US Dollar Monthly Exchange Rates Forecast - October 2025

US Dollar

The US dollar faces downward pressure through October, as uncertainty surrounding a government shutdown drags on investor sentiment. The looming federal funding gap is raising fears of operational disruptions in key economic sectors and heightening volatility across markets. Meanwhile, weaker inflation prints and slowing labour dynamics bolster the case for another Fed rate cut before year-end, eroding the dollar’s yield advantage. Occasional flights to safety may bump up the dollar intraday, but the overarching narrative is one of gradual erosion, especially as markets grow more comfortable with a dovish US policy path.

Bias:↓ Bearish

Oct 2025 Monthly Range: DXY 96.8 – 99.0

Canadian Dollar (USD/CAD)

The Canadian dollar is holding up well amid relatively stable oil prices and more cautious policy signals from the Bank of Canada following its recent cut. Even as domestic metrics such as manufacturing and housing lose momentum, solid performance in services and resilient consumer spending lend credibility to the loonie’s fundamentals. The divergence in policy expectations between Canada and the US offers the loonie an edge, especially if geopolitical stress in Washington escalates. That said, pressure from global growth risks and commodity demand slowdowns could restrain further gains.

Bias:↑ Mildly Bullish

Oct 2025 USD/CAD Monthly Range: 1.37 – 1.40

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Euro (EUR/USD)

The euro continues to benefit from a backdrop of broad US dollar softness and muted expectations for aggressive ECB easing. As inflation trends moderate across the Eurozone and growth appears more resilient than feared, investors are growing more confident in the euro’s medium-term strength. A mild policy divergence versus the US adds fuel to upside moves, and positive technical momentum helps attract further interest. Still, potential volatility from energy markets or unexpected US policy shifts could cap rallies.

Bias:↑ Bullish

Oct 2025 EUR/USD Monthly Range: 1.15 – 1.19

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British Pound (GBP/USD)

Sterling retains firmness as inflation pressures persist in the U.K., anchoring expectations for delayed rate cuts. Despite weak growth signals and consumer stress, the market sees less urgency for BoE easing compared to other central banks. Coupled with dollar weakness, GBP is enjoying selective strength, particularly in cross-currency flows. However, political uncertainty, muted investment momentum, and external shocks remain limiting factors for sustained upside.

Bias:↔ Neutral to Mildly Bullish

Oct 2025 GBP/USD Monthly Range: 1.33 – 1.36

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Japanese Yen (USD/JPY)

The yen is gaining renewed traction in October, buoyed by safe-haven flows and declining US Treasury yields. The gradual pivot in Bank of Japan policy, especially subtle scaling back of bond purchases, has strengthened the case for a more balanced yen outlook. Short-yen carry trades are seeing pressure, and reduced interest rate divergence is making the currency more attractive. Should the US shutdown persist or global risk sentiment sour, USD/JPY may test the lower end of its band.

Bias:↑ Bullish

Oct 2025 USD/JPY Monthly Range: 146.00 – 149.00

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Chinese Yuan (USD/CNY)

The Chinese yuan remains tightly managed, reflecting the PBoC’s ongoing resolve to maintain exchange rate stability amid a mixed recovery. Export data and stimulus efforts show soft signs of improvement, but property-sector stress and subdued consumer sentiment limit strong appreciation. With speculative flows constrained, USD/CNY trades in a narrow corridor as authorities prioritise calm and market confidence.

Bias:↔ Neutral

Oct 2025 USD/CNY Monthly Range: 7.10 – 7.14

Live USD/CNY chart

Indian Rupee (USD/INR)

The rupee is trading within a muted range as the Reserve Bank of India continues to intervene to smooth abrupt swings. Capital inflows, steady domestic demand, and a weakening US dollar provide modest tailwinds. However, headwinds persist from rising import costs (especially oil) and global risk jitters that could trigger defensive flows. The currency’s path depends heavily on external sentiment and RBI’s resolve.

Bias:↑ Bullish

Oct 2025 USD/INR Monthly Range: 88.40 – 89.20

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Australian Dollar (AUD/USD)

The Australian dollar is treading carefully higher as China demand shows tentative stabilisation and global risk appetite improves. Commodity strength, particularly in iron ore and energy, offers partial support, though domestic data, especially retail and housing, remain soft. The RBA is likely to remain data-dependent, avoiding aggressive moves until clarity on inflation is clearer. If markets view the US dollar as structurally weaker, AUD may capture incremental gains.

Bias:↑ Bullish

Oct 2025 AUD/USD Monthly Range: 0.65 – 0.67

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New Zealand Dollar (NZD/USD)

The kiwi is making modest gains, riding alongside improved risk sentiment and better external demand. Strong dairy exports and a relatively firm agricultural outlook bolster the currency, but soft domestic metrics and the expectation of RBNZ easing moderate optimism. The NZD’s strength depends on how global conditions evolve and whether China demand rebounds meaningfully.

Bias:↔ Neutral to Mildly Bullish

Oct 2025 NZD/USD Monthly Range: 0.575 – 0.595

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Mexican Peso (USD/MXN)

The peso remains one of the standout performers in emerging markets, powered by attractive real yields, strong carry flows, and remittance support. Even amid US fiscal turbulence, investor confidence in Mexico’s macro framework helps buffer volatility. In a softer-dollar environment, MXN could stretch further gains, although risk-off episodes are likely to induce sharp but brief retracements.

Bias:↑ Bullish

Oct 2025 USD/MXN Monthly Range: 18.25 – 18.55

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