Daily Forex Analysis

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. 

Energy markets cooled on Monday as Brent crude slipped toward $103 a barrel, ending a two-session rally. Declining oil prices and easing Treasury yields provided support to major currencies and precious metals as investors awaited upcoming US inflation data. 

Easing oil prices and retreating Treasury yields (around 5.23% ) provided some relief to financial markets as improving US-Iran diplomatic prospects reduced immediate inflation concerns. 

Hawkish Federal Reserve meeting minutes reinforced expectations for another rate hike this year, pushing Treasury yields higher and supporting the US dollar. 

Oil inventories are nearing depletion, increasing supply risks and supporting prices. Aramco estimates less than 6 billion barrels remain after over 1 billion barrels were drawn this year, while the IEA is preparing a 100-million-barrel release. The US 10-year Treasury yield stabilized near 5.31% on Wednesday, close to 24-year peaks, as markets awaited the Fed's minutes.

The dollar index steadied around 102 on Tuesday, near its highest since April 2025, as the euro weakened on French fiscal and political concerns and Spain's upcoming snap election, yet stabilized near 1.1220 after touching its lowest level since May 2025. 

Safe-haven demand and elevated Treasury yields supported the dollar as Middle East tensions kept investors cautious at the start of the week. 

A stronger dollar and elevated Treasury yields kept pressure on major currencies and precious metals as markets awaited the latest US employment data.