Forex News
- Silver price plunges to near $52.20 as Fed’s Waller warns of bigger interest rate hike.
- The US Dollar draws strength from Fed Waller’s warning of aggressive policy tightening.
- Investors keenly await the US CPI data for October.
Silver price (XAG/USD) is severely down over 2% to near $52.20 during the European trading session. The white metal faces a sharp selling pressure as Federal Reserve (Fed) Governor Christopher Waller has warned of a bigger interest rate hike ahead of the United States (US) Consumer Price Index (CPI) data at 13:30 GMT.
During the European trade, Fed’s Waller said in a speech that further monetary policy tightening is needed and also not rule out the possibility of a larger interest rate hike, if inflationary pressures continue to advance.
“Half-point Fed rate hike may be needed in December, if October core CPI inflation comes in around 0.3% or higher,” Fed’s Waller said.
US inflation expected to cool ahead of key Fed meeting
Economists at Deutsche Bank highlight that, in contrast to September’s strong print, they now anticipate a clear moderation in price pressures. They note that “this time, our US economists expect inflation to have come down from its September pace, with both headline and core at +0.20% on the month,” underscoring expectations for a more subdued October CPI profile going into the next Fed meeting.
Theoretically, fears of aggressive Fed tightening diminish the appeal of non-yielding assets, such as Silver.
The warning of aggressive Fed’s monetary tightening by Governor Christopher Waller has resulted in some relief for the US Dollar (USD). Following Waller’s remarks, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, clawed back its early losses and turned marginally positive above 101.70.
Silver Technical Analysis
In the daily chart, XAG/USD trades at $52.36, maintaining a bearish near-term tone as it holds below the 20-day Exponential Moving Average (EMA) at $54.07. The short-term trend remains pressured while price stays capped under this dynamic barrier, and the Relative Strength Index (14) around 40 suggests weak but not oversold momentum, hinting that sellers still retain an advantage.
On the topside, the 20-day EMA at $54.07 is the first notable resistance, and a daily close above this level would be needed to ease immediate downside pressure and open the way for a corrective recovery. With no nearby technical supports highlighted by the current dataset, any further pullback from present levels would leave XAG/USD vulnerable to probing lower chart-based levels not captured here, keeping focus on whether buyers can reclaim the $54 area to stabilize the outlook.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Economic Indicator
Consumer Price Index ex Food & Energy (MoM)
Inflationary or deflationary tendencies are measured by periodically summing the prices of a basket of representative goods and services and presenting the data as the Consumer Price Index (CPI). CPI data is compiled on a monthly basis and released by the US Department of Labor Statistics. The MoM print compares the prices of goods in the reference month to the previous month.The CPI Ex Food & Energy excludes the so-called more volatile food and energy components to give a more accurate measurement of price pressures. Generally speaking, a high reading is seen as bullish for the US Dollar (USD), while a low reading is seen as bearish.
Read more.Next release: Tue Nov 10, 2026 13:30
Frequency: Monthly
Consensus: 0.2%
Previous: 0.3%
Source: US Bureau of Labor Statistics
The US Federal Reserve has a dual mandate of maintaining price stability and maximum employment. According to such mandate, inflation should be at around 2% YoY and has become the weakest pillar of the central bank’s directive ever since the world suffered a pandemic, which extends to these days. Price pressures keep rising amid supply-chain issues and bottlenecks, with the Consumer Price Index (CPI) hanging at multi-decade highs. The Fed has already taken measures to tame inflation and is expected to maintain an aggressive stance in the foreseeable future.
- The US Consumer Price Index is expected to rise by 0.3% MoM in October.
- Monthly core CPI inflation is expected to soften to 0.2% from 0.3% in September.
- The inflation report, combined with geopolitical headlines and the stock market action, could influence the US Dollar valuation in the near term.
The US Bureau of Labor Statistics (BLS) will publish the October Consumer Price Index (CPI) data on Tuesday, a release that could influence the US Dollar (USD) valuation as investors reassess the Federal Reserve’s (Fed) interest-rate outlook.
The report won’t include 12-month percentage changes for most CPI series in this release, due to missing October 2025 monthly data because of the lack of collection during the government shutdown from October 1, 2025, to November 12, 2025.
“For most CPI series, BLS could not publish October 2025 indexes. As a result, BLS will not publish 12-month percent changes for October 2026 for indexes where October 2025 data are not available,” the BLS noted in a press release.
On a monthly basis, headline CPI is forecast to rise 0.3% following the 0.6% increase recorded in September, while the core CPI is seen increasing 0.2%, compared to 0.3% in the previous month.
Economists at Deutsche Bank see a clear moderation in the upcoming US inflation data. They note that “headline CPI [is] to rise by 0.20% month-on-month, down from 0.65% previously, with core CPI also up 0.20% after 0.33% last time.” Despite the anticipated softer prints, the bank’s team “continue[s] to expect 25bp rate increases at the December and March FOMC meetings, absent a further material tightening in financial conditions.”
How could the US Consumer Price Index report affect EUR/USD?
According to the CME FedWatch Tool, markets currently see about an 80% chance of the Federal Reserve (Fed) raising the policy rate by another 25 basis points (bps) at the last meeting of the year.
Speaking at a news conference after the Fed's decision to leave interest rates unchanged at a range of 3.75%-4.00% in October, Fed Chair Kevin Warsh described labor market conditions as “positive,” and added that the discussion among policymakers is focused mainly on the price stability mandate. The October employment report confirmed a robust labor market, with Nonfarm Payrolls (NFP) rising by 165K and the Unemployment Rate declining to 4.1% despite an uptick in the Labor Force Participation Rate.
In the meantime, crude Oil prices declined sharply last week as markets grew optimistic about a diplomatic resolution to the conflict in the Middle East following the Republicans’ defeat in the midterm elections. Although this recent fall won’t be reflected in October inflation figures, a notable downward surprise in the monthly CPI, with a print of 0.1% or lower, combined with an extended slide in energy prices could cause market participants to refrain from pricing in a rate hike in December. In this scenario, the US Dollar (USD) could come under sudden selling pressure and help EUR/USD gather bullish momentum in the near term.
Conversely, a reading at or above market expectations, coupled with a lack of progress in ceasefire negotiations with Iran, could reinforce an increase in interest rates next month. However, the market positioning suggests that the USD’s upside potential could remain limited in this scenario, paving the way for a short-lasting bearish reaction in EUR/USD.
At the same time, the action in stock markets could further influence the USD’s valuation and impact EUR/USD’s performance. An extended selloff in technology stocks could support the USD and cap EUR/USD gains even if inflation data arrive soft and reinforce a cautious Fed policy-tightening path.
Strategists at ING argue that the recent US Dollar strength is heavily contingent on risk sentiment, noting that “we think the dollar rally requires the risk-off mood to persist this week.” They caution that “Friday’s move looked a bit too stretched relative to short-term market drivers,” leaving “some moderate correction risk” if market nerves ease. Even so, ING believes the broader backdrop remains Dollar-supportive, with the “macro story”
“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%),” they add and note that such an outcome “should help cement expectations for a December Fed hike (19bp priced in), making the swap curve more protected from other equity market shocks.”
Eren Sengezer, European Session Lead Analyst, shares a brief technical outlook for EUR/USD:
“The EUR/USD pair has been moving in a relatively narrow channel since the beginning of October. During last week’s post-midterm elections rally, the Relative Strength Index (RSI) indicator on the daily chart recovered toward 50 but failed to clear this level, highlighting buyers’ hesitancy.”
“On the upside, 1.1260 (upper arm of the Bollinger Bands, static level) aligns as the first resistance level ahead of 1.1335 (50-day Simple Moving Average (SMA), static level) and 1.1410 (100-day SMA). Looking south, the first support level could be spotted at 1.1130 (lower arm of the Bollinger Bands, static level). If this support fails and gets confirmed as resistance, technical sellers could take action and open the door for an extended drop toward 1.1000 (static level, round level).”
Fed FAQs
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.
ING’s Chris Turner expects the US Dollar (USD) to remain underpinned into early 2027 by strong US growth, inflation above 3% and a hawkish Federal Reserve. He notes that as headline inflation falls back towards the Fed’s 2% target, short-dated US rates should decline.
Fed stance underpins Dollar into 2027
"The dollar should stay supported by strong US growth, high inflation and a Fed threatening to tighten before weakening next spring as inflation falls."
"Our base call assumes that the Federal Reserve stays hawkish in the first quarter, as decent US growth and above-3% inflation keep money markets pricing in the threat of an extended tightening cycle."
"That turns in the second quarter, when energy-driven base effects drop out of headline inflation and a return to the Fed’s 2% inflation target sees short-dated US rates move meaningfully lower."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- Gold falls more than 1% amid profit-taking and hawkish Fed comments ahead of US CPI data.
- Fed Governor Waller keeps the door open for a 50-basis-point rate hike in December.
- XAU/USD holds above the 20-day SMA near $4,061, while RSI signals neutral momentum.
Gold (XAU/USD) falls more than 1% on Tuesday, giving back much of the previous day’s gains as traders lock in profits. Hawkish remarks from Federal Reserve (Fed) Governor Christopher Waller add to the pressure as markets wait for US consumer inflation data, due at 13:30 GMT. At the time of writing, XAU/USD trades around $4,075, down from Monday’s high near $4,148.
Waller said he would “still support a 25 basis point increase” in December even if October inflation cooled. He added that a “half-point Fed rate hike may be needed in December” if October core CPI comes in “around 0.3% or higher.” Traders are now fully pricing in a 25-basis-point (bps) rate hike in December, according to the CME FedWatch Tool.
Economists expect headline Consumer Price Index (CPI) to rise 0.3% MoM in October, down from 0.6% in September. Core CPI, which excludes food and energy, is also expected to ease to 0.2% from 0.3%. The Bureau of Labor Statistics (BLS) will not publish annual CPI figures because of last year’s government shutdown.
Waller’s remarks also helped the US Dollar Index (DXY) regain ground after it fell 0.60% on Monday, as hopes for US-Iran diplomacy pushed crude prices lower. The DXY, which tracks the Greenback’s value against a basket of six major currencies, trades around 101.70, up from an intraday low of 101.49.
West Texas Intermediate (WTI) slips toward $83 a barrel, its lowest level since August 31, after US President Donald Trump said there was “positive momentum” toward ending the war with Iran following talks with Qatar’s prime minister at the White House on Monday.
Analysts at ING expect the Dollar to remain underpinned in the near term, arguing that “the dollar should stay supported by strong US growth, high inflation and a Fed threatening to tighten” further. They note that “our base case assumes that the Federal Reserve stays hawkish in the first quarter, as decent US growth and above-3% inflation keep money markets pricing in the threat of an extended tightening cycle.”
The hawkish Fed outlook remains a headwind for Gold, as higher interest rates raise the opportunity cost of holding the non-yielding metal. A hotter-than-expected CPI report could lend further support to the US Dollar and weigh on Gold, while a softer reading could give the metal some breathing room.
Technical Analysis: $4,000 level in focus if the 20-day SMA gives way
On the daily chart, XAU/USD near-term tone is neutral, with spot holding just above the 20-day Simple Moving Average (SMA) from the Bollinger Bands at roughly $4,061, which acts as immediate support, while the upper band around $4,220 caps the topside. The Relative Strength Index (RSI) at about 49 underscores a range-bound backdrop, even as the Moving Average Convergence Divergence (MACD) turns decisively positive, hinting that upside momentum is improving but still constrained by nearby resistance.
On the upside, initial resistance emerges at the Bollinger upper band near $4,220, ahead of a more significant horizontal barrier at $4,400, where sellers could reassert control. On the downside, first support is seen at the mid-Bollinger 20-day SMA around $4,061, followed by the psychological and chart floor at $4,000. Further losses could expose the lower Bollinger Band near $3,902, followed by the year-to-date low at $3,870.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Inflation FAQs
Inflation measures the rise in the price of a representative basket of goods and services. Headline inflation is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core inflation excludes more volatile elements such as food and fuel which can fluctuate because of geopolitical and seasonal factors. Core inflation is the figure economists focus on and is the level targeted by central banks, which are mandated to keep inflation at a manageable level, usually around 2%.
The Consumer Price Index (CPI) measures the change in prices of a basket of goods and services over a period of time. It is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core CPI is the figure targeted by central banks as it excludes volatile food and fuel inputs. When Core CPI rises above 2% it usually results in higher interest rates and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually results in a stronger currency. The opposite is true when inflation falls.
Although it may seem counter-intuitive, high inflation in a country pushes up the value of its currency and vice versa for lower inflation. This is because the central bank will normally raise interest rates to combat the higher inflation, which attract more global capital inflows from investors looking for a lucrative place to park their money.
Formerly, Gold was the asset investors turned to in times of high inflation because it preserved its value, and whilst investors will often still buy Gold for its safe-haven properties in times of extreme market turmoil, this is not the case most of the time. This is because when inflation is high, central banks will put up interest rates to combat it. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold vis-a-vis an interest-bearing asset or placing the money in a cash deposit account. On the flipside, lower inflation tends to be positive for Gold as it brings interest rates down, making the bright metal a more viable investment alternative.
- Fed Governor Christopher Waller believes US monetary policy is not restrictive enough.
- A 0.3% monthly inflation reading in October could require more aggressive policy action.
- The Fed Governor sees higher interest rates as necessary to bring inflation down.
Federal Reserve (Fed) Governor Christopher Waller adopts a hawkish tone on Tuesday, arguing that interest rates need to rise to put downward pressure on inflation, according to Reuters.
Key takeaways
0.3% US Oct monthly CPI would suggest inflation moving away from target, need more aggressive policy action.
I don’t think we’ll see broad-based productivity gains from AI for a while.
Real rates have to rise to maintain level of restrictiveness in monetary policy.
Policy has been not nearly as restrictive as I thought.
We need to raise rates to put downward pressure on inflation.
Asked about sharp stock price moves, says not generally important for his view on rates.
Democrat control of congress will act as a check on presidential appointments to Fed.
Market reaction
The US Dollar (USD) rebounds following Waller's hawkish comments, reversing earlier losses, with the US Dollar Index (DXY) trading around 101.70, up 0.05% on Tuesday.
Waller flags risk of larger December hike as inflation worries intensify
Fed’s Waller delivered a notably more hawkish message, with a 9/10 FXS Speechtracker score standing well above the 7.3/10 historical average, underscoring a clear shift toward tighter policy bias. The explicit openness to a half-point FED rate hike in December if October core CPI prints around 0.3% or higher, alongside support for at least a quarter-point move even on better data, signals a strong reaction function to any sign that inflation is drifting away from target. Emphasis on broad-based price pressures, still-solid growth and labor conditions, and the view that policy has not been as restrictive as previously thought reinforces upside risks for the Dollar and front-end yields.
The FXS Fed Sentiment Index rose by 3.17 points to 145.50, keeping the gauge deeply in hawkish territory and aligning with the elevated FXS Speechtracker score. This combination points to a market narrative of renewed tightening resolve, with expectations shifting toward higher and potentially faster rate increases if incoming inflation data fail to show convincing progress.
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