DBG Markets: Market Report for Oct 16, 2025

Trade Tensions and Dovish Fed Weigh on Dollar; Gold & Euro Stay BenefitedU.S.–China Trade Outlooks Remain Fragile

U.S. Dollar: Under Pressure Amid Policy Uncertainty

The U.S. dollar remains on the defensive as remarks from Fed Chair Powell earlier this week reinforced expectations that the Fed will maintain its easing bias.

Markets are now pricing in at least two additional rate cuts before year-end, further weighing on the greenbacks short-term momentum.

USD Index, H4 ChartTechnically, 98.50 remains a key pivot level. The dollars failure to hold above this zone yesterday suggests growing downside pressure, with momentum likely to build if trade tensions persist and the Fed maintains a dovish stance.

A sustained move below 98.50 could open the way for further weakness, while a break beneath 97.50 would likely confirm a renewed bearish trend.

EUR/USD: Technical Reversal Potential vs. Eurozone Headwinds

The Euro remains fundamentally challenged by persistent weak Eurozone economic data and ongoing political instability in France. Consequently, the pairs trajectory is currently dominated by U.S. Dollar dynamics, specifically the deepening Federal Reserve easing expectations and trade-related volatility.

EURUSD, H4 ChartFrom a technical perspective, the EUR/USD is showing signs of a near-term reversal. The pair successfully rebounded above the critical 1.1600 psychological support after briefly testing the downside.

Price action confirms a short-term Double Bottom pattern, which is a strong technical indicator for a potential shift in momentum. The successful defense of the 1.1600–1.1640 support zone is crucial.

A sustained hold above this foundation would validate the pattern, setting the stage for further short-term upside in the coming sessions, particularly if the US dollar remains anchored by the Fed's dovish policy stance.

The underlying Eurozone weakness, however, may limit the strength of any bullish move.

Gold: Safe-Haven Dominance Pushes Price Past $4,200

Driven by escalating Federal Reserve easing expectations and intense safe-haven buying, Gold prices have surged past the $4,200 mark, setting a new record. The current macro environment—characterized by potential further trade friction and a global central bank tilt toward accommodation—suggests investors are positioning for continued upside in the metal.

XAU/USD, H4 Chart

XAU/USD, M15 ChartFrom a technical standpoint, this latest breakout significantly strengthens Golds underlying long-term bullish structure.

· The $4,180–$4,200 per ounce zone, which previously acted as a critical resistance area, is now expected to convert into a formidable support zone following the decisive break.

· If Gold successfully breaches and stabilizes above the $4,200 psychological barrier, the short-term bullish momentum is likely to accelerate, confirming buyer control.

Should the rally sustain its pace, the next key resistance targets, based on Fibonacci extension levels, are $4,229 (161.8% extension) and $4,275 (223.6% extension). These levels will be critical focal points for short-term profit-taking and momentum tests.

Bottom Line

Global market sentiment remains anchored by two powerful opposing forces: intensifying U.S.–China trade escalation and the Fed's deepening dovish bias.

Gold is the clear winner, capitalizing on both fear and easing expectations, with its bullish structure intact above the decisive $4,200 level, targeting $4,275.

The U.S. Dollar (DXY) is on the defensive, with the critical 98.50 support level broken due to Fed Chair Powell's accommodative shift.