EUR/USD is declining within its six-week consolidation range. Strong US inflation data and heightened expectations of further Fed tightening are weighing on the price, while the German inflation report failed to give the euro any meaningful support.
Possible technical scenarios:
As we can see on the daily chart, the technical picture remains unchanged for now. EUR/USD is still holding within a broad descending channel, sitting on its support line, the strength of which remains in question. A consolidation below the October 14 lows (1.1112) would create the technical prerequisites for a decline toward the 1.0938 level. Otherwise, the pair may recover toward the local levels of 1.1269 and 1.1324, marked with dotted lines.
Fundamental drivers of volatility:
Final data on Germany's Harmonized Index of Consumer Prices confirmed the preliminary estimate: prices fell 0.2% month-over-month in October, while annual inflation came in at 2.8%. In September, by comparison, the readings were up 0.6% and 3.3%, respectively. The slowdown in inflation points to easing price pressures and may limit expectations of further ECB tightening.
In the US, inflation came in above forecasts: consumer prices rose 0.4% in October versus the expected 0.3%. The core index also beat expectations, adding 0.3%. Rising food and housing costs were among the factors behind the acceleration in inflation. Annual figures were not published because of the US federal government shutdown in 2025.
The dollar received additional support from hawkish remarks by Fed officials. Philadelphia Fed President Anna Paulson spoke in favor of further gradual rate hikes, while Dallas Fed President Lorie Logan said that at least two additional 25-basis-point hikes were needed. Against this backdrop, markets have almost fully priced in a rate hike at the Fed's December meeting, while the probability of a larger 50-basis-point move is estimated at 12%.
Overall, the fundamental balance remains in the dollar's favor: persistent inflationary pressure in the US and the Fed's hawkish rhetoric are reinforcing rate-hike expectations, making the US currency more attractive. At the same time, falling inflation in Germany weakens the case for tighter ECB policy. As long as these factors persist, the risks for EUR/USD are skewed toward further pressure on the pair.
Intraday technical picture:
Given the current developments on the 4H EUR/USD chart, the pair is approaching the support of the 1.1112-1.1269 sideways range between the two dotted lines. If its lower boundary holds, a reversal to the upside and a recovery within the current range are plausible. If the 1.1112 level fails to hold, a medium-term decline toward 1.0938 is possible.
The GBP/USD recovery was cut short, with the pair falling back at the end of last week as the US dollar strengthened. High US inflation and hawkish remarks by Fed officials have heightened expectations of further interest rate hikes. Meanwhile, the Bank of England's more hawkish stance and lingering hopes for a diplomatic resolution of the conflict between the US and Iran are limiting the pound's downside potential.
Possible technical scenarios:
As evidenced by the daily GBP/USD chart, we can see that the pair failed to hold above the 1.3400 level marked with a dotted line and reversed to the downside. The price has room to move toward support at 1.3215. That said, should the fundamental backdrop shift in sterling's favor, the pair could resume its rise sooner. In that case, renewed attempts to consolidate above the 1.3400 level and extend the rise are likely.
Fundamental drivers of volatility:
The main factor supporting the dollar was the October US inflation data, which exceeded forecasts for the third consecutive month. Rising consumer prices have heightened expectations of more aggressive monetary tightening by the Fed. Markets are now fully pricing in a 25-basis-point rate hike in December and are also allowing for a sharper 50-basis-point move. Some major financial institutions have already revised their forecasts and expect additional rate hikes early next year. This makes the US currency more attractive and puts pressure on GBP/USD.
The dollar is drawing additional support from geopolitical tensions surrounding the conflict between the US and Iran. Ongoing attacks on tankers in the Strait of Hormuz are sustaining demand for safe-haven assets and keeping a geopolitical premium in the US currency. However, hopes for a diplomatic resolution of the conflict remain a factor that could limit further dollar strength. Successful negotiations could reduce demand for safe-haven assets and ease the pressure on the pound.
Sterling, in turn, is receiving some support from the Bank of England. Deputy Governor Clare Lombardelli said that further interest rate hikes remain likely given high energy costs and the resilience of the UK economy. This stance points to persistent inflation risks and the Bank of England's readiness to keep fighting rising prices. Expectations of tighter policy may support the pound and limit its decline against the dollar.
Thus, the short-term advantage remains with the US currency thanks to persistent US inflation and growing expectations of a Fed rate hike. However, the prospect of further policy tightening by the Bank of England provides the pound with fundamental support. Developments around the US and Iran will also matter: an easing of geopolitical tensions could weaken the dollar and set the stage for a GBP/USD recovery.
Intraday technical picture:
The 4H chart shows that GBP/USD chart, following the drop below the 1.3400 level, the pair's next downside target is support at 1.3276, marked with a dotted line.
USD/JPY is being supported by growing expectations of monetary tightening by the Fed amid persistent US inflation. In the meantime, investors' attention is shifting to Japanese inflation data, which could have an impact on expectations regarding the Bank of Japan's next steps.
Possible technical scenarios:
USD/JPY has reached the resistance of the 156.41-158.93 range and is testing its strength. A consolidation above 158.93 would allow the price to extend its climb toward the 160.41 level marked with a dotted line. Otherwise, a reversal to the downside and a medium-term return to support at 156.41 are plausible.
Fundamental drivers of volatility:
Accelerating inflationary pressure in the US remains the main factor behind the dollar's strength. The October Consumer Price Index rose 0.4% month-over-month against a forecast of 0.3%, while core CPI increased 0.3%, exceeding the expected 0.2%. This indicates that inflation remains persistent despite the Fed's earlier efforts to contain it. As a result, market participants have begun pricing in the possibility of a 50-basis-point US rate hike in December, which makes the dollar more attractive.
The US currency is drawing additional support from the hawkish rhetoric of Fed officials. The market is taking note of the concern voiced even by Austan Goolsbee, a relatively dovish Fed official, who called the latest inflation data alarming. Price pressures persist in the food and housing sectors, while the effects of the earlier rise in energy costs continue to feed through to the cost of medical services and household goods. This complicates the Fed's task and reduces the likelihood of a near-term shift to policy easing.
For the Japanese yen, an important reference point will be Thursday's release of the Producer Price Index (PPI) for October. An acceleration in producer price inflation could strengthen expectations of further tightening by the Bank of Japan and support the yen. If the data come in weaker than forecast, however, this could weaken the case for rate hikes and keep the Japanese currency under pressure.
Thus, the advantage remains with the dollar for now: steady growth in US consumer prices and the likelihood of a sharper Fed rate hike are supporting USD/JPY. The pair's further movement will depend on Japanese producer price inflation and the extent to which it affects expectations regarding the Bank of Japan's policy.
Intraday technical picture:
The 4H USD/JPY chart shows that we can see the pair attempting to consolidate above the 158.93 level. If it succeeds, there is a chance of a climb toward the 160 yen per dollar area.
USD/CAD is recovering while being influenced simultaneously by factors favoring both currencies. High inflation and the Fed's hawkish rhetoric are supporting the US dollar, while the recovery in oil prices may strengthen the Canadian dollar.
Possible technical scenarios:
On the daily chart, USD/CAD is rising steadily, having consolidated above the 1.4179 level. The nearest upside target is resistance at 1.4275. This is a strong level and the price will need a significant fundamental driver to overcome it.
Fundamental drivers of volatility:
US inflation data remain an argument in the dollar's favor. The Consumer Price Index rose 0.4% month-over-month in October against a forecast of 0.3%, although the pace of growth slowed compared with September's 0.6%. Core CPI increased 0.3%, exceeding the expected 0.2%. These figures point to persistent inflationary pressure and reduce the likelihood of near-term monetary easing by the Fed.
The US currency is drawing additional support from the hawkish rhetoric of Fed officials. Austan Goolsbee called the latest inflation data alarming, noting that price growth in the services sector is not slowing sufficiently and that inflation remains a pressing problem. He also highlighted the resilience of the labor market. Such remarks signal the Fed's readiness to keep rates high or to continue tightening policy if necessary. This supports the dollar and limits its downside prospects.
At the same time, USD/CAD gains are being held back by the recovery in oil prices, since Canada is a major commodity exporter and higher oil prices typically support the Canadian dollar. However, the outlook for the oil market remains uncertain: hopes for a diplomatic resolution of the conflict between the US and Iran could erode the geopolitical premium in oil prices. Statements by Donald Trump and Marco Rubio about the reduced need for further military action have strengthened expectations of de-escalation. This could limit the support CAD receives from the oil market.
Thus, high US inflation and hawkish signals from the Fed are creating the conditions for a stronger dollar and a rise in USD/CAD. However, the recovery in oil prices may support the Canadian currency and restrain the pair's upward movement. In the near term, developments around the US and Iran will remain an important factor, as they will affect both demand for the dollar as a safe-haven asset and the price of oil.
Intraday technical picture:
Judging by the look of things on the 4H USD/CAD chart, we can see that the pair is halfway to the resistance of the 1.4179-1.4275 range, with sufficient room left to reach its upper boundary.
Gold remains under pressure from strong US inflation data and expectations of further monetary tightening by the Fed. Despite attempts to recover after the sell-off, the prospect of higher interest rates is limiting investor interest in the precious metal.
Possible technical scenarios:
The gold price has corrected lower to the 4002.27 level following its recent rise. If this support holds, XAU/USD may continue its recovery toward the 4209.95 level. If fundamental pressure persists, however, the price may return back to the 3886.25-4002.27 range.
Fundamental drivers of volatility:
The main negative factor for gold remains accelerating US inflation, which is supporting the US currency. The October Consumer Price Index rose 0.4% month-over-month, exceeding the 0.3% forecast. Faster price growth is fueling concerns that inflationary pressure remains persistent and that the Fed will need to continue tightening monetary policy. As a result, the probability of a December rate hike has risen to 100% from 84% before the data release.
Gold is facing additional pressure from the hawkish rhetoric of Fed officials. Christopher Waller allowed for the possibility of a 50-basis-point rate hike in December, depending on certain core inflation readings. Anna Paulson also pointed to the need for further rate hikes, while Michelle Bowman stressed that fighting inflation remains the Fed's priority. These remarks reinforce expectations of a longer period of tight monetary policy.
The main problem for gold is that high interest rates make yield-bearing assets more attractive and raise the opportunity cost of holding the precious metal, which pays no interest. Therefore, even though gold retains its role as an inflation hedge, persistent inflationary pressure is currently working against prices, as it reinforces expectations of further Fed tightening.
Thus, the key factor for gold remains the monetary policy outlook of the US central bank. As long as inflation exceeds expectations and Fed officials maintain their hawkish rhetoric, the advantage remains with sellers. An improvement in market sentiment will require easing inflationary pressure and lower expectations of further rate hikes.
Intraday technical picture:
Given the unfolding situation on the 4H XAU/USD chart, we can see an attempt to pull back from the local resistance level of 4066.44, marked with a dotted line. In the short term, the price may drop to support at 4002.27, and the precious metal's further direction will depend on how well that level holds.
The price of Brent crude has remained under pressure for a second consecutive week, despite a local bounce on Wednesday after hitting two-month lows. The primary pressure on prices comes from hopes for a diplomatic resolution of the conflict between the US and Iran, which could reduce the geopolitical risk premium and ease concerns about supply disruptions through the Strait of Hormuz.
Possible technical scenarios:
On the daily chart, the Brent price has dropped below the 95.18 level and is halfway to the next target, which is support at 85.70. A further decline will depend on whether the price can break down through the intermediate level of 89.62 marked with a dotted line. The alternative scenario would be a bounce toward the 95.18 level.
Fundamental drivers of volatility:
On Tuesday, oil prices fell after US Secretary of State Marco Rubio said there was no need for large-scale military operations against Iran. President Donald Trump also reported positive progress in negotiations to end the conflict in the Middle East. These signals strengthened expectations of a possible de-escalation and became one of the main factors weighing on the oil market.
On Wednesday, prices partially recovered after an Iranian official said that Tehran would not allow enriched nuclear material to be removed from the country. This points to lingering disagreements between the parties: Washington insists on discussing the nuclear issue as part of the initial negotiations, while Iran's position casts doubt on the possibility of a quick agreement.
Oil is drawing additional support from ongoing attacks on vessels in the Strait of Hormuz: 37 such incidents were recorded in October, the highest monthly figure since the start of the war. Risks to shipping also persist due to the need to clear mines from the strait, high insurance costs, and shipowners' reluctance to put their vessels in danger. Houthi strikes on Saudi Arabia's oil infrastructure are further heightening tensions in the region.
Supply factors are also creating a mixed backdrop. According to API data, US crude inventories rose by 9 million barrels over the past week, which may limit the price recovery; official statistics should clarify the picture. At the same time, a drone attack caused a fire at the Russian port of Ust-Luga, while Ukrainian strikes, according to industry sources' estimates, have reduced Russian refining capacity by about 30% since late October.
Thus, Wednesday's local rise reflects persisting geopolitical risks, but overall sentiment remains cautious: hopes for a diplomatic resolution and rising US inventories continue to restrain the market despite the threat of supply disruptions.
Intraday technical picture:
The 4H Brent chart suggests that the price has stalled in the narrow 89.62-92.88 range marked with a dotted line. The direction in which the price breaks out of it will determine whether we see a further decline toward the 85.70 level or a recovery toward 95.18.
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