FX Strategy Forecast Update for October 2025

This document is a forecast update focusing on foreign exchange (FX) strategy as of October 2025. It outlines a less bearish outlook for the USD, with expectations of a decline of only 5-6% in the DXY USD index by Q3 2026. The report discusses the implications of Federal Reserve policy easing, predicting 100 basis points of cuts through Q3 2026, which influences the USD outlook and the cost of hedging US assets. The AUD/USD forecast is revised to indicate potential growth above 0.70, but at a slower pace than previously anticipated. The document also addresses the EUR/USD and GBP/USD forecasts, noting political and economic factors affecting these currencies. Additionally, it highlights the expected gradual appreciation of the CNY and the impact of global economic conditions on various currency pairs. The report includes updated forecasts for major currency pairs and discusses the sensitivity of these forecasts to changes in monetary policy.