Forex Today: US Dollar selling pressure eases as crucial inflation data approaches

Key market developments to watch on Tuesday, 10 November:

Selling pressure weighed on the US Dollar (USD) at the start of the week, sending the USD Index down more than 0.5% on Monday. With investors avoiding sizeable positions before the crucial October inflation release, the USD Index is consolidating below 102.00 early on Tuesday. Speeches from policymakers at the Federal Reserve (Fed), the European Central Bank (ECB) and the Bank of England (BoE) are also scheduled through the day.

Stronger risk appetite left the USD struggling to hold its ground against other currencies on Monday. After heavy selling in the previous week, Wall Street's main indices opened the new week on a strong note, 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. US stock index futures, however, are largely flat during European trading, suggesting that the risk rally is losing momentum.

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

Could softer US inflation undermine US Dollar momentum?

Both the Fed and market participants will scrutinise the US inflation release “for evidence of spillover effects from higher energy prices.” That is the assessment of analysts at MUFG/BTMU, who 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,” although “consensus expectations are looking for a softer core CPI print of 0.2% M/M in October.” In MUFG/BTMU's view, that result “would help put a dampener on the US Dollar’s upward momentum in the near-term,” as the bank 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 sideways range above 1.1200, following Monday's advance of more than 0.7%.

GBP/USD recovered from the previous Friday's sharp fall with a 0.7% rise on Monday. Early in Tuesday's European session, the pair is steady near 1.3450.

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

USD/JPY has steadied near 158.00 early on Tuesday after shedding about 0.3% on Monday. According to the Bank of Japan's (BoJ) Summary of Opinions for 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 while assessing risks to the economy and prices for a while longer.

China's trade figures, released during Asian trading, showed October exports rising 35.2% year on year and imports growing 41.6%. As a result, the trade surplus narrowed from $133.53 billion to $105.28 billion. The release had no discernible effect on AUD/USD, which was last trading at 0.6920, almost unchanged on the day.