Forex News

• Silver gains 1.60% on Wednesday despite rising US Treasury yields and a stronger US Dollar.
• Higher-than-expected US inflation reinforces expectations of further Federal Reserve rate hikes.
• Deutsche Bank and Commerzbank warn that persistent inflation could keep monetary policy restrictive.

Silver (XAG/USD) advances on Wednesday, gaining 1.60% to trade around $52.35 at the time of writing. The precious metal strengthens despite rising US Treasury yields and a stronger US Dollar (USD), as hotter-than-expected inflation data fuels expectations of further interest rate hikes by the Federal Reserve (Fed).

The US Consumer Price Index (CPI) rose 0.4% in October, exceeding market expectations of 0.3%, although slowing from September's 0.6% increase. Core CPI, which excludes food and energy prices, increased 0.3%, above the 0.2% forecast and matching the previous month's reading.

These figures reinforce concerns about persistent inflation and encourage investors to anticipate more aggressive monetary tightening. According to the CME FedWatch tool, markets now fully price in a December Fed rate hike, with an 88% chance of a 25-basis-point (bps) increase and an 12% chance of a larger 50 bps move.

Fed Governor Christopher Waller previously indicated that a 50 bps increase could be necessary if October core inflation reached 0.3% or higher, a threshold now met by the latest figures. The inflation surprise triggered a sharp sell-off in US government bonds on Tuesday, pushing the benchmark 10-year Treasury yield briefly above 5%.

Deutsche Bank analysts highlight that core inflation has increased by 0.3% for three consecutive months, bringing its three-month annualized rate to 3.75%, the fastest pace since April 2024. The bank considers that this persistence makes it increasingly difficult to dismiss inflationary pressures as temporary.

Similarly, Commerzbank economists warn that underlying inflation remains too elevated and is no longer declining. The German bank expects inflation to remain persistent throughout 2026, with a potential easing only emerging in 2027, amid resilient economic activity and ongoing geopolitical tensions in the Middle East.

Meanwhile, the US Dollar Index (DXY) rises 0.68% on Wednesday, extending its recovery for a second consecutive day. Higher Treasury yields and a stronger Greenback generally weigh on non-yielding assets such as Silver. Nevertheless, the metal's advance suggests resilient buying interest, although expectations of further Fed tightening could limit additional gains.

Silver technical analysis

In the one-hour chart, XAG/USD trades at $52.31. The metal holds above the 200-period simple moving average (SMA) at $51.52, but it is capped by the 100-period SMA at $52.37, leaving the near-term tone neutral to slightly heavy while price consolidates between these key averages. The Relative Strength Index (RSI) at 45.93 sits just below the midline, hinting that bullish momentum has faded after the recent spike toward $53.00, with neither side currently showing decisive control.

On the topside, immediate resistance is aligned at the 100-period SMA at $52.37, with further hurdles at the horizontal levels of $53.20 and $53.72, which guard the recent recovery highs. On the downside, initial support is seen at the 200-period SMA around $51.52, ahead of the horizontal floor at $51.10; a sustained break beneath these levels would open the door to a deeper correction, while holding above them would keep XAG/USD confined in a range beneath the nearby moving-average cap.

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

• GBP/USD slides below 1.3300 as bearish pressure intensifies.
• US Core CPI holds at 0.3% MoM, reinforcing Fed rate hike expectations.
• US 10-year Treasury yields reach 5% ahead of Thursday's UK GDP.

The Pound Sterling (GBP) drops against the US Dollar (USD) on Wednesday as traders digest hawkish comments from Federal Reserve (Fed) officials and Tuesday's hot US inflation report. At the time of writing, GBP/USD trades below the 1.3300 psychological figure, down 0.55%.

GBP/USD extends its decline below 1.3300, eyes on UK GDP and US PPI data

On Tuesday, the US Bureau of Labor Statistics (BLS) reported that the Consumer Price Index (CPI) dipped from 0.6% to 0.4% MoM in October, exceeding forecasts and signaling continued disinflation. But comments from Federal Reserve (Fed) Governor Christopher Waller opened the door to a 50-basis-point rate hike in December if core CPI was 0.3%. This was fulfilled as underlying inflation was 0.3% MoM for the third straight month, above estimates of 0.2%.

Consequently, market participants bought the US Dollar, in part underpinned by the rise of US Treasury yields. The 10-year T-note yield is at 5%, up nearly 12 basis points on Tuesday, while market participants fully price in a 25-basis-point rate hike, according to the CME FedWatch Tool.

Other Fed officials crossed the wires. Dallas Fed Lorie Logan and Philadelphia’s Fed Anna Paulson were also hawkish. Logan said that it may be possible to raise rates “more rapidly this winter,” while Paulson said that the “Fed will move more aggressively if inflation landscape worsens.”

In the Fed’s moderate camp were Fed Governor Michelle Bowman and Kansas City Fed President Jeffrey Schmid, with the former saying that persistent inflation suggests there is more work to do, while the latter added that there are concerning price trends, excluding the whole energy story.

In the UK, the docket was light, but investors are bracing for Thursday’s Gross Domestic Product (GDP) figures. In the US, market participants eye the release of jobless claims and housing data ahead of Friday’s Producer Price Index (PPI).

GBP/USD Price Forecast: Technical outlook

In the daily chart, GBP/USD trades at 1.3282, keeping a bearish near-term tone as spot holds beneath a dense band of medium-term resistance. The latest reading of the 50-, 100- and 200-day simple moving averages (SMAs) around 1.3352 sits comfortably above price, suggesting rallies remain capped while the pair trades under this cluster. A pair of downward-sloping resistance trend lines, drawn from 1.3869 and 1.3653, also run above the market, reinforcing the idea of a market contained within a broader corrective channel. Momentum backs this cautious stance, with the 14-period Relative Strength Index at 43.6, pointing to subdued buying interest and leaving scope for further corrective slippage if sellers regain control.

On the topside, initial resistance is defined by the nearer of the two descending trend lines projected from 1.3653, with a break there exposing the higher downtrend line drawn from 1.3869 and, beyond that, the confluent 50/100/200-day SMA cluster near 1.3352. On the downside, immediate support is anticipated from the first upward-sloping trend line that originates at 1.3159, ahead of a secondary rising support line anchored at 1.3140; a daily close below these structural floors would likely signal that bears are extending the broader decline.

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

• Gold struggles as expectations of more Fed rate hikes weigh on sentiment.
• Markets fully price in a December Fed rate hike, with a larger 50 bps move also on the table.
• XAU/USD struggles below its 21-day SMA, keeping the near-term technical outlook tilted to the downside.

Gold (XAU/USD) reverses its earlier gains on Wednesday as a broadly stronger US Dollar (USD) weighs on the precious metal. The metal fell 2.67% the previous day, in the aftermath of hotter-than-expected US consumer inflation data and hawkish remarks from Federal Reserve (Fed) officials that fueled expectations of a more aggressive interest rate-hike path. At the time of writing, XAU/USD trades around $4,016, retreating from an intraday high of $4,066.

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, rose 0.3%, matching September’s pace and beating the 0.2% forecast.

Economists at Commerzbank caution that “prices are still rising too quickly, even though the increase was somewhat smaller than in September.” They highlight that “core inflation, a key gauge of the underlying trend, thus remains (too) high and is no longer trending downward,”. In their assessment, “the strong economy and the ongoing conflict in the Middle East suggest that inflation is unlikely to ease in the near term.”

Hawkish Fed signals boost expectations of a 50 bps hike

Before the CPI release, Fed Governor Christopher Waller said a half-point rate hike may be needed in December if October core CPI comes in “around 0.3% or higher.” With inflation meeting that threshold, traders have started pricing in the possibility of a larger move at the December meeting.

Other Fed officials, including Dallas Fed President Lorie Logan and Philadelphia Fed President Anna Paulson, also backed further monetary tightening, while Fed Vice Chair for Supervision Michelle Bowman stressed the need to bring inflation under control.

Markets now fully price in a rate hike in December, with an 88.5% chance of a 25-basis-point (bps) increase and an 11.5% chance of a 50 bps move, according to the CME FedWatch Tool. Traders also expect more rate hikes next year, with three additional quarter-point increases priced in by mid-2027.

US Dollar and Treasury yields rise as traders price in more rate hikes

The shift in rate expectations boosted demand for the US Dollar (USD) and triggered a sharp sell-off in US government bonds, particularly at the short end of the yield curve. The policy-sensitive 2-year Treasury yield jumped around 19 bps on Tuesday, while the benchmark 10-year yield climbed roughly 14 bps during the day, briefly moving back above 5%.

The US bond market is closed on Wednesday in observance of Veterans Day. Meanwhile, the US Dollar Index (DXY), which tracks the Greenback against a basket of six major currencies, rises 0.68% on the day, extending gains for a second straight day and approaching its year-to-date high of 102.94 set in October.

The combination of a stronger US Dollar, elevated Treasury yields and growing expectations of further Fed tightening is likely to keep Gold under pressure. However, robust central bank buying and sustained inflows into Gold-backed exchange-traded funds (ETFs) could continue to provide a structural floor over the longer term.

Technical Analysis: Bears retain control below key daily SMAs

On the daily chart, XAU/USD maintains a bearish bias as it trades below the 21-day Simple Moving Average (SMA) at $4,056, as well as the 50-day and 100-day SMAs. The Relative Strength Index (RSI) hovers around 45, indicating neutral momentum, while the Moving Average Convergence Divergence (MACD) remains in positive territory, although fading green histogram bars suggest weakening bullish momentum.

On the topside, immediate resistance is at the 21-day SMA near $4,057, with further barriers at the 50-day SMA at $4,178 and the 100-day SMA at $4,200, where sellers are likely to defend the recent range highs. On the downside, the psychological $4,000 level acts as immediate support, followed by the yearly low of $3,870.23. A decisive break below the latter could expose Gold to further selling pressure.

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

• AUD/USD trades near its lowest levels since March as Fed and RBA policy expectations diverge.
• Hotter-than-expected US inflation and hawkish Fed remarks lift the US Dollar toward its yearly high.
• The RBA softens its guidance on further hikes after raising rates for the fifth time this year.

AUD/USD remains on the back foot on Wednesday, hovering near levels last seen in March. The Australian Dollar (AUD) loses ground as expectations grow that the Federal Reserve (Fed) and the Reserve Bank of Australia (RBA) could take different monetary policy paths in the coming months. At the time of writing, AUD/USD trades around 0.6846, down 0.28% on the day.

Hawkish remarks from Fed officials and hotter-than-expected US consumer inflation data have fueled bets on more aggressive rate hikes, boosting demand for the Greenback. The US Dollar Index (DXY), which tracks the Greenback against a basket of six major currencies, rises 0.68% on the day, extending gains for a second straight day and approaching its year-to-date high of 102.94 set in October.

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, rose 0.3%, matching September’s pace and beating the 0.2% forecast.

Fed hawks firm up December hike expectations as political pressure fears fade

Analysts at Rabobank highlight that the market’s response to “the hawkish commentary from Fed officials yesterday, including those from Waller that put the risk of a 50-bps rate hike on the table, says more than just the obvious.” They note that “the market is now fully priced for a December rate hike,” and, crucially, that these remarks were absorbed “with no real speculation that the Fed would be pressured by political forces not to raise rates,” underscoring a reduced focus on potential political interference in the Fed’s policy path.

Other Fed officials, including Dallas Fed President Lorie Logan and Philadelphia Fed President Anna Paulson, also backed further monetary policy tightening, while Fed Vice Chair for Supervision Michelle Bowman stressed the need to bring inflation under control.

On the Australian side, the RBA raised its cash rate by 25 basis points (bps) to 4.85% at its November meeting, as expected, taking borrowing costs to their highest level since 2008. The move marked its fifth hike this year as policymakers grapple with inflation fuelled by higher Oil prices. The central bank softened its guidance, dropping an explicit reference to further hikes if needed. Governor Michele Bullock said it was “probably best to pause and assess incoming data.”

Analysts at OCBC note that the “market has started to price in some chance of easing towards the latter part of 2027,” with cash rate futures “last priced a 74% chance of a 25bp cut by December 2027.” In line with this repricing, OCBC reiterates that its base case is “for a 25bp cut in 4Q 2027.”

• USD/JPY breaks above the 159.00 resistance level, reaching its highest level in ten weeks.
• Stronger-than-expected US inflation reinforces expectations of further Fed interest rate hikes.
• The Japanese Yen remains under pressure despite growing expectations of additional BoJ monetary tightening.

USD/JPY extends its bullish momentum on Wednesday, climbing 0.54% to around 159.65 at the time of writing, its highest level in ten weeks. The pair breaks decisively above the 159.00 resistance level, supported by renewed strength in the US Dollar (USD) as investors increasingly anticipate further interest rate hikes by the Federal Reserve (Fed).

The US Dollar's rally follows hawkish remarks from Fed Governor Christopher Waller and stronger-than-expected US Consumer Price Index (CPI) data released on Tuesday. Waller warned that a “half-point Fed rate hike may be needed in December” if monthly core inflation remained “around 0.3% or higher.” The subsequent CPI report showed core inflation rising 0.3% in October, exceeding the 0.2% forecast, while headline inflation increased 0.4%, above expectations of 0.3%.

These developments triggered a sharp repricing of Fed interest rate expectations. According to the CME FedWatch Tool, markets now assign an 85% chance to a 25-basis-point rate hike in December and a 15% chance of a larger 50-basis-point increase.

More importantly, the odds of another 25-basis-point increase in January have surged to 60%, compared with just 19% before Tuesday's repricing, reinforcing the US Dollar's appeal.

Meanwhile, the Japanese Yen (JPY) struggles despite growing expectations that the Bank of Japan (BoJ) could raise interest rates again in December. The central bank's October Summary of Opinions revealed increasing support for further monetary tightening, although policymakers remain divided over the appropriate pace.

The widening monetary policy divergence continues to favor the US Dollar, while USD/JPY's advance toward the psychologically important 160.00 threshold raises the possibility of intervention by Japanese authorities.

Yen slides back toward 160 as strong Dollar keeps BoJ intervention risk in focus

Analysts at MUFG note that the Yen “weakened sharply yesterday in response to the US inflation data” and that “USD/JPY has returned closer to the 160-level, above which intervention becomes a much greater prospect.” Strategists at ING similarly point to a “broadly strong dollar,” but they “increasingly think investors will be looking to acquire cheap yen should USD/JPY push above 160 again.” ING adds that “all of the above can feed into the Bank of Japan's view that inflation is now stable at 2.00% and its accommodative monetary policy can be reined in,” reinforcing the sense that policy dynamics may gradually shift in favour of a stronger Yen over the medium term, even as spot hovers near intervention-sensitive levels for now.

USD/JPY technical analysis

In the four-hour chart, USD/JPY trades at 159.68, retaining a bullish near-term bias as price holds comfortably above the 100-period and 200-period simple moving averages (SMAs) clustered around 157.90. The pair is also trading above nearby horizontal support at 159.00, while the Relative Strength Index (RSI) has pushed into overbought territory near 72, hinting at strong but potentially stretched upside momentum.

On the topside, immediate resistance emerges at 159.80 ahead of the more significant barrier at 160.40, where buyers could begin to take profit. On the downside, initial support is seen at 159.00, with the 200-period SMA at 157.94 and the 100-period SMA at 157.91 reinforcing a broader demand zone above the horizontal floor at 157.50.

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

Rabobank’s FX Strategy team argues that reduced fears of political interference at the Federal Reserve (Fed) and evidence of renewed safe-haven demand support the US Dollar (USD). The bank notes that concerns over the US budget deficit and treasury market stresses could weigh on the Dollar over the medium term, but concludes that last year’s Dollar debasement fears were exaggerated.

Fed credibility and safe-haven dynamics

"Diminished fears about political interference on the Fed is a supportive factor for the USD. In addition, at the start of the Gulf war, strong demand for the USD undermined last year’s claims that the USD’s had lost at least part of its safe haven value."

"Reduced concerns over the credibility of the greenback should allow it more opportunity to benefit from the US’s robust economic growth performance."

"There is still a risk that concerns related to the US’s unwieldly budget deficit could weigh on the USD over the medium-term."

"However, for decades the US has benefitted from the ‘exorbitant privilege’ of being able to fund its debt at relatively low yields, due to strong demand for its debt."

"There are signs that this ‘privilege’ has slipped. These manifest in changing yield spreads vs. other bond markets and signs of stress in the treasury market."

"Either way, last year’s dollar debasement fears appear exaggerated."

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

• EUR/USD falls for a second straight day as the US Dollar strengthens across the board.
• Hotter-than-expected US inflation and hawkish Fed remarks fuel bets on further rate hikes.
• Uncertainty over French politics and public finances remains a drag on the Euro.

EUR/USD extends losses for the second straight day, slipping to a two-week low during Wednesday's American trading hours. The Euro (EUR) comes under pressure as the US Dollar (USD) strengthens across the board amid growing expectations of a more aggressive Federal Reserve (Fed) interest rate-hike path.

At the time of writing, the pair trades around 1.1116, down 0.42% on the day. Meanwhile, the US Dollar Index (DXY), which tracks the Greenback against a basket of six major currencies, trades around 102.70, approaching the year-to-date high of 102.94 reached in October.

Markets are now fully pricing in a Fed rate hike in December, with an 88% chance of a 25-basis-point (bps) increase and an 11% chance of a larger 50-basis-point move, according to the CME FedWatch Tool. Traders also expect further tightening next year, with three additional quarter-point increases priced in by mid-2027.

The shift in rate expectations follows hotter-than-expected US consumer inflation data released on Tuesday, along with calls from Fed officials for further monetary tightening. 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, rose 0.3%, matching September’s pace and beating the 0.2% forecast.

Waller comments revive talk of 50bp Fed move and tilt risks toward the Dollar

Analysts at MUFG note that the latest repricing in rates has been driven less by the inflation data itself and more by the policy backdrop, with “the market rethink … to consider the prospect of a 50bp hike.” They stress that “this is only now being considered because of Waller’s comments before the CPI report rather than the CPI report itself,” after Fed Governor Waller suggested that “a stronger CPI print may warrant a 50bp hike.”

MUFG still sees such an outcome “more a risk than a core view”; they warn it would “alter the current balanced expectations in the markets across key central banks and shift rate hike expectations much more in favour of the dollar.” In turn, they argue this would “likely prompt a further lurch lower in EUR/USD and bring levels below the 1.1000-level into play.”

Across the Atlantic, persistent political and fiscal challenges in France, along with uncertainty over the possibility of an early departure by European Central Bank (ECB) President Christine Lagarde, add to the pressure on the Euro, even as the ECB maintains a hawkish policy stance. Traders anticipate another rate hike in December, which would mark the central bank's third increase this year, while also pricing in further increases in 2027.

Deutsche Bank economists Sanjay Raja and Maui Brennan expect UK inflation to move higher in October, driven by energy, tobacco and modest food and services gains. They forecast headline CPI at 3.80% year-on-year, with Core CPI and Services CPI also rising. Looking ahead, they see headline CPI pushing closer to 4.25% early next year, with price pressures remaining sticky.

Deutsche Bank flags renewed inflation pressures

"After broadly matching expectations in September, we expect UK inflation to rise further in October."

"First, energy prices are set to push even higher as we enter the final quarter of the year, with the Ofgem Price Cap up, heating oil prices up, and petrol and diesel prices up too. Second, tobacco duty will also be a prominent feature of the October inflation report, with higher duties on vapes and tobacco kicking in."

"We expect headline CPI to have risen to 3.80% y-o-y (Sep-26: 3.48%). Core CPI, we think, will have jumped by 2.87% y-o-y (Sep-26: 2.78%). Services CPI, we project, will have edged up to 3.87% y-o-y (Sep-26: 3.72%)."

"We continue to see headline CPI pushing closer to 4.25% y-o-y at the start of next year."

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

Societe Generale’s Kit Juckes argues that despite potential future US fiscal tightening and greater AI regulation, current data show a resilient US economy. Core CPI has risen steadily, with headline CPI up 1% over two months, alongside strong payrolls, retail sales and GDP.

Resilient data back US currency

"It is possible, though by no means certain, that US fiscal policy will be tightened as the President and Congress struggle to reach agreement, and it is widely assumed that the AI industry will face greater Congressional scrutiny."

"Over the past two months, core CPI has risen by 0.3% month-on-month in each release, while headline CPI has increased by 1% over the same period."

"A large upside surprise in payroll growth is probably more noise than substance, but we have also seen stronger-than-expected retail sales and GDP data."

"The bottom line is that there may be storm clouds gathering beyond the horizon, but for now the US economy continues to outperform most others."

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

• USD/CAD rallies nearly 2% in less than one week and hits fresh four-week highs at 1.4230 so far.
• Hotter-than-expected US inflation and a solid labour market have cemented hopes of at least a quarter-point rate hike at the next Fed meeting. 
• The diverging employment data between the US and Canada released on Friday is likely to keep the pair above 1.4000, according to TD Securities' experts.

The Canadian Dollar (CAD) has resumed its downtrend, with the US Dollar (USD) rallying across the board on Wednesday as investors ramp up hopes of Federal Reserve (Fed) tightening in December. The USD/CAD pair trades at fresh four-week highs at 1.4230 at the US session opening, after rallying nearly 2% in less than a week.

Speculative investors have boosted the Greenback since the US Bureau of Labour Statistics (BLS) revealed that consumer inflation grew beyond expectations in October. These figures, coupled with the bright Nonfarm Payrolls (NFP) report released on Friday, have boosted expectations that the Fed will hike rates by at least a quarter-point at its December meeting.

Fed officials support bets of at least a quarter-point hike in December

These hopes were supported by Fed officials late Tuesday, as the President of the Philadelphia Fed, Anna Paulson, hinted at “further gradual tightening” ahead to bring inflation to target. The President of the Dallas Fed, Lorie Logan, highlighted a similar stance, affirming that “the Fed needs at least two more quarter-percentage-point  increases.”

Before the US Consumer Price Index (CPI) release, Fed Governor Christopher Waller had stated that he would back a 25-basis-point hike if inflation came at 0.3% or higher –it came out 0.4% up, finally–, adding that “I believe a 50-basis-point hike in the policy rate should be considered”. Futures markets ramped up bets of a jumbo rate hike in December to 12% from practically none last week, according to data by the CME’s FedWatch Tool.

In Canada, the scenario is quite different, as October's employment report, which was released simultaneously with the US NFP data, showed a net loss in employment and rising unemployment. Analysts at TD Securities argue that “diverging employment data releases will likely keep USDCAD supported above 1.40,” as a “rising unemployment rate amid falling wage growth rate in Canada also reduces the market pricing of a December BoC rate hike relative to the Fed.” In their view, this combination of softer Canadian labour dynamics and a comparatively more hawkish Fed should keep the Canadian Dollar under pressure for now.