**Forex Market Update: Turning Points, Factors Affecting Currencies, and Outlook – Extended Coverage**
*(Original reporting by Sophia Lewis, expanded with additional sources)*
The global forex market remains sensitive to economic events, central bank decisions, and geopolitical shifts. On October 4th, 2025, the landscape for major currency pairs continues to evolve as investors process a wave of new data, changing risk sentiment, and fresh signals from monetary policymakers. This comprehensive update covers the key movers in the currency world, delving into contributors behind recent trends and the broader implications for currency traders.
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### Major Currency Movements on October 4, 2025
**US Dollar Performance**
– The US dollar climbed to new multi-month highs earlier in the week, propelled by robust economic data and persistent expectations that the Federal Reserve will maintain higher interest rates for an extended period.
– The US Dollar Index (DXY), which measures the greenback’s value relative to a basket of major currencies, traded close to 107.00, its highest since late 2023.
– Demand for the dollar as a safe-haven asset increased amid renewed geopolitical concerns and volatile global equity markets.
**Euro and Sterling**
– The euro (EUR/USD) struggled to hold above 1.0600, facing selling pressure as weak manufacturing and service sector data from the Eurozone signaled an ongoing economic slowdown.
– The British pound (GBP/USD) was pressured below 1.2100 after the Bank of England hinted at a pause in further rate hikes, citing softer inflation numbers and weakening growth prospects.
**Japanese Yen and Swiss Franc**
– The Japanese yen (USD/JPY) slumped to fresh multi-year lows, fueling speculation that the Bank of Japan may intervene to support its currency.
– The Swiss franc (USD/CHF) remained relatively stable due to its traditional role as a safe-haven during times of market turbulence.
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### Main Drivers Behind Recent Forex Market Trends
**Economic Data Releases**
– US job market figures continue to show resilience. A lower-than-forecast initial unemployment claims reading bolstered confidence in the labor market, giving further support to the US dollar.
– In contrast, PMI reports from the Eurozone highlighted persistent contraction in both manufacturing and services sectors, casting doubt on the region’s recovery path.
**Central Bank Policy and Rate Expectations**
– The Federal Reserve maintained its hawkish tone, emphasizing that rates may stay higher for longer, as inflation remains above the 2% target.
– The European Central Bank faces a delicate balancing act, with sticky inflation on one side and growing evidence of economic weakness on the other. The likelihood of further ECB rate hikes has diminished.
– Following a period of aggressive monetary tightening, the Bank of England now signals a more dovish posture, reflecting decelerating inflation and sluggish domestic demand.
– Currency traders are closely watching the Bank of Japan, where negative interest rates remain in place, contrasting sharply with hikes elsewhere. The central bank has thus far
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