Forex Today: US Dollar looks vulnerable, RBA expected to raise rates

Matías Salord FXStreet

The key event during the Asian session will be the Reserve Bank of Australia meeting, with a rate hike expected. China will release important trade data. Later in the day, Eurostat will release the Producer Price Index.

Here is what you need to know on Tuesday, November 7:

The US Dollar Index reached a bottom at 104.86, the lowest level since September 21, and then rebounded, rising above 105.00. It closed in positive territory but remains under pressure following last week's Federal Reserve (Fed) meeting and US employment data.

A rebound in Treasury yields supported the Dollar, with the 10-year yield rising to 4.66% and the 2-year climbing from 4.85% to 4.93%. The Dollar's rebound appears to be corrective thus far, and fundamental factors still provide crucial support to the currency

EUR/USD retreated from monthly highs after failing to hold above 1.0750 and dropped to 1.0720. Eurostat will release the Producer Price Index (PPI) on Tuesday, with the annual rate expected at -12.5%.

GBP/USD reached the 200-day Simple Moving Average (SMA) at 1.2439 and turned to the downside, falling to 1.2350. The bias is still tilted to the upside, but there is further potential for correction. The following support level emerges around 1.2300.

The Japanese Yen weakened following Bank of Japan Governor Kazuo Ueda's somewhat dovish comments and the rebound in global government bond yields. USD/JPY rose after three days of losses, approaching the 150.00 area.

AUD/USD encountered resistance around the 0.6520 area and turned to the downside, falling below 0.6500. The Reserve Bank of Australia (RBA) will announce its decision on Tuesday, with many analysts expecting a 25 basis points rate hike.

Analyts at TD Securities on RBA:

We expect a 25bps rate hike; the case for a hike is strong. Q3 Headline & trimmed mean inflation overshot RBA forecasts (largely on domestic factors), property prices are within a whisker of all-time highs, retail sales have firmed and u/e rate is closer to record lows than the Q4'23 3.9% RBA f/c.

USD/CAD fell to 1.3626 and rebounded, rising to the 1.3700 area. The pair posted daily gains after falling during three trading days, losing 250 pips. It remains under the 20-day SMA, with risks tilted to the downside.

Gold lost momentum amid higher US Treasury yields and fell below $1,980. XAG/USD (Silver) was unable to break above the crucial resistance area at $23.30 and dropped to $23.00.

Like this article? Help us with some feedback by answering this survey:

Author

Matías Salord

FXStreet

Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.

AUD/USD consolidates above 0.7000; remains close to monthly top

AUD/USD holds steady above 0.7000 during the Asian session on Friday, trading just below the previous day's monthly low amid diverging forces. A hawkish RBA continues to support the Aussie, while the recent decline in US bond yields keeps the US Dollar depressed near a three-week low. However, oil-driven inflation fears reinforce Fed hike bets, which, along with geopolitical risks, could benefit the safe-haven buck and cap the currency pair.

USD/JPY bounces off one-month low; climbs to 157.00 amid reviving USD demand

USD/JPY rebounds from the 156.00 neighborhood, or a one-month low touched during Friday’s Asian session, with bulls looking to extend momentum beyond 157.00 amid the emergence of some US Dollar buying. Meanwhile, Japan's National CPI rose to a nine-month peak and reaffirmed BoJ rate-hike bets, which could support the Japanese Yen and cap gains for the currency pair.

Gold treads water around $4,000

Gold prices maintain its offered stance in place at the end of the week, hovering around the key $4,000 threshold per troy ounce. The persistent selling bias in the precious metal comes amid decent gains in the US Dollar and an acceptable rebound in US Treasury yields across the curve, all alongside further upside traction in crude oil prices.

Crypto Today: Bitcoin holds the 50-day EMA as Ethereum and XRP face structural resistance

Bitcoin gradually ticks up on Friday, trading above $81,000. The Crypto King has recently defended structural support near $80,000, reinforcing the prevailing bullish outlook. Ethereum similarly edges higher above $2,400, while Ripple trades above $1.32 after testing support around $1.30.

The French bond panic is overdone. Here's what the market is misreading

France's 10-year government bond yield has climbed above 5%, reigniting fears of a sovereign debt crisis in the Eurozone. With public debt exceeding €3.5 trillion, persistent budget deficits and a fragmented political landscape, investors are increasingly questioning the French government's ability to stabilize its finances.

What November 3 means for the Fed's rate path and the US Dollar

The USD faces a decisive period ahead of the November 3 midterm elections. While markets anticipate another interest rate increase from the Fed in December, the battle for control of Congress could reshape fiscal policy expectations and, indirectly, the path of US monetary policy in 2027.