Forex News

ING strategists Francesco Pesole, Frantisek Taborsky and Chris Turner note that recent contagion from AI-driven equity selling into defensive stocks has lifted the Dollar, even before strong US jobs data. They argue the Dollar rally looks stretched and say softer front-end US rates and upcoming US CPI should limit upside.

Dollar rally seen overstretched

"We think the dollar rally requires the risk-off mood to persist this week. Otherwise, there is some moderate correction risk, as Friday’s move looked a bit too stretched relative to short-term market drivers. Still, in our view, the macro story should prevent DXY from returning to last week’s lows of 101.1."

"We expect tomorrow’s October US CPI to come in at 0.3% month-on-month for both headline (consensus 0.3%) and core (0.3%). That should help cement expectations for a December Fed hike (19bp priced in), making the swap curve more protected from other equity market shocks."

"Contagion from AI to defensive stocks in the US and worldwide allowed the dollar to rally even before the strong US jobs market report. But unless risk sentiment remains poor this week, lower front-end US rates should favour a weaker dollar, even if inflation tomorrow comes in slightly hotter than expected."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

Deutsche Bank reports the S&P 500 at 7377, up 0.31% Friday but down 2.68% on the week, its worst since April 2025. AI-exposed stocks saw heavy losses, while sector rotation favoured Consumers Discretionary and Communications Services. Despite volatility, Deutsche Bank’s asset allocation team finds global and US earnings growth in Q3 remained remarkably strong with record margins.

Index hit by AI slump, earnings strong

"The S&P 500 fell -2.68% (+0.31% Friday), marking its worst weekly performance since April 2025."

"Moreover, the most AI-exposed areas saw even bigger declines, with the Philly semiconductor index down -12.15% (+4.21% Friday), whilst CoreWeave fell another -15.44% (+6.28% Friday)."

"Our asset allocation team have reviewed the global earnings season here and highlighted how growth has remained remarkably strong in Q3 despite a very high hurdle after 38% year-on-year growth in Q2 and persistent upgrades ahead of the reporting season."

"US earnings growth likely held at 34%, with the median company growing 14% and growth excluding Tech, Energy and Materials at 13%, one of the strongest rates since the GFC."

"So although consensus sees some moderation in 2027, the striking feature of this earnings season has been how broad-based the strength remains even against an exceptionally demanding starting point."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

• The Eurozone Sentix Investor Confidence Index falls to 2.4 in November from 2.7 in October.
• Economic expectations deteriorate amid elevated interest rates, high energy prices and political uncertainty.
• Germany shows modest signs of stabilization, although investor confidence remains in negative territory.

Investor confidence in the Eurozone deteriorates slightly in November, according to the latest Sentix survey released on Monday. The Sentix Investor Confidence Index falls to 2.4 points from 2.7 in October.

Looking at the details, the Current Situation Index remains unchanged at -3.3 points, while the Economic Expectations Index declines by 0.5 points to 8.3 points. This divergence highlights growing investor caution regarding the Eurozone's economic growth outlook.

Sentix warns that hopes for a sustained economic recovery have suffered another setback, citing rising interest rates, elevated energy prices and political uncertainty as the main obstacles to economic activity.

Meanwhile, Germany shows modest signs of stabilization. The country's Investor Confidence Index rises by 0.3 points to -3.3 in November, although it remains in negative territory.

Market reaction

The Euro (EUR) shows little reaction to the Sentix survey, with EUR/USD rising 0.45% on Monday to trade around 1.1190 at the time of writing.

• Gold retraces Friday's losses and picks up to levels near $4,100 on Monday
• Risk appetite hurt the USD on Monday, with Iran peace talks in progress and Oil prices steady near two-month lows
• XAU/USD price action holds above the top of the descending channel from late August highs

Gold (XAU/USD) shows moderate gains on Monday, reversing Friday’s losses, and consolidating last week’s recovery, with price action levels just below $4.100 and last week’s highs, in the $4,150 area on the bulls’ focus. Precious metals are drawing support from a weak US Dollar, as efforts towards a peace deal in the Middle East continue, and Oil prices remain steady near two-month lows.

The US Dollar is dropping across the board on Monday amid improved risk sentiment, following news reports of ongoing negotiations to reach a peace deal in Iran. US President Trump contributed to improve the market mood as he affirmed on Sunday that it is unlikely that hostilities against the Islamic Republic will resume if talks show progress.

Recent macroeconomic data, however, has been USD supportive. US Nonfarm Payrolls growth overshot expectations by a wide margin in October, paving the path for further Federal Reserve (Fed) tightening in December. Key Fed policymakers also supported that view following the NFP release on Friday. This is likely to keep US Dollar dips contained.

Technical Analysis: Gold bulls break the top of the bearish channel

XAU/USD trades at $4,094, after bouncing above the upper boundary of the downward-trending channel earlier in the day. The broader tone remains capped as spot gold stays well below the 200-day Simple Moving Average (SMA), but the daily Relative Strength Index (14) has stabilized around the 50 level, and the Moving Average Convergence Divergence (MACD) indicator has turned positive, highlighting a growing upside momentum.

Bulls are likely to meet resistance at the mentioned $4,150 area, which capped rallies on Friday. If this level gives way. the next targets are the early October highs around $4,230, and then the mid-September highs near $4,400.

On the downside, initial support is seen at the confluence of the broken trendline, at $ 4,050, Friday's low at $4,030, and the $4,000 psychological level. A bearish reaction below here negates the bullish view and brings the November 3 low near $3,900 and the Channel bottom, now at $3,825, into focus.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

Silver prices (XAG/USD) rose on Monday, according to FXStreet data. Silver trades at $52.43 per troy ounce, up 0.93% from the $51.95 it cost on Friday.

Silver prices have decreased by 26.24% since the beginning of the year.

The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, stood at 78.05 on Monday, down from 78.27 on Friday.

(An automation tool was used in creating this post.)

Francesco Pesole at ING argues the recent EUR/USD drop is too sharp versus short-term rate differentials, with the pair around 2.1–2.3% undervalued in their models. He links this to tightened front-end spreads despite risk-off equities and expects EUR/USD to move back above 1.120, while ECB succession discussions should have only contained, short-lived impact on the Euro.

Euro seen undervalued vs Dollar

"The drop in EUR/USD looks too sharp relative to its short-term rate differential. We estimate short-term undervaluation at around 2.1-2.3%, exceeding what has been justified by the French risk premium. That’s mostly because front-end rate differentials have actually tightened on the back of the stock market turmoil, compensating for worsening risk sentiment."

"Unless risk sentiment faces new instability this week, we expect EUR/USD to make its way back above 1.120."

"Overall, the impact on the euro may prove relatively contained and short-lived. There are 21 voting rights for monetary policy decisions at the ECB, and we don’t see any candidate willing to cause seismic changes at this time of elevated uncertainty."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

• US index futures remain mixed as traders await inflation updates and earnings from AI companies this week.
• Nvidia faces pressure following a board probe into CEO Jensen Huang's reported espionage targeted affair.
• Markets digest potential Democratic efforts toward stricter AI regulations and data center growth restrictions.

Dow Jones futures advance 0.65% to trade around 51,720 during the European hours on Monday. Meanwhile, S&P 500 futures gain 0.30% to trade around 7,420 and Nasdaq 100 futures decline 0.12% to trade around 27,050.

US stock futures trade mixed amid easing energy prices and inflationary concerns. Crude oil pulled back after US President Donald Trump stated that further military action against Iran is "highly unlikely," contingent on continued progress on Iran's nuclear program and the Strait of Hormuz remaining open. Trump also acknowledged that the unpopular Middle East conflict had previously inflated energy costs and contributed to recent Republican midterm election losses.

Investors braced for crucial inflation updates and earnings from major AI-related technology companies this week, all while weighing fresh corporate uncertainty surrounding Nvidia. Nvidia is set to remain firmly in the market spotlight after its board launched an independent investigation following allegations that CEO Jensen Huang was targeted in a Chinese honey trap operation.

Earnings releases from key tech players, including CoreWeave, Cisco, and Applied Materials, are scheduled throughout the week, offering further insights into the overall demand and growth outlook for the AI sector. Meanwhile, market participants are heavily focused on Tuesday’s US Consumer Price Index (CPI) report and Friday’s Producer Price Index (PPI) for clearer signals on the Federal Reserve’s upcoming interest rate policy decisions.

Last week, Wall Street posted losses with the Dow Jones Industrial Average falling 0.93%, the S&P 500 dropping 2.68%, and the tech-heavy Nasdaq Composite sliding 3.37%. The broad sell-off was largely driven by growing investor concerns that Democrats could push for stricter AI regulations and potentially restrict data center expansions.

Fed hike expectations seen intact despite recent data

Analysts at Commerzbank Research point out that the Fed’s own projections already lean firmly toward further tightening this year. They note that “of the 18 Fed officials who submitted projections for the appropriate path of interest rates in September, 16 anticipated at least one more rate hike this year,” and judge that “the data released since then are unlikely to have changed that assessment materially.” In their view, the combination of robust October payrolls and still‑elevated inflation reinforces the case for another 25 basis point increase at the December FOMC meeting, in line with the Fed’s earlier guidance.

• EUR/USD approaches 1.1200 after bouncing from lows near 1.1130 on Friday.
• The ongoing diplomatic efforts to end the US-Iran war and lower Oil prices have contributed to easing AI concerns at the week's opening.
• Strong US data and Fed tightening hopes are likely to limit Dollar losses.

The Euro (EUR) appreciates about 0.4% against the US Dollar (USD) on a calm week opening, and a mild appetite for risk, which has offset the downbeat German Trade Balance data released earlier on Monday. The EUR/USD pair is trading at the 1.1190 area at the time of writing, up from Friday’s high at 1.1130.

A mild optimism prevails at the week's opening, with the main European equity indexes showing moderate advances, as AI fears have eased, at least for now, and diplomatic efforts to end the Middle East conflict continue. Brent Oil prices consolidate below the key $100 level, which provides important relief to the Eurozone’s Oil-importing economies.

The positive market sentiment has offset the downbeat German Trade Balance figures seen earlier on Monday. Data released by Destatis revealed that the trade surplus narrowed to EUR 15.6 billion in September, from EUR 17.8 billion in August, against expectations of a EUR 19.2 billion surplus, as imports increased well above exports.

The safe-haven USD dives despite strong NFP data and Fed tightening hopes

In the US, Nonfarm Payrolls data released on Friday beat expectations, with net jobs increasing by 165K, overshooting the market consensus of a 65K growth, and the Unemployment rate declining to 4.1%.

These figures have strengthened market expectations that the Federal Reserve (Fed) will hike interest rates again at its December meeting, a view that was backed by New York Fed President John Williams, St. Louis Fed President Alberto Musalem, and San Francisco Fed President Mary Daly later in the day.

Analysts at Commerzbank Research observe that “of the 18 Fed officials who submitted projections for the appropriate path of interest rates in September, 16 anticipated at least one more rate hike this year (...) “the data released since then are unlikely to have changed that assessment materially,” says the bank in a note.

Fed hike expectations underpinned by solid us labor market

Analysts at Commerzbank Research argue that recent data leave the Federal Reserve with room to tighten policy further, noting that “on balance, the U.S. labor market remains solid and poses no obstacle to further interest rate hikes.” The bank points out that “of the 18 Fed officials who submitted projections for the appropriate path of interest rates in September, 16 anticipated at least one more rate hike this year,” and judges that “the data released since then are unlikely to have changed that assessment materially.”

• USD/IDR falls as sliding oil prices after Trump's Middle East comments weigh on energy costs and the US Dollar.
• Downside for the US Dollar remains capped by strong US Nonfarm Payrolls and 78%+ December Fed hike odds.
• Elevated crude costs pressure Indonesia's fiscal outlook, prompting Bank Indonesia to intervene to curb volatility.

USD/IDR loses ground after posting modest gains in the previous day, trading around 18,100 during Asian hours on Monday. The USD/IDR pair depreciates as the US Dollar (USD) faces challenges amid easing energy prices.

Crude oil pulled back after US President Donald Trump stated that further military action against Iran is "highly unlikely," contingent on continued progress on Iran's nuclear program and the Strait of Hormuz remaining open. Trump also acknowledged that the unpopular Middle East conflict had previously inflated energy costs and contributed to recent Republican midterm election losses.

However, downside risk for the Greenback remains limited due to robust US labor market data that has heightened expectations for continued monetary tightening. According to the CME FedWatch tool, market-implied probabilities for a 25-basis-point rate hike at the December Federal Open Market Committee (FOMC) meeting have surged past 78%.

Fed hawkish sentiment is backed by October Nonfarm Payrolls (NFP), which added 165,000 jobs, substantially outperforming the 65,000 consensus estimate and building on September's revised 60,000 figure, while the Unemployment Rate dipped to 4.1%, beating forecasts of 4.2%. Investors are now awaiting Tuesday's Consumer Price Index (CPI) and Friday's Producer Price Index (PPI) reports for definitive signals on the Federal Reserve's policy trajectory.

However, the Indonesian Rupiah (IDR) may face downward pressure from elevated oil prices, which are straining fiscal conditions given Indonesia's status as a net oil importer. In response to this ongoing currency volatility, Bank Indonesia (BI) actively intervened in the foreign exchange market to smooth exchange rate fluctuations. Consequently, foreign exchange reserves edged slightly higher to USD 146.8 billion in October.

Meanwhile, market participants are closely monitoring upcoming equity catalysts. Traders are awaiting MSCI's November review later this week, alongside updates regarding its eventual decision on Indonesia's market classification, which is expected by June 2027.

US labor data averages point to solid Fed-consistent full employment

Analysts at Commerzbank argue that the recent volatility in monthly payroll prints is best assessed through a longer lens, noting that “given these fluctuations, it makes sense to look at averages over several months.” They highlight that “over the past six months, payrolls have risen by an average of 83,000 per month,” a pace that “may not seem like much” at first glance but, with immigration “significantly lower,” is nonetheless “enough to keep the unemployment rate steady at just over 4% – a level the Federal Reserve considers consistent with full employment.”