Forex in Focus: USD Stability, Asian Currencies & Emerging RisksAs the US dollar stabilises and Asia and emerging market currencies adjust, forex traders are navigating a mix of institutional flows, geopolitical risk and central bank action.
The global forex market in October 2025 is marked by two concurrent dynamics: relative stabilisation of the US Dollar (USD) and heightened scrutiny of Asian and emerging market currencies as global flows adjust. Major pairs such as USD/JPY and EUR/USD are seeing renewed interest as traders position for central bank action and funding-market shifts.
India also remains in focus: the country’s foreign exchange reserves fell by about 5.6 billion dollars to 689.7 billion for the week ending October 31, driven by declines in both foreign currency and gold assets. Despite the dip, reserves still cover more than 11 months of merchandise imports, showing strong fundamentals.
What are the forces at play?
Firstly, central bank expectations. With the Federal Reserve firmly in focus, any hint of a rate cut or policy shift triggers large moves. Lower-than-expected US inflation recently added to speculation around a rate cut, supporting risk assets and weakening the dollar.
Secondly, emerging market currencies face cross-winds. Reserve losses in India show that pressures persist as capital flows shift toward yield and safety. The economics of carry, funding costs and relative value are becoming more relevant than simple directional trades.
Key takeaways for traders:
Use carry and funding spreads, not just spot moves.
Watch major technical levels like USD/JPY near 153.
Stay nimble even if the dollar appears stable.
Diversify across Asia-Pacific and emerging markets.
Forex markets are no longer about just “dollar up or dollar down.” They’re about how different economies manage liquidity, growth, and capital flow risk together. Those who adjust their strategies stand to benefit.