Forex News

• The Australian Dollar retreats on Tuesday, giving back some of Monday's gains as the US Dollar regains strength.
• Hawkish comments from Fed officials and hotter US inflation reinforce expectations of another interest rate hike in December.
• China's narrowing trade surplus adds pressure to the Aussie, while investors await crucial US inflation data.

AUD/USD trades around 0.6905 on Tuesday, down 0.31% on the day at the time of writing, as the Australian Dollar (AUD) loses some ground against the US Dollar (USD) following Monday's strong rebound. The Aussie remains under pressure amid rising expectations of further monetary tightening by the Federal Reserve (Fed), while disappointing Chinese trade data weigh on sentiment.

The latest figures from China, Australia's largest trading partner, showed that the Trade Surplus narrowed to $105.28 billion in October from $133.53 billion in September, missing market expectations of $125.8 billion.

Despite the narrowing surplus, Chinese exports and imports continued to expand on an annual basis, suggesting that external trade activity remains resilient. Nevertheless, the weaker-than-expected headline figure provides limited support for the Australian Dollar.

Meanwhile, the US Dollar benefits from increasingly hawkish expectations surrounding the Fed's monetary policy outlook. According to the CME FedWatch tool, markets now assign an approximately 99% chance to a 25-basis-point interest rate hike in December, up from 84% a day earlier.

Fed Governor Christopher Waller reinforced these expectations on Tuesday, stating that “We need to raise rates to put downward pressure on inflation.” He also acknowledged that monetary policy has been less restrictive than previously anticipated.

The US Consumer Price Index (CPI), published by the Bureau of Labor Statistics (BLS) on Tuesday, rose 0.4% MoM in October, exceeding market expectations of 0.3%, although slowing from September's 0.6% increase. Meanwhile, the Core CPI, which excludes volatile food and energy prices, increased 0.3%, above forecasts of 0.2% and matching the previous month's reading. The stronger-than-expected inflation figures reinforce concerns about persistent price pressures in the US economy, strengthening the case for additional interest rate increases.

AUD/USD technical analysis

In the daily chart, AUD/USD trades at 0.6878, maintaining a bearish near-term tone as spot holds decisively beneath the 100-day simple moving average (SMA) at 0.7028 and the 200-day SMA at 0.7056. The pair’s inability to reclaim these medium-term averages suggests rallies remain capped for now, while the Relative Strength Index (14) around 38 hints at subdued momentum consistent with a shallow recovery rather than a sustained uptrend.

On the downside, failure to maintain a foothold above 0.6894 could revive selling pressure, exposing the recent low around 0.6855. A break below this level would bring the March low at 0.6834 back into focus. A decisive move beneath this support could confirm a deeper bearish extension.

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

• EUR/USD loses ground on Tuesday as stronger-than-expected US inflation boosts demand for the US Dollar.
• US consumer prices rose 0.4% in October, exceeding forecasts of 0.3%, while core inflation remains elevated.
• Markets now see a 99% chance of a Federal Reserve rate hike in December, reinforcing the monetary policy divergence with the Eurozone.

EUR/USD extends its decline on Tuesday, trading around 1.1190, down 0.28% on the day at the time of writing. The pair slips below the psychological 1.1200 level following the release of stronger-than-expected United States (US) inflation data, which reinforces expectations of further monetary tightening by the Federal Reserve (Fed) and supports the US Dollar (USD).

The US Consumer Price Index (CPI), published by the Bureau of Labor Statistics (BLS) on Tuesday, rose 0.4% MoM in October, exceeding market expectations of 0.3%, although slowing from September's 0.6% increase. Meanwhile, the Core CPI, which excludes volatile food and energy prices, increased 0.3%, above forecasts of 0.2% and matching the previous month's reading.

The stronger-than-expected inflation figures reinforce concerns about persistent price pressures in the US economy, strengthening the case for additional interest rate increases. The US Dollar Index (DXY), which measures the Greenback against a basket of six major currencies, gains 0.3% on Tuesday to trade around 102.00 at the time of press, putting additional pressure on EUR/USD.

According to the CME FedWatch tool, financial markets now assign a 99% chance to a 25-basis-point (bps) rate hike at the Fed's December meeting, compared with 84% just one day earlier. Such a move would bring the federal funds target range to 4.00%-4.25%.

These expectations are consistent with a Reuters survey conducted between November 6 and 10, in which all 101 economists anticipate a 25-basis-point increase at the December 9 meeting. However, uncertainty remains over the subsequent monetary policy trajectory, with 56 respondents expecting December to mark the final increase of the current tightening cycle, while 45 foresee at least two additional hikes.

Fed Governor Christopher Waller also reinforced the prospect of further tightening on Tuesday, indicating that he would support a 25-basis-point increase in December even if inflation moderated. He added that a stronger policy response could be necessary if monthly core inflation remained around 0.3% or higher, suggesting that a 50-basis-point increase should also be considered.

Meanwhile, the Euro (EUR) receives some support from improving sentiment toward European sovereign debt. The yield spread between French and German 10-year government bonds has narrowed to approximately 145 basis points, compared with around 175 basis points at its October peak. Nevertheless, political uncertainty and persistent budgetary challenges in France continue to limit the European currency's appeal.

On the monetary policy front, European Central Bank (ECB) Chief Economist Philip Lane indicated that another interest rate increase in December would be prudent if economic conditions remained broadly unchanged. He also expects Eurozone inflation to finish the year slightly above 4%, with underlying inflationary pressures potentially strengthening.

Despite the ECB's relatively hawkish signals, the stronger US inflation figures and the near-certainty of another Fed rate hike are currently favoring the US Dollar. The widening focus on persistent US price pressures could continue to weigh on EUR/USD as investors reassess the interest rate outlook on both sides of the Atlantic.

EUR/USD technical analysis

In the four-hour chart, EUR/USD trades at 1.1189, keeping a mildly bearish near-term bias as it holds below the 100-period simple moving average (SMA) at 1.1196 and the 200-period SMA at 1.1227. The pair’s inability to reclaim these overhead averages suggests rallies remain capped for now, while the Relative Strength Index (RSI) near 47 hints at fading momentum rather than outright oversold conditions.

On the topside, initial resistance is seen at the 100-period SMA around 1.1196, followed by the 200-period SMA near 1.1227, with a stronger barrier at the recent horizontal cap near 1.1275. On the downside, the next notable support aligns with the horizontal level around 1.1100, where buyers may look to defend the broader range if selling pressure extends.

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

• Gold falls, erasing Monday’s gains as hotter-than-expected US inflation lifts the US Dollar.
• US CPI data strengthens expectations of a December Fed rate hike, with markets fully pricing in a 25-bps increase.
• XAU/USD holds above the 20-day SMA near $4,061, while RSI signals neutral momentum.

Gold (XAU/USD) extends its intraday decline on Tuesday after US inflation came in hotter than expected. The metal is down about 2%, erasing all of the previous day’s gains as the US Dollar strengthens. At the time of writing, XAU/USD trades around $4,052, down from Monday’s high near $4,148.

The US Consumer Price Index (CPI) rose 0.4% MoM in October, above the 0.3% forecast but down from 0.6% in September. Core CPI, which excludes food and energy, increased 0.3%, the same as in September and above the 0.2% expected. The Bureau of Labor Statistics (BLS) did not publish annual CPI figures for October because of last year’s government shutdown.

The US Dollar Index (DXY), which tracks the Greenback against a basket of six major currencies, climbs above 102.00 after touching an intraday low of 101.49. The stronger-than-expected inflation data reinforced expectations that the Federal Reserve (Fed) will raise rates in December.

Earlier on Tuesday, Fed Governor Christopher 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. The hawkish Fed outlook remains a headwind for Gold, as higher interest rates raise the opportunity cost of holding the non-yielding metal. A firmer Greenback also makes Gold more expensive for buyers using other currencies.

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.”

However, a sustained decline in Oil prices could ease inflation pressure and reduce the need for further Fed tightening. West Texas Intermediate (WTI) slips toward $84 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.

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.)

Monthly inflation in the United States, as measured by the change in the Consumer Price Index (CPI), was 0.4% in October, the US Bureau of Labor Statistics (BLS) reported on Tuesday. This print followed the 0.6% increase reported in September and came in above the market expectation of 0.3%.

In this period, core CPI, which excludes volatile energy and food prices, was up 0.3%, matching September's increase and surpassing analysts' estimate of 0.2%.

The report doesn't include annual inflation figures 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. 

Market reaction to US October inflation data

The US Dollar (USD) continues to gather strength following monthly CPI figures. At the time of press, the USD Index was up 0.3% on the day at 102.00.

This section below was published as a preview of the October inflation data at 09:00 GMT.

• 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).”

All 101 economists in a Reuters poll conducted November 6-10 expect the Federal Reserve (Fed) to raise interest rates by 25 basis points on December 9, taking the target range to 4.00%-4.25%.

The split is over what happens next. A slim majority, 56 of 101, expects December to mark the final hike of the current cycle. The other 45, including more than half of the primary dealers surveyed, expect at least two more increases after December.

Separately, 29 of 37 economists said the midterm elections didn’t change how they see inflation risks over the medium term.

Fed Governor Christopher Waller said on Tuesday he would “still support a 25 basis point increase” in December even if October inflation cools. He added that “a stronger policy move may be needed” if monthly core CPI comes in at around 0.3% or higher, saying the Fed should consider a half-point hike in that case.

The median forecasts in the poll showed that inflation, as measured by the Personal Consumption Expenditures (PCE) Price Index, was expected to remain above 3% over the coming quarters and return to the Fed’s 2% target in 2028 at the earliest. PCE inflation was forecast to average 3.5% in 2026 and 2.6% in 2027, both slightly above last month’s estimates.

The poll put fourth-quarter US growth at an annualized 2.2%, down from 3.4% in the third quarter. Economists raised their full-year growth forecasts slightly to 2.4% for 2026 and 2.2% for 2027.

• GBP/USD trims some gains on Tuesday after failing to extend gains past 1.3450.
• Fed's Waller provided a moderate boost to the US Dollar, flagging a 50-basis-point rate hike in December.
• Technically, the pair maintains the constructive bias from mid-October lows intact.

The British Pound (GBP) trims some gains on Tuesday, with the US Dollar (USD) drawing support from hawkish comments by Federal Reserve (Fed) Governor Christopher Waller earlier in the day. GBP/USD dips, however, remain contained above 1.3420 so far, with the pair holding most of Monday's gains.

Waller provided some support for the US Dollar earlier Tuesday, hinting at the possibility of a 50-basis-point rate hike in December if consumer inflation remains at high levels.

Preliminary US Consumer Price Index data from October is due on Tuesday, but it will lack year-on-year figures due to the 2025 Federal Government shutdown, failing to deliver a key element to assess the central bank’s next monetary policy steps. The impact on US Dollar crosses, therefore, is likely to be limited.

Technical Analysis: The Bullish trend remains in play, with momentum fading

GBP/USD trades at 1.3424 with the constructive structure still in play, but with the immediate bias turning neutral. The four-hour chart shows the Relative Strength Index (RSI) is easing towards the 50 midline, with a marginally positive Moving Average Convergence Divergence (MACD) reading.

Bulls have been capped a few pips above 1.3450 on Tuesday, closing the path towards last week's highs around 1.3500, and the stronger resistance area around 1.3570, where the September peak crosses the top of the upward channel from the mid-October lows.

On the downside, first support emerges at the channel bottom, now around 1.3360, and the November 6 low, near 1.3340. A break below that zone cancels the bullish view and would open the way toward the late October low, near 1.3270, and the year-to-date (YTD) lows around 1.3140.

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

Bank of England (BoE) Deputy Governor Clare Lombardelli warned that high energy costs could keep inflation elevated, speaking at the Bank of England Watchers’ Conference in London on Tuesday.

Key takeaways

Balance of risks to inflation remains to the upside.

Energy shock has become more persistent.

Greater prospect of second-round effects.

The longer energy costs stay high, the greater pressure there will be on businesses to restore margins.

Conditions for persistent inflationary dynamics over the medium-term are crystallising.

Labour market is stuck in low gear.

Market reaction

GBP/USD shows little reaction to Lombardelli’s remarks, trading around 1.3425, down 0.12% on the day as the US Dollar firms before US inflation data due at 13:30 GMT.