be released at 15:00 London time.
- Consumer Confidence: forecast 80.4; previous 81.9
- New home sales: forecast 655,000; previous 684,000
- Richmond Fed Manufacturing Index: forecast −1; previous −2
The forecasts point to softer consumer sentiment and home sales, alongside a modest improvement in manufacturing sentiment.
If consumer confidence and home sales both come in weak, markets may become more concerned that high interest rates and rising living costs are weighing on households. That could put the brakes on the dollar’s gains.
Conversely, a series of stronger-than-expected results could reinforce the view that the U.S. economy remains resilient.
The housing price index and S&P/Case-Shiller home price index will also be released at 14:00 London time. Together with sales volumes, these reports will provide a broader view of the housing market.
The Euro and French Public Finances
EUR/USD has come under pressure from dollar buying, briefly falling to around 1.1152 in the London session.
Following France’s unchanged credit rating, the yield spread between German and French government bonds has narrowed. However, concerns about France’s public finances have not disappeared, and the euro’s recovery remains limited.
The immediate question is whether EUR/USD can find support around 1.1150. If it rebounds, watch whether it can recover 1.1200, a level it recently broke below.
Ahead of the ECB meeting, reduced concern about France’s fiscal position alone may not be enough to trigger sustained euro buying.
EUR/JPY has mainly traded around 176. Support from the rise in USD/JPY is being offset by the decline in EUR/USD, leaving the cross without a clear direction.
Sterling and the UK Autumn Budget
GBP/USD is struggling to advance ahead of the UK Autumn Budget tomorrow.
The pair briefly fell to around 1.3316 in the London session before recovering to around 1.3330. The 1.3300 level is now within reach, although the rebound has been limited.
The key issue in the budget will be whether the government can maintain confidence in its plans for fiscal sustainability. If concerns about a widening deficit intensify, both UK government bonds and sterling could come under pressure.
Conversely, if the government’s funding plans and path to fiscal improvement are viewed positively, sterling could recover some of its recent losses.
GBP/JPY softened from around 210.42 in the Tokyo morning to near 210, but has since steadied. Even if USD/JPY remains firm, UK-specific concerns could cap gains in GBP/JPY.
Equities and Oil
The rebound in USD/JPY is being supported by a pause in the sharp sell-off in AI-related shares.
However, concerns about excessive investment and the ability to generate returns have not gone away. This week’s earnings from major companies will be important for market assessments of capital spending plans and profit outlooks.
Oil’s earlier rally has also eased, but a rebound in the London session has supported the dollar.
If oil remains firm while equities stabilize, USD/JPY could receive further support. On the other hand, if higher oil prices are seen as a burden on economic growth and equities come under renewed pressure, yen buying could outweigh dollar buying.
U.S. Five-Year Treasury Auction
A $70 billion U.S. five-year Treasury auction is scheduled for 18:00 London time on October 27.
Strong demand could push U.S. yields lower and weigh on the dollar, while weak demand could lift yields and support dollar buying.
However, the FOMC meeting is underway. Even if yields move after the auction, the market reaction may not persist ahead of the policy announcement.
Assess the durability of dollar buying by looking at the combined reactions to economic data, the auction and equity markets.
Key Points to Watch in Overseas Trading
- Whether USD/JPY can remain above 157.79
- Whether it can break through resistance at 157.89–158
- Whether selling emerges around 157.80–158
- Whether stable U.S. equities reduce yen demand
- How U.S. yields and the dollar respond after the five-year Treasury auction
- Whether EUR/USD finds support around 1.1150
- Whether GBP/USD can hold above 1.3300
- Headlines surrounding the UK Autumn Budget
- U.S. corporate earnings and developments in the Middle East
Scenarios
The base case is for USD/JPY to remain supported in the upper 157s while testing resistance just below 158.
If U.S. data are strong and are accompanied by higher Treasury yields and stable equities, the pair could break above 158. In that case, the next resistance zone would be 158.44–158.54.
Conversely, weak U.S. data and lower yields could prompt profit-taking ahead of the policy events, pushing USD/JPY back toward the mid-157s.
If equities also fall, yen buying could intensify and bring 157 into focus.
Summary
Dollar buying has broadened today, lifting USD/JPY to 157.88 and the U.S. Dollar Index to its highest level since October 15. Risk aversion has eased from last week, but USD/JPY is approaching resistance just below 158.
Tonight’s U.S. durable goods orders, consumer confidence, housing data and Treasury auction are the main catalysts. In addition to the results themselves, watch whether U.S. yields and equities confirm the dollar’s strength.
With the FOMC and the UK Autumn Budget approaching, traders may remain cautious about chasing the rally. Watch whether USD/JPY can break above 158 and hold, and where it finds support if it retreats, to assess whether the dollar’s gains can continue.
