Forex News

• EUR/USD declines to near 1.1138 as the US Dollar outperforms its peers.
• Traders raise hawkish Fed bets as the US core CPI continues to remain elevated.
• EUR/USD risks extending its decline toward 1.1000 if sellers breach the recent low at 1.1104.

The Euro (EUR) is down 0.2% to near 1.1138 against the US Dollar (USD) during the European trading session on Wednesday. The EUR/USD pair is under pressure as the US Dollar (USD) strengthens due to fears that the Federal Reserve (Fed) could follow an aggressive monetary tightening cycle to contain consistently accelerating inflationary pressures.

In the European trade, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, posts a fresh almost four-week high at 102.51.

According to the CME FedWatch tool, financial markets have started pricing in a 50 basis points (bps) interest rate hike in December, following the release of the hotter-than-projected United States (US) Consumer Price Index (CPI) data for October. However, the odds are nominal at around 13.5%.

Strategists at Deutsche Bank said in a note that the “monthly core CPI print for October was above consensus at +0.30% (vs. +0.2% expected).” Deutsche Bank added that “it was the third consecutive month with core CPI at +0.3%, and if you take those three months together, the annualised pace for core CPI is running at +3.75%.” According to the bank, “that’s the fastest pace on that measure since April 2024, so it made it increasingly difficult to dismiss this as a blip.”

The bank also underscores that “meanwhile, the headline CPI numbers were faster still, with monthly headline CPI at +0.35% (vs. +0.3% expected), with the 3-month annualised pace at +5.72%.”

Meanwhile, the regime change at the European Central Bank (ECB) is expected to keep the Euro highly volatile.

ECB succession focus as Klaas Knot signals readiness to act in future crises

Rabobank highlights that Dutch central banker Klaas Knot, a leading candidate to succeed ECB President Christine Lagarde, used a Financial Times interview to underscore the Governing Council’s crisis-fighting credentials, stressing that “If circumstances require it, we will not hesitate to take action.” Analysts note that Knot’s remarks were not about revisiting “50bps rate hikes due to geopolitically driven inflation,” but rather about the opposite scenario, in which Europe faces a future crisis “of a different nature.” In that context, Rabobank points out that Knot “would not rule out developing another, more tailored instrument,” raising the prospect of fresh policy tools should conditions deteriorate again.

EUR/USD Technical Analysis

In the daily chart, EUR/USD trades at 1.1138, extending a soft bearish tone as price holds beneath recent closes while remaining just under the 20-day exponential moving average (EMA) at 1.1200, which now acts as nearby hurdle.

The 14-day Relative Strength Index (RSI) sits around 41, below the neutral 50 line, hinting that downside pressure still prevails even as oversold conditions seen earlier in the month have eased.

On the downside, the recent low of 1.1104 is the immediate support; a break below that level would expose the pair to 1.1000. On the upside, a recovery back toward the 20-day EMA support zone near 1.1200 would be the first sign of stabilization, and sustained trading above that level would be needed to ease the current bearish bias and open the door to a broader corrective bounce.

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

(This story was corrected on November 11 at 12:41 GMT to amend the third bullet point, which incorrectly stated that ECB policymaker Klaas Knot was set to replace President Christine Lagarde. Knot is one of the leading candidates to succeed her, but no appointment has been confirmed.)

Kit Juckes at Societe Generale highlights that rising global bond yields are pressuring leveraged housing markets such as Australia. Recent NAB business confidence and home loans data were notably weak. While AUD rates are still preferred over USD rates, he judges that AUD/USD has room to fall given the Australian Dollar’s strong performance earlier in the year.

Rates trade favoured over currency

"The rise in bond yields, however, is feeding through to leveraged housing markets, and Australia is certainly one of them."

"Yesterday’s NAB business confidence indicator took a sharp turn lower, and this morning’s home loans data were at least as disappointing."

"In the current market, I suspect that may still be a better trade than shorting AUD/USD, although the latter has room to fall given how well the Australian dollar has performed overall this year."

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

ING’s Chris Turner reports improving Japanese manufacturing sentiment, supported by semiconductor and data centre demand, strong corporate profits and firm wages. This backdrop could reinforce Bank of Japan (BoJ) confidence that inflation is stable near 2%.

Stronger Japan data versus Dollar momentum

"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."

"The broadly strong dollar means that USD/JPY could easily push through resistance at 159, but we increasingly think investors will be looking to acquire cheap yen should USD/JPY push above 160 again."

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

Deutsche Bank analysts report that the strong US CPI data and hawkish Fed commentary sparked a selloff in US Treasuries and pressured US equities. The S&P 500 slipped as investors priced faster hikes, with Tech and AI-linked names underperforming initially. However, a revenue beat and upgraded guidance from CoreWeave later supported futures, pointing to some recovery in the S&P 500.

Rates shock hits US stocks

"In fact, the 2yr Treasury yield (+17.6bps) saw its biggest daily jump since April 2025, surging to 4.74%, and markets even priced a modest chance of a 50bp Fed hike in December."

"So it was a very rough day for rates, and that in turn put renewed pressure on equities, with the S&P 500 (-0.38%) pulling back as investors priced in faster hikes."

"With markets pricing in a more hawkish Fed, that also drove a fresh selloff in US equities, though this did ease a bit as the session went on."

"Tech stocks underperformed, with a -5.47% drop in Nvidia leading the Nasdaq (-0.74%) and the Mag-7 (-0.83%) to larger declines than the S&P 500 (-0.38%)."

"After the close, we then heard from CoreWeave, which delivered a Q3 revenue beat ($3.66bn vs $3.56bn est.) and upgraded its full-year revenue guidance ($13.0-13.3bn vs $12.9bn est.)."

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

Brown Brothers Harriman’s (BBH) Elias Haddad notes that a hotter-than-expected US October CPI report boosted the Dollar, triggered a sell-off in Treasuries led by the short end, and weighed on US stocks.

Hot CPI shifts Fed expectations

"Yesterday’s hot US October CPI jolted markets. USD rallied across the board, Treasuries sold-off led by the short-end, and US stocks fell."

"The US inflation surprise shifted the FOMC December rate debate from whether to hold or hike 25bps to a choice between a 25bps or 50bps hike. Indeed, Fed funds futures moved to price-in as much as 15% odds of a 50bps increase on December 9. That hawkish shift bodes well for USD."

"The monthly rise in US CPI was a touch higher than expected and inflation momentum accelerated. Headline CPI rose 0.4% m/m (consensus: 0.3%) vs. 0.6% in September, and core CPI printed at 0.3% m/m for a third straight month (consensus: 0.2%). "

"Meanwhile, three-month annualized inflation picked up, signaling price pressures are strengthening. Also, inflation measures which filter out extreme price swings (trimmed, sticky, and median) quickened further above 2%."

"Post-US CPI comments from Fed officials reinforced the case for additional policy tightening:"

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

DBS Group Research, led by FX & Credit Strategist Chang Wei Liang, examines China’s evolving holdings of US securities over the past decade. The study looks for evidence of de-dollarisation, highlighting substantial Chinese net outflows from US equities and bonds and assessing how geopolitical tensions and sanctions risk are influencing China’s portfolio allocation decisions.

Examining China’s US securities holdings

"Given this backdrop, how have foreign holdings of USD assets changed over time, and is there any evidence of a “de-dollarisation” in financial assets?"

"Given the size and importance of China, we examine the trend in Chinese holdings of US securities over the last ten years."

"Chinese net outflows from US equities and bonds over the last decade have been substantial."

"But China’s de-dollarisation is not reflective of any broader trends across other countries."

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

ING’s Chris Turner notes the Dollar is trading near this year’s highs after another hot US inflation print and hawkish comments from Fed member Chris Waller. ING argues that bearish yield curve flattening typically supports the Dollar versus procyclical currencies.

Fed hawkishness underpins broad dollar strength

"The Fed's Chris Waller tossed a hawkish grenade into money markets early yesterday with his threat to vote for a 50bp rate hike at the 9 December FOMC meeting. He conditioned this on the October CPI data coming in hot for the third month in a row, which it subsequently did."

"What does this mean for FX? Bearish flattening of the US yield curve as the Fed takes rates into restrictive territory is normally good for the dollar against activity currencies."

"Given what could be an accelerating US labour market, core inflation well above target and a Fed ready to pull the trigger again, we expect the dollar to stay strong and explore the top end of trading ranges over the coming weeks."

"But Friday's October PPI data could deliver the latest instalment of hot price data and keep the dollar bid."

"DXY should remain near recent highs and could be retesting big resistance at 102.85/103.00 sooner rather than later."

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

• USD/CHF appreciates more than 1% in less than two days and hits fresh two-week highs at 0.8286 so far.
• The USD appreciates across the board, as investors ramp up bets on further Fed tightening in December.
• US Dollar bulls are likely to meet resistance in the area between 0.8300 and 0.8315.

The US Dollar (USD) rallies Wednesday, fuelled by higher bets of a Federal Reserve (Fed) rate hike in December, with the Swiss Franc (CHF) crushed by higher appetite for risk and an unfavourable monetary policy divergence. The USD/CHF has jumped more than 1% since the release of US inflation data to reach two-week highs at 0.8286 so far.

The Greenback is outperforming its peers on Tuesday, as the hotter-than-expected US Consumer Price Index (CPI) figures released on Tuesday cemented hopes of further Federal Reserve tightening in December.

These views have been validated by Fed officials earlier on Wednesday. The President of the Philadelphia Fed, Anna Paulson, called for a “further gradual tightening” to bring inflation to target, and somewhat later, Dallas Fed President Lorie Logan said that “it is clear that the Fed needs at least two more quarter-percentage-point  increases.”

The CME’s FedWatch Tool shows that futures markets are practically discounting a rate hike in December, with a 12% chance of a 50 basis points hike priced in. The Swiss National Bank (SNB), on the contrary, is not expected to raise its benchmark interest rate from the current 0% level anytime soon. This, in times of risk-on markets, poses a heavy burden on the Swissie.

Technical Analysis: Bulls might find resistance around 0.8300

USD/CHF trades at 0.8283, retaining a constructive near-term bias after rallying nearly 2% from last week's lows. Four-hour charts show strong bullish momentum, with the Relative Strength Index (14) nearing overbought territory and the Moving Average Convergence Divergence (MACD) histogram showing widening green bars.

Bulls, however, are likely to face significant resistance in the area between 0.8295, where the October 29 low meets the 61.8% Fibonacci retracement of the October-November correction, and the October 28 high, at 0.8313. Above here, the next target is the October 15 high in the 0.8350 area ahead of the long-term high, at 0.8395, hit in mid-October.

On the downside, the session low at 0.8248 is likely to test bearish attempts ahead of last week's range top, at the 0.8225 area, and Monday and Tuesday's lows, at 0.8174.

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

Derek Halpenny at MUFG highlights that USD/JPY has moved back toward 160 after US CPI, keeping intervention risks elevated. At the same time, JGBs have sold off but sentiment is improving, with stronger household demand and potential tax incentives.

Household JGB demand supports Yen outlook

"The yen weakened sharply yesterday in response to the US inflation data and USD/JPY has returned closer to the 160-level, above which intervention becomes a much greater prospect."

"There continue to be signs that confidence in the JGB market has improved, no doubt helped by the more active BoJ and the general consensus that within one or two hikes, the BoJ would be at the neutral policy rate."

"There is also growing speculation that the government will soon make changes to incentivise JGB buying by including individual JGB holdings in tax-free NISA accounts and/or removing these holdings from inheritance tax."

"Early signs of a shift in flows perhaps, and the more examples of this we start to see the more compelling the case will become of a more sustained turnaround in the multi-year trend of yen weakness. With intervention likely halting the prospects to the upside, and confidence in the BoJ improving, the risks certainly look more skewed to yen strength over the medium term."

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

Silver prices (XAG/USD) rose on Wednesday, according to FXStreet data. Silver trades at $52.92 per troy ounce, up 2.73% from the $51.52 it cost on Tuesday.

Silver prices have decreased by 25.55% since the beginning of the year.

The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, stood at 76.52 on Wednesday, down from 78.25 on Tuesday.

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