Forex News
- USD/JPY holds onto previous day’s gains near 159.00 as the US Dollar outperforms.
- The expectations of a bigger Fed interest rate hike in December have also come into picture.
- Investors await Japan’s PPI data for October scheduled for Thursday.
The Japanese Yen (JPY) trades weakly against the US Dollar (USD) on Wednesday, with the USD/JPY pair hovering near its almost seven-week high of around 159.00. The pair reflects strength as the US Dollar outperforms due to fears that the Federal Reserve (Fed) could deliver a bigger interest rate hike in the December meeting.
As of writing, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades 0.1% higher to near 102.32.
Financial markets have started pricing in a Fed 50 basis points (bps) interest rate hike in the December meeting as United States (US) inflationary pressures grew at a faster pace in October.
US inflation surprise deepens Fed policy dilemma
Economists at Rabobank note that “yesterday’s US CPI print came in hotter than expected at 0.4% m-o-m headline vs. a consensus of 0.3% and 0.3% core vs. a 0.2% market view,” underscoring a renewed setback in the disinflation narrative.
Rabobank highlights that, in the words of the “usually dovish Fed voter Goolsbee, ‘it’s another distressing report, borderline disturbing. We’ve been hoping to get progress.’” Instead of further easing, Rabobank points to “an acceleration in grocery and food inflation, persistent housing/shelter price pressure, and a delayed pass-through from earlier energy shocks feeding into medical care, household furnishings, and other daily expenses,” all of which reinforce concerns that underlying price pressures remain stubbornly entrenched.
On Tokyo front, investors await the Producer Price Index (PPI) data for October, which is scheduled for Thursday. Japan’s inflation at the producer level is estimated to have grown 0.3% Month-on-Month (MoM) after declining at a similar pace in September.
USD/JPY Technical Analysis
In the daily chart, USD/JPY trades at 158.88, close to the high of almost seven-week long consolidation range. The pair holds a bullish near-term bias as spot remains above the 20-day Exponential Moving Average (EMA) at 158.10. The pair is advancing away from that dynamic support, and the Relative Strength Index (RSI) at 57.38 rises in positive territory, which suggests buyers retain control without the market yet appearing overstretched.
On the downside, initial support is seen at the 20-day EMA at 158.10, where a daily close back below would hint at easing upside pressure and a deeper correction towards the lower-end of the consolidation range near 156.00. Looking up, the pair would enter a fresh upside leg if it decisively breaks above 159.00. Key resistance levels would be 160.00 and the September high at 160.39.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
(This story was corrected at 07:35 GMT on Wednesday to say in the first bullet that USD/JPY holds onto previous day’s gains, and not losses)
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.
- EUR/USD clings to losses near 1.1166 as the US Dollar strengthens.
- Hot US CPI data for October has made a Fed interest rate hike in December almost certain.
- Financial markets start debating over the size of Fed’s rate hike next month.
The Euro (EUR) holds onto Tuesday’s losses at around 1.1166 against the US Dollar (USD) at the start of the European trading session on Wednesday.
The EUR/USD pair is under pressure as the US Dollar has strengthened due to fears of Federal Reserve’s (Fed) supersized interest rate hike in the December policy meeting, emerging from hot United States (US) Consumer Price Index (CPI) data for October, which was released on Tuesday.
As of writing, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades close to its fresh 12-day high of 102.41 posted on Tuesday.
Fed December hike seen as sealed as debate shifts to size of move
According to TD Securities, the “strong upside surprise in the US CPI makes a December hike all but certain,” with the bank reiterating that “today's data certainly seals a Dec rate hike by the Fed.” Strategists note that “after Waller's speech, the debate has now shifted to whether the FOMC will go 25 or 50bps,” as Governor Waller’s pre-CPI remarks have sharpened the focus on the need for a potential “catch-up” move. TD Securities writes that the discussion will now center on whether the Fed should implement a “catch-up 50bps rate hike in December, or whether to maintain course with a 25bps rate increase and provide strong guidance toward a potential January follow-through.” For now, they emphasize that “we still favor a 25bp hike with a rising risk of another hike in January.”
EUR/USD Technical Analysis
In the daily chart, EUR/USD trades at 1.1167, maintaining a bearish near-term tone as spot holds beneath the 20-day Exponential Moving Average (EMA) at 1.1202. The pair remains pressured while it fails to reclaim this short-term trend gauge, although the Relative Strength Index (RSI) at 43 stays below the midline, hinting at only modest negative momentum rather than outright oversold conditions.
On the topside, initial resistance is clearly defined by the 20-day EMA at 1.1202, and a daily close above this barrier would be needed to ease immediate downside pressure and open room for a more meaningful rebound. Looking down, the 17-month low at 1.1104 is the key support level; a break below the same would expose the pair to the psychological level of 1.1000.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Waller flags risk of larger december hike, lifting Dollar bulls
Fed’s Waller delivered a distinctly more hawkish tone, with a 9/10 FXS Speechtracker score standing well above the 7.3/10 historical average and underscoring a strong bias toward further tightening. The explicit openness to a half-point rate hike in December if core CPI prints around 0.3% or higher, alongside support for at least a quarter-point move even on better data, signals a low bar for additional hikes and a clear intent to push real rates higher as policy has “not been nearly as restrictive” as previously thought. Emphasis on broad-based price pressures, persistent producer and energy cost risks, and still-solid labor conditions reinforces upside risks for US yields and supports the Dollar on a relative policy divergence narrative.
The FXS Fed Sentiment Index rose by 3.17 points to 145.50, confirming a decisive shift deeper into hawkish territory consistent with the elevated FXS Speechtracker score. With the index far above the neutral 100 mark, markets are likely to price a higher probability of a December hike and potentially a larger move, favoring the Dollar against lower-yielding peers.
- USD/IDR rises as the Indonesian Rupiah struggles amid market caution following domestic political instability.
- The US Dollar gained as stronger CPI data increased Fed rate hike bets.
- CME FedWatch Tool suggests nearly a 91% probability of a rate hike in December.
USD/IDR gains ground after registering modest losses the previous day, trading around 18,140 during Asian hours on Wednesday. The currency pair advanced as the Indonesian Rupiah (IDR) came under pressure from heightened market caution following political instability in the country.
The uncertainty mounted after Vice President Gibran Rakabuming Raka met with President Prabowo Subianto and expressed his intention to resign. The offer followed two consecutive court rulings regarding Gibran's foreign educational credentials, including a Supreme Court decision invalidating his high school equivalency certificate, which raised questions about his eligibility for office and triggered calls for parliamentary impeachment proceedings.
The USD/IDR pair rises as the US Dollar (USD) receives support from rising Federal Reserve (Fed) rate hike odds in December after the release of the latest US inflation data. According to the CME FedWatch Tool, markets are now pricing in approximately a 91% probability of a rate increase next month.
US Consumer Price Index rose 0.4% month-over-month in October, beating the 0.3% forecast even as it slowed from September's 0.6% gain. Meanwhile, Core CPI, which excludes food and energy prices, rose 0.3%, matching September's pace and topping the 0.2% estimate. The Bureau of Labor Statistics omitted annual figures for October due to last year's government shutdown.
USD stays supported as markets lean toward a more hawkish Fed
According to TD Securities, the Dollar is set to remain underpinned in the coming sessions, with the bank arguing that “the USD will likely stay bid in the near-term as the market assesses odds of a more hawkish Fed.” This reflects their view that recent data have pushed investors to reassess the policy path, keeping the US currency supported while those expectations are repriced.
Indonesian Rupiah FAQs
The Indonesian Rupiah (IDR) is sensitive to a dynamic mix of global market conditions, domestic economic fundamentals, commodity price shifts, and proactive central bank interventions. As an emerging market currency, the Rupiah’s trajectory depends heavily on both domestic resilience and international economic momentum.
Bank Indonesia (BI) plays a central role in stabilizing the Rupiah through strategic monetary policy and direct market operations. By adjusting benchmark interest rates, the central bank manages yield differentials against major global central banks like the US Federal Reserve to attract and retain foreign portfolio investments. BI also utilizes a "triple-intervention" framework—operating across spot, derivative (DNDF), and government bond markets- to smooth out currency volatility, complemented by monetary instruments like Sekuritas Rupiah Bank Indonesia (SRBI) to bolster capital inflows.
From a broader macroeconomic perspective, domestic inflation rates, trade performance, and overall fiscal health dictate the IDR's underlying strength. Indonesia's trade and current account balances are closely tied to these fundamentals, while broader global factors, such as risk-on or risk-off sentiment among international investors and global liquidity trends, directly affect exchange rate movements.
As a major exporter of commodities such as palm oil, coal, nickel, and natural gas, Indonesia benefits from higher global commodity prices, which generate trade surpluses, increase foreign currency inflows, and strengthen the Rupiah. However, because Indonesia is also a net importer of crude oil, elevated global oil prices increase the foreign exchange burden, widening the current account deficit and weighing on the currency's value.
- GBP/USD attracts some dip-buyers, though the upside remains capped amid a bullish USD.
- The hot US CPI and odds for a jumbo Fed rate hike in December lend support to the buck.
- The BoE’s hawkish tilt acts as a tailwind for the GBP, warranting caution for bearish traders.
The GBP/USD pair struggles to build on modest Asian session uptick beyond mid-1.3300s, though it holds above a one-and-a-half-week trough, touched the previous day.
The US Dollar (USD) preserves the previous day's hot US consumer inflation figures-inspired gains amid odds for a jumbo 50-basis-point (bps) rate hike by the US Federal Reserve (Fed) in December. That said, hopes for US-Iran diplomacy cap the upside for the safe-haven Greenback. Furthermore, the Bank of England's (BoE) hawkish outlook acts as a tailwind for the GBP/USD pair.
From a technical perspective, spot prices defended the 200-period Simple Moving Average (SMA) on the 4-hour chart and hold a mildly positive near-term tone above several Fibonacci retracement levels. The setup suggests underlying demand after the recent pullback from the 1.3506 swing high. Momentum indicators, however, remain subdued and warrant caution for GBP/USD bulls.
In fact, the Relative Strength Index is near 38, and the Moving Average Convergence Divergence (MACD) is fractionally negative and flattening, hinting that buyers lack strong conviction and that upside progress could be gradual. Meanwhile, initial resistance is aligned at the 38.2% Fibo. at 1.3365, ahead of the 23.6% retracement at 1.3419, while the 1.3506 swing high remains the key bullish target.
On the downside, immediate support emerges at the 50.0% retracement at 1.3322, followed by the 200-period SMA at 1.3314. A convincing break below these would expose deeper Fibonacci supports at 1.3279 and 1.3217, with 1.3138 acting as a more distant structural floor.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
GBP/USD 4-hour chart
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.
Gold prices rose in India on Wednesday, according to data compiled by FXStreet.
The price for Gold stood at 12,198.48 Indian Rupees (INR) per gram, up compared with the INR 12,158.77 it cost on Tuesday.
The price for Gold increased to INR 142,280.30 per tola from INR 141,817.50 per tola a day earlier.
Unit measure | Gold Price in INR |
|---|---|
1 Gram | 12,198.48 |
10 Grams | 121,987.20 |
Tola | 142,280.30 |
Troy Ounce | 379,415.30 |
FXStreet calculates Gold prices in India by adapting international prices (USD/INR) to the local currency and measurement units. Prices are updated daily based on the market rates taken at the time of publication. Prices are just for reference and local rates could diverge slightly.
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
(An automation tool was used in creating this post.)
TD Securities’ macro research team argues that the upside US CPI surprise and firm Core PCE projections make a December Fed rate hike virtually certain. They still favor a 25bp move but see rising odds of an additional hike in early 2027 and consider a 50bp “catch-up” move in December as a clear possibility, pending PPI data and further Fedspeak.
Debate shifts to 25bp or 50bp move
"The strong upside surprise in today's CPI makes a December hike all but certain, in our view."
"After Waller's speech this morning, the debate has now shifted to whether the FOMC will go 25 or 50bps."
"We still favor a 25bp hike with a rising risk of another hike in January."
"We believe that today's data certainly seals a Dec rate hike by the Fed."
"However, following Governor Waller's remarks pre-CPI, the discussion will now center around the need for implementing a "catch-up" 50bps rate hike in December, or whether to maintain course with a 25bps rate increase and provide strong guidance toward a potential January follow-through."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
Rabobank’s RaboResearch Global Economics & Markets team highlights that hotter-than-expected US CPI has pushed US 2-year and 10-year yields sharply higher, reviving talk of a possible 50 bps Federal Reserve hike. The report links the move to renewed inflation pressures in groceries, housing and services, and notes that this comes just after investors had rushed back into Treasuries.
Hot CPI revives aggressive Fed pricing
"Yesterday’s US CPI print came in hotter than expected at 0.4% m-o-m headline vs. a consensus of 0.3% and 0.3% core vs. a 0.2% market view. To put it in the words of the usually dovish Fed voter Goolsbee, “It’s another distressing report, borderline disturbing. We’ve been hoping to get progress.” Instead, we saw an acceleration in grocery and food inflation, persistent housing/shelter price pressure, and a delayed pass-through from earlier energy shocks feeding into medical care, household furnishings, and other daily expenses."
"The reaction in US 2-year yields was dramatic - they jumped 19bps while 10-year yields rose 14bps to briefly go back above 5% again; today, we have a Bloomberg story talking about the possibility ofa 50bps hikefrom the Fed!"
"Of course, that US yield spike came just after everyone rushed back into Treasuries after the AI and bullish oil trades hit an air pocket with last week’s US election on the view that the former is likely to be slowed down and that we are closer to peace than war in the Middle East on the back of the recent Democrat Blue Tsunami.Now imagine if either of those were not the case."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
Societe Generale’s Jan Groen analyzes October US inflation data, noting that October core CPI rose 0.3% month-on-month, surprising to the upside. He estimates PCE housing inflation at 0.28% and core-goods inflation around 0.25%. Depending on super-core PCE dynamics, core PCE inflation is projected in a 0.27%-0.33% range, with the October PPI release expected to refine these estimates.
Core PCE seen holding relatively firm
"October core CPI surprised to the upside at 0.3% m/m."
"Direct estimates suggest PCE housing inflation barely eased to 0.28% m/m, while PCE core-goods inflation likely was firm at around 0.25% m/m."
"Depending on whether monthly super-core PCE inflation reverts toward its recent six-month average (0.28% m/m) or remains near the August-September pace (0.37% m/m), core PCE inflation would likely fall in a 0.27%-0.33% m/m range, with a central estimate around 0.30% m/m."
"The October PPI release will provide more clarity with regards to super-core PCE."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- NZD/USD may struggle as falling oil prices ease inflationary pressures, curbing RBNZ rate hike expectations.
- The US Dollar Index could further appreciate on rising Fed rate hike bets.
- CME FedWatch Tool suggests nearly a 91% probability of a rate hike in December.
NZD/USD inches higher after posting over 0.5% losses in the previous day, trading around 0.5600 during Asian hours on Wednesday. However, the upside for the currency pair could remain capped as the New Zealand Dollar (NZD) faces potential headwinds. A potential decline in oil prices is helping to curb inflationary pressures, which in turn reduces market expectations for future interest rate hikes by the Reserve Bank of New Zealand (RBNZ).
Meanwhile, market participants are keeping a close eye on ongoing coalition negotiations. Labor market leaders have highlighted National's Simeon Brown and Labour's Barbara Edmonds as the frontrunners for the Finance Minister role after incumbent Finance Minister Nicola Willis failed to retain her parliamentary seat.
The US Dollar (USD) may receive support against the New Zealand Dollar amid rising Federal Reserve (Fed) rate hike odds in December after the release of the latest US inflation data. According to the CME FedWatch Tool, markets are now pricing in approximately a 91% probability of a rate increase next month.
US Consumer Price Index rose 0.4% month-over-month in October, beating the 0.3% forecast even as it slowed from September's 0.6% gain. Meanwhile, Core CPI, which excludes food and energy prices, rose 0.3%, matching September's pace and topping the 0.2% estimate. The Bureau of Labor Statistics omitted annual figures for October due to last year's government shutdown.
Goolsbee flags ‘real inflation issue,’ lifting hawkish Fed tone and supporting the Dollar
Fed’s Goolsbee delivered a notably more hawkish tone, with an FXS Speechtracker score of 8/10, well above the 6.8/10 historical average, underscoring rising concern about persistent price pressures. The remark that the latest CPI was “borderline disturbing,” with services inflation “not coming down” and a “real inflation issue on our hands,” signals growing discomfort with sticky inflation and a lower tolerance for upside surprises. Emphasis that “everything is always on the table” and that the Federal Reserve “must get inflation down to target” reinforces the risk of renewed tightening or a longer-for-longer stance, a mix that is typically supportive for the Dollar and a headwind for risk-sensitive currencies.
The FXS Fed Sentiment Index rose by 1.69 points to 145.61, confirming a clear shift deeper into hawkish territory and aligning with the elevated FXS Speechtracker reading. With the index far above the neutral 100 mark, markets are likely to interpret Goolsbee’s comments as validating higher-for-longer rate expectations, which should underpin the Dollar while keeping pressure on the Euro, Yen, and other low-yielding currencies.
New Zealand Dollar FAQs
The New Zealand Dollar (NZD), also known as the Kiwi, is a well-known traded currency among investors. Its value is broadly determined by the health of the New Zealand economy and the country’s central bank policy. Still, there are some unique particularities that also can make NZD move. The performance of the Chinese economy tends to move the Kiwi because China is New Zealand’s biggest trading partner. Bad news for the Chinese economy likely means less New Zealand exports to the country, hitting the economy and thus its currency. Another factor moving NZD is dairy prices as the dairy industry is New Zealand’s main export. High dairy prices boost export income, contributing positively to the economy and thus to the NZD.
The Reserve Bank of New Zealand (RBNZ) aims to achieve and maintain an inflation rate between 1% and 3% over the medium term, with a focus to keep it near the 2% mid-point. To this end, the bank sets an appropriate level of interest rates. When inflation is too high, the RBNZ will increase interest rates to cool the economy, but the move will also make bond yields higher, increasing investors’ appeal to invest in the country and thus boosting NZD. On the contrary, lower interest rates tend to weaken NZD. The so-called rate differential, or how rates in New Zealand are or are expected to be compared to the ones set by the US Federal Reserve, can also play a key role in moving the NZD/USD pair.
Macroeconomic data releases in New Zealand are key to assess the state of the economy and can impact the New Zealand Dollar’s (NZD) valuation. A strong economy, based on high economic growth, low unemployment and high confidence is good for NZD. High economic growth attracts foreign investment and may encourage the Reserve Bank of New Zealand to increase interest rates, if this economic strength comes together with elevated inflation. Conversely, if economic data is weak, NZD is likely to depreciate.
The New Zealand Dollar (NZD) tends to strengthen during risk-on periods, or when investors perceive that broader market risks are low and are optimistic about growth. This tends to lead to a more favorable outlook for commodities and so-called ‘commodity currencies’ such as the Kiwi. Conversely, NZD tends to weaken at times of market turbulence or economic uncertainty as investors tend to sell higher-risk assets and flee to the more-stable safe havens.
- Silver regains positive traction following the previous day’s pullback from a one-week high.
- Hawkish Fed expectations favor USD bulls and might cap meaningful upside for XAU/USD.
- The mixed technical setup warrants some caution before positioning for further appreciation.
Silver (XAG/USD) attracts some dip-buyers during the Asian session on Wednesday, reversing a part of the previous day's retracement slide from the $53.70-$53.75 region, or a one-and-a-half-week top. The white metal currently trades near mid-$52.00s, up around 1.80% for the day, though the upside potential seems limited amid mixed cues.
Tuesday's hotter-than-expected US consumer inflation figures reaffirmed bets for further policy tightening by the Federal Reserve (Fed). Adding to this, comments from Fed Governor Christopher Waller prompted traders to price in the possibility of a jumbo 50-basis-point (bps) rate hike in December. The hawkish outlook might continue to act as a tailwind for the US Dollar (USD), which, in turn, should act as a headwind for USD-denominated commodities, including the XAG/USD.
From a technical perspective, the commodity keeps a capped tone beneath the 100-period Simple Moving Average (SMA) on the 4-hour chart, at $53.05, and all visible Fibonacci retracement levels of the $71.09-$48.61 decline. Meanwhile, the Relative Strength Index (RSI) at 52.62 sits just above the neutral line, and the Moving Average Convergence Divergence (MACD) remains slightly negative, suggesting that rebounds are vulnerable while the XAG/USD stays below the $53.00 hurdle.
A sustained strength beyond, however, could lift the white metal to the 23.6% Fibo. retracement at $53.92. More meaningful barriers are pegged at the 38.2% level at $57.20 and the 50% retracement at $59.85. On the downside, the next notable support is the cycle low at $48.61, where a break would likely open the door to a deeper corrective phase despite the currently neutral short-term momentum profile.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
XAG/USD 4-hour chart
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
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