Forex Today: US Dollar comes under less selling pressure as critical inflation data loom

Tuesday, 10 November: the key market developments to watch

A decline of more than 0.5% in the USD Index on Monday marked a weak start to the week for the US Dollar (USD). With the index consolidating below 102.00 early on Tuesday, investors are holding back from sizeable positions ahead of the crucial inflation figures for October. Speeches from policymakers at the Federal Reserve (Fed), the European Central Bank (ECB) and the Bank of England (BoE) are also scheduled throughout the day.

Monday’s improvement in risk appetite left the USD struggling to hold its ground against other currencies. After heavy selling the previous week, Wall Street’s main indices opened the new week strongly, with the Nasdaq Composite advancing more than 3% on Monday. That positive sentiment extended into Tuesday’s Asian session: Korea’s KOSPI Index climbed more than 4%, while Japan’s Nikkei added nearly 3% on the day. During European trading, however, US stock index futures are largely unchanged, suggesting the rally in risk assets is losing momentum.

A monthly increase of 0.3% in October is the market forecast for the Consumer Price Index (CPI), compared with September’s rise of 0.6%. Core CPI, which strips out volatile food and energy prices, is expected to increase by 0.2% over the same period. Annual figures will be absent from this release because the government shutdown left a gap in the data for October 2025.

US Dollar momentum faces risk from softer-than-expected US inflation

According to analysts at MUFG/BTMU, market participants and the Fed will scrutinise the US inflation release “for evidence of spillover effects from higher energy prices.” Although “consensus expectations are looking for a softer core CPI print of 0.2% M/M in October.”, the analysts point out that “recent core CPI readings have surprised to the upside over the last couple of months putting pressure on the Fed to tighten policy,”. In MUFG/BTMU’s assessment, a reading in line with that forecast “would help put a dampener on the US Dollar’s upward momentum in the near-term,”. The bank also notes that “the US Dollar appears to be running ahead of short-term yield spreads,” suggesting that “a hawkish surprise maybe required to maintain US Dollar strength.”

EUR/USD is confined to a narrow range above 1.1200, consolidating Monday’s advance of more than 0.7%.

GBP/USD recovered the previous Friday’s sharp losses with a 0.7% rise on Monday. Early in Tuesday’s European session, the pair is little changed around 1.3450.

Gold built on the previous week’s strong advance on Monday, climbing nearly 1.75% to finish at $4,140. An early pullback on Tuesday has left the precious metal lower, though it remains above $4,100.

USD/JPY steadied near 158.00 early on Tuesday, having fallen about 0.3% on Monday. According to the Bank of Japan’s (BoJ) Summary of Opinions from its October monetary policy meeting, some members favoured further interest rate increases in the near term. Others considered it appropriate to leave policy settings unchanged for a while to assess risks to the economy and prices.

Chinese figures released during Asian trading showed annual growth of 35.2% in exports and 41.6% in imports in October. As a result, the trade surplus narrowed from $133.53 billion to $105.28 billion. There was no discernible response in AUD/USD, which was last trading at 0.6920, virtually flat on the day.