Fed Hike Bets Lift Dollar (10.13.2026)

The US dollar climbed to an 18-month high as investors awaited key inflation reports and weighed expectations for another Federal Reserve rate hike in December. 

The euro remained below 1.12 amid French fiscal uncertainty, while sterling weakened toward 1.32 as rising oil prices and UK budget concerns weighed on sentiment. Gold held below $4,200 and silver slipped toward $60, pressured by dollar strength and persistent inflation risks. Meanwhile, the yen recovered slightly toward 158 as softer Japanese producer inflation left uncertainty over the Bank of Japan's next policy move.

Euro Under Pressure Below $1.12

The euro opened the week below $1.12, remaining close to a 17-month low. Record French national debt and severe political friction over planned budget reductions contrast sharply with broad US economic strength and a resilient dollar. Although Paris aims to narrow its 2027 fiscal deficit to 5% of GDP, a divided parliament and upcoming presidential elections create significant uncertainty around passing deep spending cuts.

The first resistance is positioned at 1.1210 while the support starts from 1.1140.

Gold Stays Below $4,200

Gold held below $4,200 per ounce on Tuesday, suppressed by the US dollar reaching an 18-month peak ahead of key inflation reports. Markets currently price roughly an 80% likelihood of a Federal Reserve hold this month alongside an 88% probability of a December rate increase. Meanwhile, potential US military engagement against Houthi forces and fractures in the Russia-Ukraine energy ceasefire supported elevated oil prices, maintaining broader inflation and policy concerns.

First resistance is seen at $4210, with initial support near $4160.

Yen Rebounds Toward 158

The yen firmed toward 158 per dollar on Tuesday, snapping a two-day decline as Japanese markets resumed trading after a long weekend. September producer price inflation slowed to 6.8%, missing the 7.6% projection, yet continued to reflect sticky price pressures. Bank of Japan Governor Kazuo Ueda noted future interest rate increases depend on wholesale cost pass-through to consumers, leaving an immediate policy move uncertain while markets continue to price potential tightening in December or January.

First resistance is seen at 158.60, with initial support near 157.50.

Sterling Weakens Toward $1.32

Sterling slipped toward $1.32, remaining near multi-month lows as rising crude oil prices renewed inflation concerns. Brent crude touched $107 following strikes on Riyadh's airport and Ukrainian energy infrastructure. Although financial markets price four Bank of England rate increases over the coming year, analysts view this trajectory as aggressive given existing policy restrictions. Meanwhile, caution persists ahead of Chancellor John Healey's upcoming budget, where the IFS estimates a £35 billion shortfall requiring potential tax increases.

From a technical view, resistance stands near 1.3290, with support around 1.3150.

Silver Slides Toward $60

Silver dropped toward $60 per ounce, extending recent losses as the US dollar held near 18-month peaks ahead of upcoming CPI and PPI reports. Investors are pricing an 80% chance of a Fed pause this month alongside high odds for a December rate hike. Meanwhile, elevated oil prices, driven by Middle East and Russia-Ukraine conflicts, maintain underlying global inflation concerns.

From a technical view, resistance stands near $61.50, while support is located around $59.60.