Forex News

• Silver price plunges to near $52.20 as Fed’s Waller warns of bigger interest rate hike.
• The US Dollar draws strength from Fed Waller’s warning of aggressive policy tightening.
• Investors keenly await the US CPI data for October.

Silver price (XAG/USD) is severely down over 2% to near $52.20 during the European trading session. The white metal faces a sharp selling pressure as Federal Reserve (Fed) Governor Christopher Waller has warned of a bigger interest rate hike ahead of the United States (US) Consumer Price Index (CPI) data at 13:30 GMT.

During the European trade, Fed’s Waller said in a speech that further monetary policy tightening is needed and also not rule out the possibility of a larger interest rate hike, if inflationary pressures continue to advance.

“Half-point Fed rate hike may be needed in December, if October core CPI inflation comes in around 0.3% or higher,” Fed’s Waller said.

US inflation expected to cool ahead of key Fed meeting

Economists at Deutsche Bank highlight that, in contrast to September’s strong print, they now anticipate a clear moderation in price pressures. They note that “this time, our US economists expect inflation to have come down from its September pace, with both headline and core at +0.20% on the month,” underscoring expectations for a more subdued October CPI profile going into the next Fed meeting.

Theoretically, fears of aggressive Fed tightening diminish the appeal of non-yielding assets, such as Silver.

The warning of aggressive Fed’s monetary tightening by Governor Christopher Waller has resulted in some relief for the US Dollar (USD). Following Waller’s remarks, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, clawed back its early losses and turned marginally positive above 101.70.

Silver Technical Analysis

In the daily chart, XAG/USD trades at $52.36, maintaining a bearish near-term tone as it holds below the 20-day Exponential Moving Average (EMA) at $54.07. The short-term trend remains pressured while price stays capped under this dynamic barrier, and the Relative Strength Index (14) around 40 suggests weak but not oversold momentum, hinting that sellers still retain an advantage.

On the topside, the 20-day EMA at $54.07 is the first notable resistance, and a daily close above this level would be needed to ease immediate downside pressure and open the way for a corrective recovery. With no nearby technical supports highlighted by the current dataset, any further pullback from present levels would leave XAG/USD vulnerable to probing lower chart-based levels not captured here, keeping focus on whether buyers can reclaim the $54 area to stabilize the outlook.

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

ING’s Chris Turner expects the US Dollar (USD) to remain underpinned into early 2027 by strong US growth, inflation above 3% and a hawkish Federal Reserve. He notes that as headline inflation falls back towards the Fed’s 2% target, short-dated US rates should decline.

Fed stance underpins Dollar into 2027

"The dollar should stay supported by strong US growth, high inflation and a Fed threatening to tighten before weakening next spring as inflation falls."

"Our base call assumes that the Federal Reserve stays hawkish in the first quarter, as decent US growth and above-3% inflation keep money markets pricing in the threat of an extended tightening cycle."

"That turns in the second quarter, when energy-driven base effects drop out of headline inflation and a return to the Fed’s 2% inflation target sees short-dated US rates move meaningfully lower."

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

• Fed Governor Christopher Waller believes US monetary policy is not restrictive enough.
• A 0.3% monthly inflation reading in October could require more aggressive policy action.
• The Fed Governor sees higher interest rates as necessary to bring inflation down.

Federal Reserve (Fed) Governor Christopher Waller adopts a hawkish tone on Tuesday, arguing that interest rates need to rise to put downward pressure on inflation, according to Reuters.

Key takeaways

0.3% US Oct monthly CPI would suggest inflation moving away from target, need more aggressive policy action.

I don’t think we’ll see broad-based productivity gains from AI for a while.

Real rates have to rise to maintain level of restrictiveness in monetary policy.

Policy has been not nearly as restrictive as I thought.

We need to raise rates to put downward pressure on inflation.

Asked about sharp stock price moves, says not generally important for his view on rates.

Democrat control of congress will act as a check on presidential appointments to Fed.

Market reaction

The US Dollar (USD) rebounds following Waller's hawkish comments, reversing earlier losses, with the US Dollar Index (DXY) trading around 101.70, up 0.05% on Tuesday.

Waller flags risk of larger December hike as inflation worries intensify

Fed’s Waller delivered a notably more hawkish message, with a 9/10 FXS Speechtracker score standing well above the 7.3/10 historical average, underscoring a clear shift toward tighter policy bias. The explicit openness to a half-point FED rate hike in December if October core CPI prints around 0.3% or higher, alongside support for at least a quarter-point move even on better data, signals a strong reaction function to any sign that inflation is drifting away from target. Emphasis on broad-based price pressures, still-solid growth and labor conditions, and the view that policy has not been as restrictive as previously thought reinforces upside risks for the Dollar and front-end yields.

The FXS Fed Sentiment Index rose by 3.17 points to 145.50, keeping the gauge deeply in hawkish territory and aligning with the elevated FXS Speechtracker score. This combination points to a market narrative of renewed tightening resolve, with expectations shifting toward higher and potentially faster rate increases if incoming inflation data fail to show convincing progress.